Year-End Tax Prep Checklist for Micro and Small Businesses
As the year wraps up, small business owners are often pulled in two directions - closing sales and closing the books. But taking time to prepare for tax season before December ends can save you significant stress (and money) when filing time arrives.
Whether you manage your books yourself or work with a CPA, having a clear year-end checklist ensures nothing slips through the cracks. Here’s a practical guide to help you start the new year financially organized and tax-ready.
1. Update and Reconcile Your Books
Start by making sure all transactions for the year are recorded and categorized correctly. Reconcile your bank accounts, credit cards, and payment processors to ensure your books reflect accurate balances. Clean, up-to-date books make tax filing faster and prevent costly errors.
2. Review Income and Expenses
Look through your profit and loss statement for any uncategorized or unusual transactions. Double-checking expense categories can help you spot missed deductions such as home office costs, mileage, or software subscriptions. The more organized your records, the easier it is for your accountant to identify savings.
3. Gather Important Tax Documents
You’ll need key documents like:
• Employer Identification Number (EIN)
• Last year’s tax return
• Payroll reports
• Contractor 1099s and W-2s (issue them by January 31)
• Business loan or interest statements
Having everything in one place speeds up the filing process and reduces back-and-forth with your CPA.
4. Check Estimated Tax Payments
If you’ve made quarterly tax payments, review whether you’re on track or if you need to make a final payment to avoid underpayment penalties. This is especially important if your income fluctuated during the year.
5. Review Fixed Assets and Depreciation
If you bought equipment, vehicles, or office furniture, confirm they’re properly recorded as assets. You may qualify for Section 179 deductions or bonus depreciation, which can significantly lower your taxable income.
6. Meet with Your CPA Before Year-End
Don’t wait until tax season to talk strategy. A year-end consultation can help you make smart last-minute moves, like accelerating expenses, deferring income, or contributing to retirement accounts to reduce your tax burden.
The Bottom Line
Year-end tax prep doesn’t have to be overwhelming. With a structured checklist and proactive planning, you can file smoothly, minimize taxes, and start the new year with financial confidence.
A little preparation today can mean fewer surprises - and more savings - tomorrow.