A February Records Checklist Before You Meet Your Accountant

February is when the paperwork of the previous year comes due. Forms start arriving, deadlines appear on the calendar and accountants’ schedules fill quickly. You do not need to be a tax expert to make this season easier. You just need organized records and clear answers. This checklist is general guidance; your accountant or tax preparer will tell you exactly what your business needs and which deadlines apply.

Close out the books for last year

Before anyone can prepare a return, the books need to reflect what actually happened. Work through these items, or ask your bookkeeper to:

• Reconcile every business bank and credit card account through December 31.
• Categorize uncategorized transactions and clear out duplicates.
• Review accounts receivable and note any invoices you do not expect to collect.
• Confirm loan balances match your lender statements.
• Record any owner contributions or draws properly rather than as income or expenses.

Gather the documents

Most of what your accountant needs falls into a few categories:

• Financial statements. A year-end profit and loss statement and balance sheet.
• Information returns. Copies of forms you issued to contractors and employees, and any forms you received from clients, banks or payment processors.
• Payroll records. Quarterly and annual payroll filings, usually available from your payroll provider.
• Asset purchases. Receipts and dates for equipment, vehicles, computers and other significant purchases.
• Loans and leases. Statements showing interest paid and any new financing.
• Prior-year return. Especially if you are working with a new preparer.

Prepare answers to likely questions

Preparers often need context that is not in the numbers. Have answers ready for questions like these:

• Did ownership of the business change during the year?
• Did you start operating in a new state, or hire someone who works in another state?
• Did you use a vehicle or home office for business, and do you have records of that use?
• Did you make estimated tax payments, and when?
• Were there any unusual one-time events, such as selling equipment or receiving a large settlement?

Set up next year while it is fresh

The best time to improve your recordkeeping is right after you have felt the pain of a messy year. Consider a few changes now:

• Keep a separate business account and card, and use them only for business.
• Snap and store receipts digitally as you go instead of collecting them in a drawer.
• Schedule a monthly reconciliation, even if it takes only an hour.
• Put estimated tax due dates on your calendar if they apply to you.
• Ask your accountant which records they wished you had this year.

Know where to check official guidance

Federal requirements are published by the Internal Revenue Service at irs.gov, and Massachusetts businesses can find state tax information through the Department of Revenue on mass.gov. Rules and deadlines change, so rely on official sources and your tax professional rather than last year’s memory.