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The entity itself The paperwork that establishes who is filing. Most of it does not change from year to year, but the year it does change is the year it matters.
EIN and the legal name exactly as it appears on the IRS notice (CP 575) A name on the return that does not match IRS records is a common cause of e-file rejection. Formation documents: articles, operating or partnership agreement, bylaws and any amendments Form 8832 entity classification election, if one was filed States where the business is registered, qualified or has filed an annual report Prior-year federal and state returns, including the depreciation schedule and every K-1 issued Essential for an accurate return. Last year's closing figures become this year's opening figures, and the depreciation schedule carries each asset's remaining basis. Some small entities may qualify not to complete Schedules L and M-1 on the filed return, but the books, capital or equity rollforward and depreciation still need to reconcile. Every notice received from the IRS or a state during the year Changes during the year: new owners, a change in ownership percentages, a new state, a name change, a merger, a sale or a closure Tell your preparer about these before the return is started, not after. Books and financial statements Everything below comes out of the accounting system. If it is already reconciled, the return takes days instead of weeks.
Year-end trial balance, profit and loss statement and balance sheet December statements and year-end reconciliations for every bank and credit card account Loan statements showing the year-end balance and the interest paid during the year Merchant processor annual summaries and any Forms 1099-K the business received Processor deposits are net of fees; the 1099-K reports gross. The books have to show both. Accounting method — cash or accrual — and whether it changed during the year A tax accounting method cannot always be changed simply by starting to report differently. IRS consent and Form 3115 may be required, and any section 481(a) adjustment may be taken into account immediately or over several years depending on the change. Inventory at the beginning and end of the year, the year's purchases, and the valuation method Cost of goods sold is a calculation, not a figure you can look up. When Form 1125-A and inventory accounting apply, the computation generally starts with opening inventory, adds purchases and production costs, and subtracts closing inventory. Small-business inventory rules may permit a different method, so bring the records even if the books treat inventory as materials and supplies. Goods withdrawn for personal use cannot remain in deductible purchases. Accounts receivable and accounts payable at year end Owner draws, contributions and anything personal that ran through a business account These are not expenses. Left unlabelled they distort both the return and the owner's basis. Income The IRS matches most of this against what other people reported paying you. Gross receipts that fall short of the forms on file is the fastest way to draw a letter.
Gross receipts, returns and allowances Forms 1099-NEC, 1099-MISC and 1099-K received by the business Interest and dividend income earned in business accounts Forms 1099-INT and 1099-DIV issued to the business EIN. On a 1065 or an 1120-S these are stated separately on each K-1 rather than folded into ordinary business income, so they cannot simply sit in revenue. Other income: rebates, insurance proceeds, grants, forgiven debt, legal settlements Forgiven debt usually arrives as Form 1099-C and is taxable unless an exclusion applies. Sales or disposals of business assets, with dates, proceeds and the original cost Reported on Form 4797. Depreciation taken in earlier years is recaptured on the sale, so the original cost alone is not enough — the asset's history has to come with it. Rental income from property the business owns A partnership or S corporation reports this on Form 8825, separately from trading income. Payroll and contractors The area that generates the most notices, because three separate filings have to agree with each other and with the books.
Deductions and expenses A deduction is only as good as the record behind it. The categories below are the ones examiners open first, because they are the ones where personal and business spending blur.
Rent paid for premises, and the Form 1099-MISC issued to the landlord if one was required Vehicles: make and model, the date each went into service, and the year's mileage Total miles, business miles and commuting miles are reported separately, so a log or a mileage app is what makes the deduction defensible. Personal use of a company vehicle belongs on the user's W-2. If you claim actual expenses instead of the standard rate, bring fuel, insurance, repairs and the lease or loan statements. Business meals, kept separately from entertainment An ordinary personal lunch between jobs is not deductible. A qualifying business meal generally needs a documented business purpose and, when it involves a client, supplier or employee, a record of who attended and what was discussed. Meals during qualifying overnight business travel may also count even when the traveler eats alone. Meals are generally 50% deductible; entertainment is generally nondeductible. Days on the road, if drivers are subject to the DOT hours of service rules Certain transportation workers who are subject to federal hours-of-service limits may deduct 80% of qualifying away-from-home meal costs. The optional special transportation-industry meal allowance can replace meal receipts, but the applicable federal rate depends on the travel date and is updated on 1 October. Keep a log of the location and each night away from your tax home. Travel, lodging and conference costs, with the business reason for each trip A trip qualifies when business is the reason you went and you were away from your tax home long enough to require sleep or rest. Keep the itinerary and what you actually did each day. On domestic travel mixing work and holiday, transportation generally follows the trip's primary purpose while lodging and meals are allocated to business days; international travel has additional allocation rules. A conference agenda or registration record helps establish the business purpose. A family member's travel is generally not deductible unless that person is an employee, has a bona fide business purpose and would otherwise qualify. Professional fees, insurance, software and subscriptions A written reimbursement policy for a partner's own car, home office and other costs paid personally With proper substantiation, a partnership can reimburse a partner for partnership expenses and deduct the qualifying expense. Unreimbursed partner expenses generally belong on the partner's return only when the partnership agreement or established policy requires the partner to pay them personally. The written agreement and the actual reimbursement practice should match. Domestic research and development costsChanged Domestic research can be deducted again in the year it is paid, for tax years beginning after 2024, rather than amortized over five years. Business interest expense If gross receipts are above the small-business threshold, the limit is computed on Form 8990 — and since 2025 it is measured on earnings before depreciation and amortisation again. Charitable contributions made by the business Startup and organisational costs, if this is the first year Up to $5,000 of startup costs and up to $5,000 of organizational costs may be deducted when the business begins, with each $5,000 amount reduced when that category exceeds $50,000. The remainder is generally amortized over 180 months. Bad debts written off during the year Deductible for an accrual-basis business; a cash-basis business never recorded the income. Assets and depreciation Anything with a useful life beyond this year lands here rather than in expenses. The decisions made now follow the asset for years, so they are worth making deliberately.
Every asset bought, sold or scrapped during the year: description, date, cost and the invoice Last year's depreciation schedule, including assets that are fully depreciated but still in use Decisions on Section 179 and bonus depreciationChanged 100% bonus depreciation is back for qualified property acquired and placed in service after 19 January 2025. The Section 179 limit for 2026 is $2,560,000, reduced once purchases pass $4,090,000. Equipment and vehicle lease agreements The tax treatment follows the agreement's economic terms and the facts, not merely its title. Some arrangements are true leases; others are conditional sales or financed purchases. Provide the complete contract, payment schedule, purchase option and any trade-in so the asset and deductions are reported consistently. Improvements to real property, with the invoices split between land, building and equipment Assets converted from personal to business use, with the fair market value on the conversion date Partners and capital accounts The part of a partnership return that cannot be reconstructed later. Every number here follows the partners for as long as they hold their interest.
Credits, elections and reporting to owners Credits are rarely claimed by accident: they need paperwork gathered during the year, not reconstructed in March. The foreign items below carry penalties that apply even when no tax is owed.
The figures owners need for the qualified business income deduction: W-2 wages and the basis of qualified propertyChanged The deduction is permanent now. For 2026 it starts to phase out above $403,500 of taxable income on a joint return ($201,750 for others), and there is a $400 minimum deduction for owners with at least $1,000 of qualified business income. Research credit documentation, if the business develops products, processes or software (Form 6765) Work opportunity credit certifications for eligible new hires Form 8850 has to reach the state workforce agency within 28 days of the hire — miss that window and the credit is gone no matter how eligible the employee was. The credit itself is claimed on Form 5884. Employer-provided child care credit, if the business helps employees with child care Claimed on Form 8882. Any credit carryforwards from earlier years Foreign owners, foreign accounts and foreign transactions A 25% foreign-owned U.S. corporation generally files Form 5472 when it has a reportable transaction with a related party; a foreign-owned U.S. disregarded entity can also have a pro forma Form 1120 and Form 5472 filing duty. The initial failure-to-file penalty is $25,000. Foreign financial accounts may separately require FinCEN Form 114. Foreign partners, and any withholding required on income allocated to them Section 1446 withholding on effectively connected taxable income allocable to foreign partners is generally reported on Forms 8804 and 8805 and can be due even when no cash was distributed. Other payments to foreign partners may follow different withholding rules. State and local Federal filings are the visible half. State obligations follow employees, property and sales, and they usually start before anyone notices they have.
Books not closed yet? Half of this list is easier when the bookkeeping is already current. If your year needs catching up first, that is work we do — and the three months before an engagement starts are free.
Book a free intro call This checklist is general information for the 2026 tax year, not advice about your business. Amounts and rules are current as of the date of publication and can change. Your own return may need documents that are not on this list.