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The easiest way to get ready for your business tax return is to keep documents as they arrive, instead of hunting for all of them in March. You do not need a complicated system. It is enough to know where the important documents come from and to have one place for each kind. This guide groups them by source, suggests a simple way to keep them during the year, and explains how to use our free checklist when your appointment comes around.
What comes from the bank and your cards
Monthly statements for the business's bank accounts, credit cards, and loans are the base of everything. They show every dollar in and out, and your bookkeeper uses them to reconcile the accounts, which means confirming that what was recorded matches what actually happened.
You can almost always download them as PDFs from your bank's website. It is worth doing every month, because some banks only show recent months online.
What comes from your sales
This includes reports from your point-of-sale system, the invoices you send, reports from payment apps and card processors, and a record of cash sales. If customers or payment platforms send you 1099 forms, keep them here too: they report payments made to you.
Cash deserves special attention. Because it leaves no trail at the bank until it is deposited, a simple daily record, even in a notebook, prevents questions later.
What comes from your expenses
- Receipts and invoices for business purchases
- Rent, utility, insurance, phone, and internet bills
- Subscriptions, software, and professional fees
- What you paid contractors, and the W-9 forms you asked them for
A clear photo of a receipt works. What matters is that the date, the vendor, and the amount are readable, and that you know what the purchase was for. If the receipt does not say, add a note to the photo or to the file name.
What comes from payroll and tax payments
If you have employees, your payroll provider produces a report for each pay run and quarterly and annual summaries. Keep them all in the same place.
If you made estimated tax payments during the year, keep the confirmation for each one, with the date and the amount, because your preparer needs them for the return.
What comes from large purchases
For equipment, tools, computers, furniture, or vehicles bought for the business, keep the invoice with the date and the price, and the loan documents if you financed the purchase. If you sold something or stopped using it, note that too. These purchases often affect several returns, not only the one for the year you bought them.
If you use a vehicle for the business, keep a mileage log during the year. Rebuilding one months later is much harder.
A simple way to keep everything
You do not need special software. A folder on your computer or in cloud storage, with one subfolder per month, works well:
- At the end of each month, download the bank and card statements.
- Move the month's receipt photos into that folder.
- Add your sales and payroll reports.
- Make a note of anything unusual, such as a large purchase or a cash payment.
How long to keep each document depends on your situation, so ask whoever prepares your return. What we can say is that it pays to keep organized digital copies and not to throw anything away before asking.
When tax season arrives, our tax appointment checklist helps you confirm you have everything: tick off each document as you find it, then print the list or save it as a PDF. If your books are current with us, much of this is already done, because your bank and card activity is recorded and reconciled every month.
Let's talk about your business
If you would rather stop gathering papers at the last minute, we can help you organize your records and keep your books current every month. Send us a message in English or Spanish, and we will talk it through.
Questions about this topic
Are photos of receipts enough, or do I need to keep the paper?
For bookkeeping and tax preparation, clear photos and PDFs usually work. If you have a question about a specific document, ask whoever prepares your return.
How long do I have to keep my documents?
It depends on the type of document and on your situation, so it is best to ask your preparer. In the meantime, keep organized digital copies and do not throw anything away without asking.
What if I am missing bank statements from earlier months?
You can usually download them from your bank's website or request them from the bank. If many months are missing, it may be a sign that the books need catching up before tax season.
If you keep my books, do I still need to keep all of this?
Much less of it. We record and reconcile your bank and card activity every month. You still keep the receipts and documents only you have, such as invoices for large purchases and records of cash sales.
Written by the team at Choice Business Advisors, a bookkeeping, tax, and advisory firm based in Utah serving small businesses across the United States in English and Spanish.