Income records

• Profit and loss statement. A year-end P&L from your accounting software (QuickBooks, Xero, etc.) is the starting point. It should reflect all income and categorized expenses for the tax year.
• 1099-NEC forms. If clients paid you $600 or more during the year, they are required to issue a 1099-NEC. Collect these and compare them to your own income records. Discrepancies need to be explained.
• Bank statements. Year-end bank statements for all business accounts allow the CPA to verify that income and deposits are consistent with your reported figures.
• Other income sources. Any income not captured in the above — cash payments, barter transactions, rental income from business property — should be documented separately.

Expense records

• Categorized expense detail. Your accounting software should provide a categorized breakdown of business expenses. If expenses are not categorized, the CPA will need to do that work — which takes time.
• Receipts for significant purchases. For larger deductions — equipment, software, professional services — having receipts or invoices available is useful if questions arise.
• Home office documentation. If you claim a home office deduction, you will need the square footage of the office and the total square footage of the home, plus documentation of home-related expenses (rent or mortgage interest, utilities, insurance).
• Vehicle use records. If you use a vehicle for business, you need either a mileage log (for the standard mileage rate) or documentation of actual vehicle expenses and business use percentage.
• Meals and entertainment. Business meals are generally 50% deductible. Keep records of the business purpose, who was present, and the amount.

Asset and depreciation records

• Prior year depreciation schedules. If your business has depreciable assets, the CPA needs the prior year's depreciation schedule to continue calculating depreciation correctly.
• New asset purchases. For any equipment, machinery, or other assets purchased during the year, provide the purchase date, cost, and description. This determines whether the asset qualifies for Section 179 expensing or bonus depreciation.
• Asset disposals. If you sold or disposed of a business asset during the year, the CPA needs the original cost, accumulated depreciation, and sale proceeds to calculate the gain or loss.

Entity-specific documents

For S-Corporations and partnerships

• Payroll records and W-2s issued to owners and employees
• Shareholder or partner basis information
• Loan documentation for any loans between the entity and its owners
• Prior year K-1s

For all entities

• Prior year tax return (federal and state)
• EIN confirmation
• State registration documents if the entity is new
• Any IRS or state notices received during the year

New York-specific items

• Documentation of New York source income if you operate in multiple states
• New York LLC filing fee payment records
• Any New York State or New York City tax notices
• Sales tax records if your business collects sales tax

What happens when records are missing

When records are incomplete, the CPA has a few options: ask the client to reconstruct the missing information, estimate based on available data, or proceed without the missing items and note the limitation. None of these options is as good as having complete records from the start.

Missing records also increase the risk of errors — either overstating income (because deductions are missed) or understating it (because income is not fully captured). Both create problems, either at filing time or if the return is later reviewed.

The simplest way to be prepared

The simplest way to arrive at tax preparation with complete records is to maintain clean, current bookkeeping throughout the year. A year-end P&L and balance sheet from reconciled accounting software, combined with the documents listed above, gives a CPA everything needed to prepare an accurate return efficiently.

If your books are not current, the time to address that is before tax season — not during it.