Small business tax preparation checklist
Get your documents ready.
The tax experts at Block Advisors, a part of H&R Block, will help you understand your small business’s taxes, starting with a small business tax preparation checklist for 2021.
Are you a team of one? You’ve come to the right place — you can also use this as a self-employed tax checklist.
Self-Employed
Being self-employed, a sole proprietorship or independent contractor is considered the easiest business type to run and is the default tax entity for those who work for themselves.
Partnerships
There are many types of partnerships businesses can enter into. Usually, all partners share in the liabilities and profits. Partnerships are generally inexpensive and simple to set up.
S-Corps
S Corporations pass deductions, corporate income, losses, and credits to shareholders for federal tax reasons. These shareholders report the income and losses on their own returns.
C-Corps
C Corporations are structured so that the owners pay tax on the salaries and dividends they receive from the corporation on their individual returns at the appropriate tax rates.
General checklist and self-employed
Income Items
Be sure to include all income sources when creating your small business checklist. This could include income from your day-to-day operations as well as any investment or secondary income.
Costs of goods sold
Some categories may not apply each tax season, so you should only include what applies for 2021 on your small business tax checklist. If you produce, purchase, or sell merchandise in your trade or business, you’ll need to take your inventory into account at the beginning and end of the year.
Expenses
A wide range of costs can fall under applicable business expenses. Don’t miss recording any of these on your small business tax preparation checklist. Our tax pros will help you find each and every deduction you deserve.
- Local transportation: Did you take any business trips this year? You’ll want to include your mileage along with any car and truck expenses (from app-based mileage trackers like Everlance). For public transportation, parking and tolls, you should include your contemporaneous log (recording of transactions as they happen) or receipts.
- Travel away from home: You should account for actual expenses if you drove — or airfare for any flights. There are helpful app-based trackers (Everlance is a great one) available so you can keep up while you’re on the go. Be sure to include costs for hotels; meals and tips; and taxi fares and tips. Remember to include any miscellaneous expenses, such as your internet access (hotel, internet café, etc.).
- Cost and first date of business use of assets
- Records relating to personal use of assets
- Sales price and siposition date of any assets sold
- Documentation of prior-year depreciation
- Casualty loss insurance
- Errors and omissions
- Other
- Mortgage interest on building owned by business
- Business loan interest
- Investment expense and interest
- Lawyers, accountants, and consultants
- Tax preparers
- Pens, paper, staples, and other consumables
- Office space rent
- Business-use vehicle lease expense
- Other
- Square footage of office space
- Total square footage of home
- Hours of use, if operating an in-home daycare
- Mortgage interest or rent paid
- Homeowner’s or renters’ insurance
- Utilities
- Cost of home, cost of separate improvements and first date of business use
- Repairs, maintenance of office facility, etc.
- Estimated tax payments made (including property taxes and sales taxes if applicable)
- Other business-related expenses
- Health insurance: Whether you’re a sole-proprietor who is covering their family, a partner or you have S corporation shareholders, you’ll want to account for premiums paid on behalf of those individuals. Also, you should gather information on your spouse’s employer provided insurance if applicable.
Advance payment notices
Tasks that should be completed
Make sure you’ve completed all related tax issues such as:
Other items
Make sure you’ve gathered related information such as:
Partnerships—Form 1065
Documents
- If an LLC taxed as a partnership, copies of the LLC operating agreement and articles of organization
Partner information
- each partner’s share of liabilities
- guaranteed payments made to any partner
- any insurance plan provided to any partner
- any liquidating payments made to any partner
- any change in ownership percentages including the addition or loss of partners
S Corporations—Form 1120S
Documents
- If an LLC taxed as an S corporation, copies of the LLC articles of organization and operating agreement
Shareholder information
- capital contributions, distributions or loans to shareholders.
- reasonable compensation paid to any employee/shareholder
- insurance plan provided to any shareholder
- changes in ownership throughout the year
C Corporations—Form 1120
Documents and other information
- If an LLC taxed as a C corporation, copies of the articles of organization and operating agreement
Shareholder information
Additional items for your small business checklist
Make sure you’ve completed all related tax issues such as:
How Block Advisors can help your business.
Maximize your tax outcome
Our tax pros help grow your bottom line and put money back in your pocket by finding every available credit and deduction relevant to your industry.
Affordable expertise, year-round
Get personalized human help rightsized to where you are and where you want to go — for up to 30% less than the cost of a typical accountant.†
Specialized in small business
Our small business certified tax pros have an average of 12 years of experience and undergo annual Block Advisors training to specialize in small businesses.
100% Accuracy Guarantee
We guarantee 100% accuracy on your taxes, bookkeeping and payroll and will reimburse you for penalties and interest if we make an error on your return.
† Average savings based on national average fees for Federal Form 1040 plus Schedule C and one state filing in latest available 2020 survey conducted by the National Society of Accountants. All tax situations are different. Pricing will vary based on individual circumstances.
- We do not provide legal advice. The choice of entity for a small business is an important decision, and taxes and other financial considerations are only some of many factors to consider. The information on this site is not intended to be legal advice or specific to any situation. We recommend that you seek the advice of an attorney about the implications of entity selection.