Business Tax Preparation Workflow

Confirm the entity’s legal name, taxpayer identification number, tax year, owners and effective tax elections before importing the books. Obtain the prior filed return, depreciation schedules, carryovers, ownership changes and election records. An LLC’s current bookkeeping label is not sufficient evidence of its federal classification. A new owner or an election effective during the year can change the reporting task.

Request source records by return area: bank and payment-processor reconciliations for receipts, invoices for major expenses and assets, loan statements for debt, payroll records for compensation, and distribution/contribution records for owners. Give each missing item an owner and a due date. The goal is a traceable file, not a pile of documents with no explanation of which tax question each supports.

Reconcile bank and loan balances, verify opening balances against the prior closing file and explain material current-year changes. Then build schedules for fixed assets, inventory, book-to-tax differences, separately stated items and owner transactions as applicable. Mark adjustments with both an amount and a reason. “Tax adjustment” alone is not enough for a reviewer to reproduce the treatment.

For an S corporation, shareholder basis is not established by the corporate trial balance. Obtain the shareholder’s basis history and distinguish stock contributions from direct loans. Distributions require that owner-level record even when the entity’s books balance perfectly. Similarly, a depreciation schedule must identify service dates and elections, not just the current-year expense total. Missing support should become a specific unresolved issue rather than a guessed input.

A review should trace figures across the return: ordinary income to owner allocations, separately stated totals to K-1s, distributions to equity records and depreciation to the asset workpaper. Compare with the prior year and investigate changes rather than automatically treating them as errors. Check identification details, required attachments, elections, signatures or authorizations and payment or extension requirements.

Keep a filing and delivery record that distinguishes a prepared return from an accepted electronic submission. Resolve a rejection rather than assuming the initial transmission completed filing. Provide the taxpayer with the return and a clear payment or follow-up instruction under the applicable procedure. An extension ordinarily does not extend the time to pay. This workflow covers completeness and traceability; the business-tax-preparation lesson explains how receipts and deductions are classified.