Documents Need for A Business Tax Prep Services

Michigan business owners who still need to get their business tax prep filed for the 2023 year do have some time, but not much. 

Like individual filers, most small businesses have until April 15, 2024 to file their taxes with the IRS. These businesses include sole proprietorships, household employers, and C corporations. However, partnerships and S corporations only have until March 15, 2024.

Either way, it’s important to start compiling the necessary documents as soon as possible. Sending them over to us for tax prep services sooner rather than later will help facilitate a smoother process.

What Businesses Need for Business Tax Prep Services

Many Michigan business owners routinely ask us what documents we need to complete their tax paperwork and any other year-end reporting that may be necessary.

In many cases, it depends on how a business is classified, but some documents are necessary across the board. Records, facts, and documents businesses may need to file their taxes in 2023 include:

• Basic identification and facts
• A financial statement
• Details about capital and assets
• A summary of expenses
• Gross receipts
• Purchases
• Employment taxes

Ask one of our tax preparers here in Wayne County for specific documents you may need. In the meantime, following is a general breakdown.

1. The Essentials

Clearly, you will need basic information for tax prep services, including your name, the name of your business, its address, how it’s classified, the names of leaders in your company if their personal taxes intertwine with the business’s taxes, and so on.

2. Financial Statement

A financial statement shows the overall health of your business. This assessment can offer insight that business owners can use to improve the financial health of their businesses. In fact, when you work with our southeast Michigan-based accounting firm, we regularly provide our clients with financial statements, depending on their needs.

3. What You Have for Tax Prep

Your accountant will need details about your assets. Assets include the property, machinery, furniture, technology, and your other belongings. This also may include the financial value of your company and the land it’s on. Throughout the year, you should be keeping records about your business assets, as well as keeping track of losses and gains. 

For tax preparation services, businesses may need to have the following documents and details available, as noted on the IRS.gov website.

• When and how you acquired the assets
• Purchase price
• Cost of any improvements
• Section 179 deduction taken
• Deductions taken for depreciation
• Deductions taken for casualty losses, such as losses resulting from fires or storms
• How you used the asset
• When and how you disposed of the asset if that was the case
• Selling price, if applicable
• Expenses of sale

You can find many of these details in invoices, real estate documents, and check stubs.

4. Business Expenses

Items you use to run your business are considered expenses. These include payments to employees and contractors. In this regard, documents you may need when you file your taxes include:

• Proof of payments, such as canceled checks or electronic fund transfers
• Receipts
• Credit card statements
• Invoices

Travel, entertainment, and gifts may be included in this category, as long as you can prove the expenses were necessary for work.

5. Income receipts

Gross receipts refer to income you receive in the everyday course of your business activities. Throughout the year, business owners or managers should keep documents showing the sources of this income. When you file your business’s 2021 taxes this year, documents you may need include:

• Cash register tapes
• Receipt books
• Invoices
• Applicable tax forms, such as 1099-MISC

6. Purchases/Merchandise & Goods

This category refers to the goods and services you offer to customers, including materials, parts, and steps necessary to complete the transaction. You may need to show proof of such transactions and a description of the product or service. Not every detail will be necessary for tax preparation services, but you may need to present a general overview. You also may need detailed documents in the event that you are audited by the IRS. 

Documents that you should have available for the tax year include:

• Canceled checks or other documents reflecting proof of payment/electronic funds transferred
• Cash register tape receipts
• Credit card receipts and statements
• Invoices

7. Employment Taxes

Clearly, you must also keep general employment taxes and records of previous years’ taxes for at least four years. These include taxes related to wages, pensions, and tips. You should also keep records of property taxes you may have paid, as well as individual tax information if it will affect your business tax filing and vice versa.

In this regard, documents businesses should have include:

• The employer identification number
• Amounts of all wage, annuity, and pension payments
• Names, addresses, social security numbers, and occupations of employees and recipients
• Dates of employment
• Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them
• Copies of employees’ and recipients’ income tax withholding certificates (Forms W-4, W-4P, W-4S, and W-4V)
• Dates and amounts of tax deposits you made
• Copies of returns filed
• Records of allocated tips
• Records of fringe benefits provided

Metro Detroit business managers who have questions about our tax preparation services or who would like to schedule an appointment may call our office, located in Canton, Michigan. You may also send us a message through our website, and we will respond as soon as possible.