How to Prep Your Books for Tax Season

No more scrambling, just clean books and confidence.

Tax season doesn’t have to be stressful… but for a lot of small business owners, it is.

If you’re a solo operator, contractor, or service-based business owner, chances are you didn’t start your business because you love bookkeeping. And if your books have been on the back burner all year… now’s the time to catch up.

Here’s a step-by-step guide to prep your books for tax season — even if you’ve been winging it so far.

Step 1: Make Sure You’ve Tracked ALL Income

Start by making sure all your income is accounted for — especially if you got paid in more than one way.

Check for:

• Payments received through QuickBooks, Square, PayPal, Venmo, Zelle, etc.

• Direct bank transfers or deposits

• Checks and cash

• Unpaid invoices still outstanding

Pro tip: Even if you didn’t receive a 1099 from a client, that income still needs to be reported.

Step 2: Gather All Business Expenses

Go through your bank accounts, credit cards, and receipts to gather every business-related expense.

Common expenses include:

• Fuel or mileage

• Supplies and tools

• Equipment purchases

• Insurance premiums

• Marketing and advertising

• Phone, internet, and software subscriptions

• Meals and travel (when business-related)

Bonus tip: Use a separate business account/card to keep this easier next year.

Step 3: Reconcile Your Accounts

Reconciliation is the process of comparing your books to your bank and credit card statements to make sure everything matches.

Make sure all your:

• Transactions are categorized correctly

• Duplicates are removed

• Missing transactions are added

• Accounts are balanced

If you’re using software like QuickBooks Online, use the built-in reconciliation tool.

Step 4: Review Key Reports

Once your books are clean, run these three reports:

1. Profit & Loss Statement
   Shows income, expenses, and net profit

2. Balance Sheet
   Shows what you own (assets), owe (liabilities), and your equity

3. Cash Flow Statement (if available)
   Shows how cash moved in and out of your business

These reports are what your tax pro (or CPA) will need to file your taxes accurately.

Step 5: Organize Receipts and Backup

Digital receipts are fine — just make sure you can access them easily.

Store them by:

• Month or vendor

• Expense category (fuel, supplies, advertising, etc.)

• Cloud folder (Google Drive, Dropbox, etc.)

If you're ever audited, you'll need proof of your deductions. No shoebox required — just organization.

Step 6: Send Everything to Your Tax Preparer (or Do It Yourself)

Once your books are ready:

• Export your reports (P&L, Balance Sheet)

• Gather 1099s, W-2s, or any other tax forms you received

• Make sure your personal and business income are separated (especially for sole props)

Then either:

• Upload everything to your CPA

• Use tax software to file on your own (if your return is simple)

What If You’re Behind?

If you haven’t touched your books all year — don’t panic.

You have two options:

1. Do a full-year cleanup yourself (if you're confident and have time)

2. Hire a bookkeeper (like me 👋) to get you caught up fast — accurately and stress-free

Final Thoughts

Tax season doesn’t have to be a nightmare.

If you keep up with your books — or at least prep them properly before filing — you’ll:

• Reduce your tax bill

• Avoid penalties or late fees

• Understand your business better

• Be in a great spot to grow in the new year

Need help getting caught up before tax time?
I offer a free Bookkeeping Health Check to review where you stand and get a plan in place.

Contact us by clicking here

Or send us an email at David@RuckandReconcile.com

Check out our services here

Learn more about Ruck and Reconcile here

And as always, thanks for reading and we’ll see you next week!