A tax return is a set of lines, and every line that comes from the business comes from a financial statement, whether you made one or the preparer rebuilt one on the clock. This guide says which statements each kind of return draws on, so you walk in with what is needed and not a shoebox.
Sole proprietor or single-member LLC: Schedule C
Schedule C is a Profit and Loss with the lines pre-named: gross receipts, then advertising, car and truck, commissions, contract labor, insurance, interest, legal and professional, office, rent, repairs, supplies, taxes and licenses, travel, meals, utilities, wages, and other. A Profit and Loss by category maps onto it almost line for line. No Balance Sheet is filed, but a year-end one still tells you and the preparer whether the money adds up.
Partnership or multi-member LLC: Form 1065
A Profit and Loss again, plus a Balance Sheet, because the return reports each partner’s capital account: what they put in, what they took out, and their share of the income. That means owner draws and contributions must be separated by partner, not lumped. The preparer will also want the beginning-of-year balances.
S corporation or C corporation: 1120-S or 1120
Profit and Loss, Balance Sheet, and for an S corporation the shareholder distributions separated from salary. Officer compensation paid through payroll is a wage; distributions are not. The statements need to show which was which.
The two pages that save the most preparer time
- A tax-line worksheet: each category of the Profit and Loss with the line it usually goes to on the return. It turns a half-hour of mapping into a glance. It is a map, not a decision; the preparer confirms every line.
- A 1099 candidate list: who was paid for services, how much, and how. The preparer decides who actually gets a form, but the list is the part that takes time.
Both are in a Rekonix Lite packet, together with an Excel file of every transaction.
What the statements do not do
Statements built from bank and card activity are cash basis. They do not include depreciation for the year, the home office deduction, vehicle mileage, accrued payroll liabilities, inventory, or money owed to or by the business. Those are tax adjustments the preparer makes on top of the statements, which is why handing over a clean set does not make the preparer redundant; it makes them faster.
Timing
Preparers are least busy in November and December and most busy from late January to April 15, and again before October 15 for extensions. A packet delivered in January, before the W-2s and 1099s arrive, gets a preparer’s attention; one delivered on April 10 gets an extension.