What does my accountant need from me? 

What does your accountant need for a personal tax return?

Preparing and filing your annual tax return can be a headache, even if you use the services of a professional accountant.

Forgetting one crucial document can mean yet another road trip back to their office — potentially delaying any refund you’re owed.

In your first meeting, you should bring along: 

• ID – Preferably your Social Security card (and those of any dependents or a spouse) and your driver’s license, or another federal ID 

• Proof of income – Don’t be fooled into thinking this is just your pay checks. If you’ve received any income that wasn’t a gift, like social security payments, retirement benefits, a gambling win, money from a property sale, investments or dividends or alimony, you must report it  

• Proof of expenses – Any receipts or an itemized record of deductibles is essential if you want to increase the size of your refund  

• Proof of losses – Your accountant should see any personal or business losses, as well as any police or fire reports or insurance claims and any payments you received for them. Losses can be from theft, natural disasters or incidents such as fires  

Required information for business tax returns

Lots of small business owners underestimate how complex business tax returns can be.

There are different filing requirements depending on the structure of your operations.

All businesses need to provide:

• The last financial year’s federal, state and/or local tax returns 

• Tax forms for your contractors and employees, such as Form W-2 or Form 1099-MISC 

• A trial balance — if you’ve got a bookkeeper, they’ll be able to share this with you. If you handle your own finances, it is a summary of all the business transactions your company made over the course of the year, organized by account type 

• An income statement, which includes the cost of goods/services sold 

• Any financial information that could support deductions, like:

  • Bank and credit card statements 

  • Legal and professional fees 

  • Utilities 

  • Travel and mileage costs 

  • Donations or contributions to charity 

  • Education expenses 

  • Expenses incurred from making properties energy efficient  

  • Foreign earned income and taxes paid 

  • Investments 

  • Medical expenses 

  • Asset records 

  • Costs of moving to new premises  

  • Real estate taxes 

  • Vehicle payments and taxes 

There a few more specific documents your accountant will need to see, depending on the structure of your company.

Here's a brief rundown:

• Sole proprietors: If you work alone and haven’t incorporated your company, it’s likely your accountant will view you as a sole proprietor. You’ll need to show the previous year’s Schedule C, unless this is your first year in business  

• Partnerships: Anyone in a partnership business structure will need to show the previous year’s Form 1065 and their individual Schedule K-1. You’ll also need specific information for each partner, including a list of all states where your business has nexus and your partnership or operating agreement. Your accountant can advise you if anything is missing 

• C corporations: If your business is taxed entirely separately from you and any other owners, you’ll need your EIN (employer identification number) and last year’s Form 1120. You'll also need:

  • A list of the states where your business is required to report for tax purposes, and their ID numbers 

  • Your articles of incorporation 

  • A list of all people or entities that own more than two per cent of your business’s stock 

  • Granted credit certificates from federal or state tax authorities 

What questions should I ask my accountant?

1. What should I keep record of? 

You may find tax season stressful as you don’t understand how much information you need to share. It can be particularly confusing if you’ve recently become self-employed. Your accountant will outline exactly what they need to see, giving you a clear idea of the financial records you should be keeping.

2. What are my deductible expenses? 

Check with your accountant to see if there are specific expenses relating to your job or company that can be deducted from your tax bill. Generally, tax-deductible expenses include: 

• Expenses from self-employment, like equipment essential for your work or mileage 

• Education expenses related to your work 

• Medical expenses than amount to more than 10 per cent of your adjusted gross income 

• Donations to charity, including physical items like clothes and food 

• Mortgage interest 

• Union and IRA contributions 

• The cost of preparing last year’s taxes

3. When do I need to pay my taxes? 

Perhaps the most crucial question of all — make sure you know when you need to pay your tax bill. Your accountant will explain how to do so, and outline any flexible options available to you.  

4. What changes could I make? 

Accountants can offer trustworthy advice as well as take action on your behalf. You may not be taking advantage of all the tax deductibles you could to reduce your tax bill. Or as a business owner, your accountant could show you ways to improve your cash flow and your operations’ liquidity. 

How do accountants add value?

There are lots of ways an accountant can add value to your life, including: 

• Helping you claim back expenses: You may think you aren’t eligible to claim deductible expenses, or not understand just how much you could be claiming.

  Your accountant will show you how to itemize and record your expenses, and open your eyes to new deductibles.

  This includes everything from self-employed social security tax breaks to teachers’ tax savings.  

• Streamline your financial recording: Once you understand exactly what your accountant needs to see, they can help you work out a simple system for recording relevant information  

• Prevent costly errors: Even with the best intentions, preparing and filing taxes can be complex and confusing.

  Accidentally under-reporting your income, or over-reporting deductibles, can lead to penalties for underpaid tax.

  An accountant is confident with numbers and understands exactly how the process works, making it extremely unlikely that errors will occur  

• Find the most efficient business structure: Accountants can do more than simply prepare and file taxes.

  They can advise you on the most tax-efficient legal structure for your business.

  For example, if you began as a sole trader but have significantly grown and enlisted employees, an S corp or C corp structure may be more suitable