A Tax Checklist All Small Business Clients Need

One of the most painful challenges your accounting practice can face is the small business or solo entrepreneur who shows up at the front desk with a box full of disorganized receipts, a problematic ledger of check deposits, and confusing home-grown spreadsheets of indecipherable numbers. 

Any number of reasons create this sort of client. Like the little engine that could, you love these intrepid small business owners. But also, like that little engine, these clients thought they could keep on top of bookkeeping.

They thought they could keep track of finances — up until they couldn’t. Their expenses haven’t been properly accounted for, are incomplete, or weren’t recorded at all. Payroll has been mismanaged: people were hired without completing the proper tax forms or properly making employee tax payments during the year. 

That pain grows more acute the closer it is to Tax Day, but it isn’t limited to tax season. In a way, the faith that these hopeful clients hold in the ability of an accountant to perform in these conditions is inspiring, ascribing abilities that are almost super-heroic.

Even when these types of clients are charged appropriately for the time they require, they still add stress and anguish. Had finances been managed better by the business owner throughout the year, the process could have been straightforward. The recommendations, applications, and checklist below are ideal for leading small business clients to good bookkeeping practices that will help you both.

Their Pain is Your Pain

People turn to you for help because they’ve been too busy doing what they get paid for to pay attention to taxes. When these small business owners walk through your door, you have an opportunity to ease their minds, solve their problems, and win their trust. Because once they’re satisfied with your support at tax time, they’ll seek out and appreciate your guidance throughout the year to keep financial management on track.

Besides helping your clients complete their 1040, 1120, or 1065 forms, you’re ideally advising your prospects and clients what they can do to track their business finances, which should help put them on a path to succeed. And this will help you to work their account more efficiently. 

If only you had a Super Accountant cape, the one that gives you powers and abilities to do all the things you need to do for your clients. Since you can’t, your next best step is to explain to them bookkeeping responsibilities or the accounting work you do for them — instructing how they should maintain their financial records so you can best advise them and address their tax considerations.

Introduce the Checklist

Small business owners, consultants and side hustlers who handle their own bookkeeping will benefit from receiving a checklist of items that would ensure accurate and precise tax filings with a simple, easy process. This prepares them for tasks they need to do on their own, helps them organize their tasks, and, most important, helps them provide you with the right data.
Hand them this checklist (or email them this link to a PDF they can download) so they have a handy reference to the things you need them to bring:

After a new client is established and existing clients understand what is required, set them to work on capturing the right data and supporting documentation. Put them on course to do this every year. Urge them to make a commitment to attend to their bookkeeping regularly. Explain how much easier tax time will be for them if they spend a little bit of time throughout the year getting their figures and documents in order. Also, advise them that a paper journal and physical files means they’ll be paying you for time not related to actually doing their taxes and perhaps not finding time to advise them about their business. 

If they want to use a spreadsheet, double down on how they need to make sure that they get all of their columns, worksheets, and formulas correct — and the downside of having a small calculation error mushroom exponentially, perhaps leaving them unprepared for the actual size of their tax liability.

If they want to try a financial management system, there are several, and they’ll provide business insights that can help year-round. Impress upon them the value of a system that automates data capture, shares information from bank and credit card accounts, and is easy to use. Now might be the right time to suggest they share their business and succession plans with you. Then you can provide the long-term, month in and month out accounting guidance that having their accounting buttoned up leaves time for.

The very act of offering your service means that small businesses will come to you for help, with their sometimes unique takes on recordkeeping. Giving them an outline of what you need, a good pep talk about why it’s good for them as a business owner, and your recommendation for a good all-in-one financial management system that they can handle, is the best route to success for both of you.

They’ll find insights that will benefit them all year long, not just at tax time. You’ll find a client who prizes you for your ability to provide relevant takes on their business. Together, you’ll both avoid future tax preparation process pain.