Small business tax organizer that starts with the entity type

Most organizers for businesses open with names and addresses. This one opens with the tax classification, because it settles which return the preparer builds. The tax classification is how the IRS treats the business for income tax, and it can differ from the legal form filed with the state (IRS, Limited Liability Company (LLC)).

An LLC is the usual source of confusion. A domestic LLC with at least two members is a partnership unless it elects to be taxed as a corporation, and a one-member LLC is disregarded unless it makes that election (IRS, Limited Liability Company (LLC)). So the label "LLC" alone does not tell the preparer which form to open.

Spouses who run a business together are a second trap. If they jointly own and operate an unincorporated business and share profits and losses, they are partners and file Form 1065 instead of Schedule C (IRS Publication 334, Tax Guide for Small Business). They can elect to be a qualified joint venture instead, but a business run through an LLC does not qualify (IRS Publication 334, Tax Guide for Small Business). In a community property state, such as California or Texas, spouses who wholly own the business as community property may treat it as a sole proprietorship or a partnership (IRS Publication 334, Tax Guide for Small Business).

The IRS lets a business keep any recordkeeping system that clearly shows its income and expenses (IRS, Recordkeeping for small businesses). What matters to the preparer is that the totals trace back to paper. Purchases, sales and payroll create paper of their own (IRS, Recordkeeping for small businesses). Put simply, supporting documents are the invoices, receipts, deposit slips and statements behind each entry in the books.

The organizer asks for the year-end profit and loss report and the balance sheet first. It then asks for the December statement of every business bank account, card and loan. Those statements let the preparer tie the cash in the books to the bank, and the loan statements show the year-end balance and the interest paid.

The burden of proof sits with the business. You must be able to prove certain elements of an expense to deduct it (IRS, Recordkeeping for small businesses). A total from the software, with no statement or receipt behind it, is the weakest answer an owner can give.

Gross receipts come from the books, but the IRS also sees some of them through information returns. A payment app or online marketplace must send Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions (IRS, Understanding your Form 1099-K). It may send one for lower amounts too (IRS, Understanding your Form 1099-K). Card payments follow a different rule: when customers pay by credit, debit or gift card, the card processor sends Form 1099-K no matter how many payments or how much (IRS, Understanding your Form 1099-K).

Customers who pay the business for services may send Form 1099-NEC or Form 1099-MISC. The organizer asks for each form received, not a total, so the preparer can check that every one is inside reported sales. A card payment that also shows up on a customer’s Form 1099 is a classic double count to look for.

• Inventory businesses also answer the cost of goods sold block: opening stock, purchases and closing stock, such as a December count sheet.
• Sales tax collected is not income to the business. Ask whether the books record it in a separate liability account.

The other side of the 1099 question is what the business must issue. For tax years beginning after 2025, the reporting threshold for these payments rose to $2,000 (Instructions for Forms 1099-MISC and 1099-NEC). The threshold may be adjusted for inflation starting in calendar year 2027 (Instructions for Forms 1099-MISC and 1099-NEC).

Form 1099-NEC must be filed on or before January 31 (Instructions for Forms 1099-MISC and 1099-NEC). That deadline lands before most organizers come back, so the questions ask for copies of what was filed and a Form W-9 for each contractor. A missing W-9 is easier to fix in January than in April.

If the business has employees, the organizer asks for the quarterly and annual payroll returns and the W-2 summary. Those filings tie wages in the books to what was reported, and the preparer needs them for the payroll expense lines on every entity return.

Fixed asset questions need a date, a cost and an invoice for each item bought or sold. Good records keep track of your basis in property (IRS, Recordkeeping for small businesses). Here, basis is the starting figure for depreciation, and for the gain when you sell. The prior-year depreciation schedule tells the preparer what is already on the books.

Vehicles need miles, not just receipts. For 2026 the IRS business mileage rate is 72.5 cents a mile from January 1 to June 30 (IRS, Standard mileage rates). The rate is 76 cents a mile from July 1 to December 31, 2026 (IRS, Standard mileage rates). A log by date is the only way to split the miles between the two rates.

Home office questions depend on the entity. A sole proprietor claims it on Schedule C, while an owner of a corporation is usually reimbursed by the company. The organizer asks who paid the costs, then routes the details to the right line.

Owner money moves in and out in ways the books often lump together. The organizer asks for owner contributions, draws or distributions, owner health insurance and retirement plan deposits. Each one lands somewhere different depending on the entity, for example a draw is not an expense, but an S corporation owner’s salary is.

Changes are the questions owners skip most. A new owner, a sale of shares, a closed location or a business sold can change the return type or require a final return. An IRS or state notice received during the year belongs here too. If you are unsure, use the LLC tax organizer to settle the classification before you answer the rest.

• IRS, Limited Liability Company (LLC): A domestic LLC with two or more members is a partnership and a one-member LLC is disregarded, unless it elects to be taxed as a corporation.
• IRS Publication 334, Tax Guide for Small Business: Spouses who jointly own and operate an unincorporated business are partners filing Form 1065, unless they elect qualified joint venture status (an LLC does not qualify) or own it as community property.
• IRS, Recordkeeping for small businesses: Any system that clearly shows income and expenses is allowed; supporting documents back the books, records track basis, and the business carries the burden of proof.
• IRS, Understanding your Form 1099-K: Payment apps and marketplaces send Form 1099-K when payments total over $20,000 in more than 200 transactions, and may send one for less; card processors send one for any amount.
• Instructions for Forms 1099-MISC and 1099-NEC: For tax years beginning after 2025 the reporting threshold is $2,000, and Form 1099-NEC must be filed by January 31.
• IRS, Standard mileage rates: The 2026 business rate is 72.5 cents a mile from January 1 to June 30 and 76 cents a mile from July 1 to December 31.