The short answer is reconcile all accounts, categorize every transaction, and gather documentation before handing anything to your CPA. The longer answer depends on how well you’ve kept up during the year.

Start with bank and credit card reconciliations. Every account should be reconciled through December 31. This catches duplicate charges, missing deposits, and transactions that slipped through. If you’re months behind on reconciliations, tackle this first because nothing else is accurate until the accounts match.

Review every transaction and make sure it’s categorized correctly. Search for “uncategorized” or “Ask My Accountant” entries in QuickBooks and fix them. Your CPA can’t properly prepare your return if they’re guessing what 47 miscellaneous charges were for. Look for personal expenses that accidentally hit business accounts and move them to owner’s draw or shareholder distributions.

Check your accounts receivable. If customers owe you money you’ll never collect, write it off before year-end so you’re not paying taxes on income you won’t receive. Review prepaid expenses too. If you paid a vendor in December for work happening next year, that may need to be recorded as a prepaid expense rather than a current-year deduction.

Prepare 1099s for any contractor or vendor you paid $600 or more during the year. The deadline for sending these is January 31. Gather W-9s now if you’re missing them. Massachusetts also requires filing 1099s with the state, so factor that into your timeline.

Reconcile payroll reports with what actually left your bank account. Verify all Q4 payroll taxes were filed and paid. Year-end W-2s need to go out by January 31 as well.

Review fixed assets. Did you buy equipment, vehicles, or make significant improvements this year? Those need to be recorded properly for depreciation. Did you sell or dispose of anything? Your CPA needs to know about those transactions.

Gather supporting documentation for large deductions, vehicle mileage, home office measurements, and major equipment purchases. If the IRS asks questions, your CPA needs something beyond a bank statement to point to.

Run your year-end reports and review them. Profit and loss, balance sheet, and general ledger. Look for numbers that seem wrong. A month with unusually high expenses, negative asset balances, or income that doesn’t match reality. Catching errors now is easier than explaining them during an audit.

Create a folder with everything your CPA needs: year-end financials, bank statements, loan statements, depreciation schedules from last year, and notes on any unusual transactions. The easier you make their job, the faster and cheaper your tax prep will be.

If your books are behind, catch-up bookkeeping can get your financials current and accurate before tax season instead of having your CPA sort through the mess at their billing rate.

The real answer to this question is that tax prep should happen all year. When transactions get categorized monthly, accounts reconciled regularly, and documentation saved as you go, year-end becomes a quick review rather than a scramble. A bookkeeper for small business handles this ongoing so you’re never behind when tax season arrives.