Preparing Your Books for Taxes When You DIY: A Step-by-Step Guide

Tax season is stressful when you DIY your books, not because taxes are impossible, but because uncertainty compounds. The antidote is a clear, repeatable process you run before handing anything to your tax preparer. This step‑by‑step guide will help you present clean, defensible numbers and avoid last‑minute scrambles.

Reconcile every bank and credit card account through December 31 (or your fiscal year‑end). Download and save the reconciliation reports and statements. Your tax preparer will assume that reconciled accounts are accurate; unreconciled accounts invite questions — and billable hours.

Clear Uncategorized Income and Expense to zero. Review the detailed transactions, reclassify appropriately, and add bank rules to prevent recurrence next year. Document any judgment calls so you can explain them consistently.

Review owner transactions. Separate draws and contributions from business activity. If you used personal funds for business purchases, record owner contributions with the appropriate expense accounts so deductions aren’t lost.

Check fixed assets. Any large equipment, vehicles, or property improvements should be on the Balance Sheet, not expensed outright unless they qualify under your capitalization policy. Create an “Unassigned Fixed Assets” expense category to gather candidates for capitalization and review with your preparer.

Prepare year‑end reports: P&L, Balance Sheet, General Ledger, and a list of major changes year‑over‑year. Add a short cover memo summarizing anomalies (new loan, moved payment processors, one‑time events). You’ll reduce back‑and‑forth and build confidence in your numbers.

If you’d rather not live in your books during the least convenient month of the year, SimplifiBooks can perform a monthly confidence check so year‑end becomes a handoff, not a rescue mission.