Tax Prep Checklist: 7 Essential Steps to Avoid December Panic

The best time to have a year-end tax conversation is NOT December 30th.

And yet, every December, that’s exactly when it happens. The calls start rolling in the week between Christmas and New Year’s — business owners suddenly remembering that tax season exists, scrambling to pull together a year’s worth of receipts, and asking questions that really needed to be asked back in October. By then, most of the good options are already off the table.

Here’s the good news: it’s October, which means none of that has to be you this year. This tax prep checklist doesn’t require financial analysis or big decisions — just a bit of gathering, checking, and one conversation, while there’s still time to act on what you find.

1. Gather Missing Receipts and Documentation

The risk here is real — it’s deductions you’re actually entitled to that you can’t claim because you can’t back them up. Cash purchases, older digital receipts buried in email, vendor invoices that never made it into a folder — it adds up faster than most owners expect.

This isn’t the same thing as bookkeeping being “caught up.” Your books can be fully reconciled and accurate, and you can still be missing the actual paper trail behind those transactions. One is about the numbers being recorded correctly; this is about being able to prove them if anyone asks.

Do this: Set aside an hour to pull together anything sitting in inboxes, glove compartments, or “I’ll file it later” piles. A centralized storage location is a good start.

2. Review Fixed Assets and Equipment Purchases

If you’ve already bought equipment, vehicles, software, or furniture this year, the question now isn’t was this a good purchase — it’s whether it’s properly recorded. That means the correct cost, the date it was placed in service, and the paperwork to back it up. Depreciation elections and certain deductions hinge on those details being right, not just on the purchase having happened.

(If you’re still deciding whether to make a year-end purchase, that’s a different conversation — check out our Year-End Review article for more info.)

Do this: Pull a list of anything purchased this year over $2,500 and confirm it’s recorded with proper documentation.

3. Check Payroll and Owner Compensation

A few things you can’t afford to miss reviewing: reasonable compensation if you’re an S-corp, any bonuses you’re planning, and whether anyone classified as a contractor is really functioning like an employee. October matters specifically because payroll corrections and reclassifications get more expensive and more complicated the closer you get to W-2 and 1099 season — fixing something in October is a quick adjustment; fixing it in December is a much bigger project.

Do this: Review your year-to-date owner compensation and flag anything that looks off — salary that seems low relative to distributions (this includes insurance and retirement for S-corp owners), contractors who might actually be employees (or actual employees paid like contractors), or bonus plans that haven’t been finalized.

4. Verify Business and Personal Expenses Are Properly Separated

This one’s common enough: the business card that occasionally covers a personal purchase, the personal account that occasionally covers a business one. It happens. But commingled expenses create real exposure if you’re ever audited, and just as importantly, they make your own financials less trustworthy as a tool for understanding your business — which matters if you’re using them to make decisions.

Do this: Scan year to date transactions of both accounts for anything that crossed the line, and get it reclassified properly now rather than trying to reconstruct it in March. If you’re working with our bookkeeping team, be sure to respond to their transaction clarification requests as soon as possible — we’re actively gearing up for year-end!

5. Review Mileage and Vehicle Records

If you drive for both business and personal reasons, mileage logs are one of the easiest things to let slide — and one of the harder things to reconstruct months later. Whether you use the standard mileage rate or actual expenses, the record-keeping requirement is the same either way, and a thin or missing log is exactly the kind of thing that turns into a problem later.

Do this: If you haven’t been logging consistently, reconstruct what you can now while the year is still fresh, and set up a simple system for the rest of the year. There are several mobile apps that make mileage tracking a breeze — we’ve heard from several clients that MileIQ is easy to use.

6. Talk to Your CPA About Tax-Saving Strategies Before December

This is the one that makes the whole list worth doing. Retirement plan contributions and setup deadlines, equipment purchase timing, entity structure considerations, shifting income or expenses between this year and next — these are decisions made during the year, not after it. By the time most owners sit down with their CPA in December, the calendar has already closed most of these doors.

Do this: Schedule a planning conversation now, while there’s still time to act on whatever comes out of it.

7. Make a List of Anything Unusual That Happened This Year

Last one, and it’s a catch-all on purpose: a new business line, record profit or loss, a large one-time sale, an ownership change, a settlement, a major asset sale — anything atypical this year is worth a heads-up conversation, even if it doesn’t seem tax-related on the surface. Unusual events often carry tax consequences that don’t occur to owners until it’s too late to plan around them.

Do this: Jot down anything that felt different about this year and bring it to your CPA conversation.

Bringing It Together

None of this is complicated, and none of it takes long if you do it now.

Ready to get ahead of it? Reach out to schedule your year-end tax planning conversation now, before the holiday rush hits and every calendar — yours and ours — fills up fast.