Making Your 2021 (and Future) Tax Seasons Stress Free

Updated: Apr 29, 2021

In a Pew Research study, 56% of Americans disliked doing their taxes, and 26% of those said they ‘hated’ doing their taxes! Unarguably, that feels relatable.

Taxes are complex - they depend on so many factors, and the tax code seems to be changing continually. If you stay on top of your accounting throughout the year, taxes may seem manageable yet still unenjoyable. But I’d like to see a raise of hands from those who only update their finances because tax season is around the corner, and it ‘has to be done.’ Don’t be shy; we’ve all been there at some point!

Here are the top 5 list of tasks you can start doing today for an easier tomorrow to make tax season stress-free.

Business Information

Being prepped for tax season starts with the basics and a little organization. Gather all of your business documentation and put them in one easily identifiable place. I always suggest a folder in your Google drive as you can access it from anywhere and easily share or forward that information with your CPA. Here is what is in my ‘Business Documentation’ folder:

  • Articles of Organization

  • Periodic Reports to the Secretary of State

  • Previous Tax Returns and Quarterly payments

  • Payroll and Sales Tax History

  • 1099s, both that I’ve received and sent

  • EIN

  • W9

Chart of Accounts

Having a clear and concise chart of accounts is two-fold.

One, it lets you better understand your business throughout the year. If you put every expense into one category, how do you really know what you're spending your money on? On the contrary, if you have too many accounts, your financial statements become unnecessarily long and too drawn out to read and easily understand.

Two, your CPA will appreciate a detailed, yet concise chart of accounts. They’ll know exactly what is going on in your business and it will take them less time (saving you money) to file your taxes. Further, certain expenses are only partially deductible (such as entertainment) and having that separated in a clear way is very beneficial and important.

Income Statements, Balance Sheets, & Reconciled Accounts

Reconciling your bank, credit card, loan, and other similar accounts in your accounting software is critical to producing tax-ready documents. You might say, 'all of my accounts are linked, so they should be reconciled and match my bank.' I would argue that it is very easy to create duplicate revenue and expenses in accounting software. I see it all the time when onboarding new clients!

If you duplicate your revenue, you are going to show that you owe more tax than you do. Nobody wants that. If you duplicate expenses, you might pay less, but you put yourself at risk for penalties when an audit inevitably comes around. Reconciling your accounts monthly will expose those duplicates, and it allows you to fix those errors. Further, you know the data you are looking at in your accounting software is correct, and you can confidently use it to drive business decisions throughout the year.

Lastly and most importantly, reconciled accounts and a concise chart of accounts will provide you with accurate Income Statements and Balance Sheets. Depending on your business structure, your CPA will require one or both of these documents as they tell your business's story to the IRS.


This can be split in two different ways:

You owe 1099s: If you pay contractors more than $600 per year, you will more than likely owe them a 1099. With a good accounting process, you track those contractors and LLCs throughout the year, and your accounting software will spit out a nice report for you. This includes gathering their legal business name, their EIN or SSN, and address. Similar to tracking your own business information, all of your contractors should have a folder.

If you don’t manage this, you’ll have to contact each of these individuals or entities at tax time. If you don’t track their payments, you may have to go back and find invoices or payments to calculate what you compensated each. This can end up being a mountain of work on top of what you already have going on. Keep in mind that 1099s are due by February 1!

You are owed 1099s: If you are a sole proprietor or single-member LLC (not an S-Corp), you will likely need to get 1099s from those you worked for. Make sure they have your legal business information and track what they’ve paid you throughout the year. When you get your 1099, match the payment amount to ensure your earnings are being reported correctly.

Quickbooks Tax Prep

In Quickbooks specifically, there is a Tax Prep feature that lets you export a tax map and any adjustments made to your books throughout the year. These documents make it much easier to input your financial information when doing taxes yourself. It also makes it much more straightforward for a CPA and will allow them to ask better questions.

Staying on top of your accounting throughout the year and having the proper documentation come tax season is the key to eliminating stress. If you are unsure about documentation or accounting processes, have a quick chat with your bookkeeper, accountant, or CPA. If you don’t have one of those, hiring at least one will undoubtedly help further eliminate any stress.

Here at Pinto Bookkeeping, we work with your CPA directly. Or you can work with our partner CPA, where we handle the dirty work and essentially remove you from the tax process.

At Pinto, we work with you to update your chart of accounts, we reconcile monthly, prepare 1099 reports, provide income statements and balance sheets, and any other documentation needed.

Let Pinto handle all the ‘boring tax stuff’ with the CPA of your choice. Just ask our clients - they’ve never had an easier tax season!

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