What Your Accountant Needs From You in January

Reconciled books through December 31

The single most important thing you can provide your accountant is books that are fully reconciled and closed through year-end. This means every bank account, every credit card account, every loan account balanced to its statement. If your books are not reconciled, your accountant will either reconcile them for you (at your expense) or work from unreliable numbers.

The single most important thing your accountant needs in January is books that are reconciled through December 31. Bank accounts, credit cards, merchant processors, all reconciled to statements. Without this, the accountant cannot produce reliable financials, and all the work that follows (tax returns, financial statements, projections) is built on sand.

If reconciliations are not done, the accountant's first job becomes doing them, which is expensive. Your accountant charges $150-300/hour to do what your bookkeeper can do at $50-75/hour. Investing in year-end reconciliation before handing off saves 3-5x on total accounting cost.

The documents they'll need

Beyond the trial balance, your accountant will need: 1099 information for any contractor paid more than $600 during the year, W-2s and payroll summary reports from your payroll provider, loan statements showing ending balances and interest paid, fixed asset additions and disposals during the year, and any other significant transactions that need supporting documentation.

Documents needed: prior year tax returns, bank statements for all accounts, credit card statements, loan statements, merchant processor reports (Stripe, Square, others), payroll reports for the full year, 1099s received, W-9s for any contractors paid over $600, fixed asset additions with invoices, any equity transactions with documentation.

Also provide: year-end inventory count if applicable, any outstanding legal matters or accruals, details on any insurance claims or settlements, and documentation of any unusual transactions that the accountant might have questions about. Gathering these proactively prevents the back-and-forth that slows down tax prep.

Questions to be ready to answer

Expect questions about any large or unusual expenses, the business purpose of any items that look personal, the status of any outstanding loans or notes, and any significant changes to the business during the year, new revenue streams, new legal entities, acquisitions, or major asset purchases. Having answers ready saves the back-and-forth that slows the process.

Questions your accountant will likely ask: did you have any major capital purchases, did you dispose of any equipment, did you take on any debt, did you make any equity issuances, did you have any related party transactions, are there any accrued bonuses or other year-end liabilities, and are there any material changes from prior year.

Pre-emptively answering these in writing saves the accountant time and you money. A one-page summary at the top of your document pack that says "notable items for 2024: we took a $200K line of credit in September, we bought $75K of equipment in October, we issued 100K new options in December" orients the accountant and flags the things worth double-checking.

Setting realistic expectations

Tax prep takes time even with clean books. If you need your returns by a specific date, for a raise, for a bank requirement, or for your own planning, communicate that to your accountant at the start of January, not in late March. If the deadline is tight, ask what you can do to accelerate their process.

Realistic expectations: quality accountants are busy in tax season. A return that could be done in 2 weeks in July might take 6-8 weeks in March. If you need a return completed early, commit to the document delivery early, ideally before January 31. Accountants prioritize clients who provide complete information on time.

Also plan for extensions. Most growing companies file extensions for the corporate return because the effort of finalizing December numbers in January-February is often rushed. Filing the extension in March and finishing the return in August-September gives time to do it properly. Extensions are not a sign of problems; they are standard practice for companies with complex books.