The Two Essential Financial Reports Taxpayers Need Before Tax Season

By Belshaw Accounting Tax & Advisory Services LLC

Be Prepared and Stay Ahead This Tax Season

As tax season approaches, being organized can save you time, money, and unnecessary stress. Walking into your accountant’s office with the right reports not only speeds up the process. It also ensures your return is accurate, optimized, and free of last-minute surprises.

If you’re a small business owner, freelancer, or S corporation shareholder, there are two essential financial statements that every accountant including the experts at Belshaw Accounting Tax & Advisory Services LLC will need from you:your Income Statement and Balance Sheet.

Let’s explore what these reports are, why they matter, and how to make sure they’re ready for review.

1️⃣The Income Statement (Profit & Loss Report)

Your Income Statement, often called a Profit and Loss Statement (P&L), shows your revenue, expenses, and overall profit for a specific period typically your fiscal year.

This crucial report helps your accountant:

✅ Verify Business Income: Confirms your total annual revenue for accurate tax filing.

✅ Identify Deductions: Highlights deductible expenses you may have missed potentially saving you thousands.

✅ Analyze Performance Trends: Compares current and past years to identify growth patterns or red flags like rising costs.

In short, your Income Statement offers a clear view of how much your business earned versus what it spent an essential step in understanding profitability.

💡 Pro Tip from Belshaw Accounting:Ensure your income statement spans the full tax year (January through December) and categorizes expenses clearly. Examples include:

• Advertising & Marketing: e.g., $5,000 in social media ads.

• Office Supplies: Monthly purchases such as paper or printer ink.

• Vehicle Expenses: Document mileage and fuel if used for business.

• Professional Fees: Include payments for legal, bookkeeping, or accounting services.

  
  

2️⃣The Balance Sheet (Your Business’s Financial Snapshot)

Your Balance Sheet provides a “snapshot” of your business’s financial health at a specific

moment. It shows what you own, what you owe, and what’s left over your equity.

This statement includes:

✅Assets: Cash, accounts receivable, inventory, and equipment.

✅Liabilities: Credit cards, business loans, and taxes payable.

✅Equity: The remaining value after debts are subtracted your ownership stake.

A strong Balance Sheet not only reflects stability but also helps your accountant ensure your records are balanced and ready for year-end reconciliation especially for items like payroll liabilities or retained earnings.

3️⃣ Why These Reports Matter for Tax Season

Having these reports ready means:

✅ Your accountant can prepare accurate returns

✅ You can spot cash flow or profit issues early

✅ You’ll avoid last-minute stress and costly clean-up work

Even more importantly accurate statements give your accountant the foundation to uncover tax-saving strategies, such as:

💰 Adjusting owner compensation

💰 Maximizing Section 179 deductions

💰 Planning retirement contributions

4️⃣ What If You Don’t Have These Reports Yet? Get Organized for a Stress-Free Tax Season

Tax season doesn’t have to be stressful not when you’re prepared. Having your Income Statement and Balance Sheet ready will make your accountant’s job smoother and give you greater insight into your business’s financial performance.

These reports do more than help with tax filing they help you make better business decisions, spot cash flow issues early, and uncover valuable deductions.

If you’re not sure where to start or your books aren’t up to date, Belshaw Accounting is here to help. Our bookkeeping clean-up and year-end prep services ensure your financials are accurate, organized, and ready for tax season.

Let Belshaw Accounting Help You Get Tax-Ready Today!

Tax season can feel overwhelming, but having your Income Statement and Balance Sheet prepared can lighten the load.

By making sure these documents are complete and well-organized, you can save time, reduce stress, and even discover valuable deductions.

As you prepare for tax season, dedicate time to gather these crucial financial statements. Your future self will appreciate the effort!

📅 Book your tax prep consultation now.