How to Prepare for Tax Season 2024

So, it’s time to get moving. Today, we will first deal with step one: tax and financial document organization. Then, we’ll move on to essential deductions and credits. Let’s talk about the first steps you need if you want to know how to prepare for tax season 2024.

Here’s a quick reminder: the last quarterly payment for 2023 is due on Jan. 16, 2024.

1. Gather 2023 tax documents. Here’s a checklist of what you’ll need.

I touched on accounting processes last month, but let’s get straight to the most basic form of preparation: retrieving and organizing tax and financial documents.

Get a copy of last year’s business tax return.

If your accounting and record-keeping processes have changed or you’ve lost a team member responsible for recordkeeping, you can retrieve your return directly from the Internal Revenue Service (IRS).¹ If you work with a Certified Public Accountant, ask for help. Make a decision and stick to it. This is all part of getting ready for tax season.

Start producing an income statement (or profit & loss statement).

Your income statement tracks the revenue, expenses, gains, and losses over a particular period. Consider whether you’ll provide year-end income statements covering the company’s latest fiscal year or opt for monthly, quarterly, or semi-annual statements.

Partnerships must include income, gains, and losses as part of their business tax return via Form 1065.² Remember, this is an informational return. Taxable income is collected from the members via self-employment taxes. We’ll get to that later.

Ensure that you have access to an accurate balance sheet.

Only C-corporations need to include a balance sheet for tax purposes. Getting last year’s document set up for 2024 is still a good idea.

Find your 2023 cash flow statement.

This is another financial document that should be ready for entry. Last year’s could be a valuable tool for tax planning, though it’s not something you need to provide for taxes.

Additionally, you’ll need to make sure that a tax professional or in-house accountant has gathered the following items from 2023:

  • Business Expense Receipts
  • Investment Income Records
  • Bank and Credit Card Statements
  • Payroll Records
  • Records of Quarterly Estimated Tax Payments

Organize these documents for a streamlined planning and filing process.

2. Understand your taxable income.

Today, I’ll break down the tax forms for your typical Limited Liability Company (LLC) that is taxed as a partnership.

  • Business Income – As mentioned earlier, partnerships provide business income as part of an informational tax return.
  • Self-Employment Income – Profits “pass-through” to members of a partnership or LLC taxed as a partnership, so the members of the business are in possession of the taxable income (self-employment tax).³ This is also a quarterly exercise.⁴

3. Review the implications for different business entities.

Each business entity has distinct tax implications affecting how income is reported, and taxes are calculated. Businesses should work with a tax attorney if they want to change entity structure, then consult a tax professional for tax advice.

Whether you want to make the change depends on your size, industry, growth objectives, and tax planning strategies. Restructuring your business or changing how you file your taxes can save you money.

For instance, should your LLC file as an S corp?

4. Identify tax deductions.

Start by evaluating whether your business is currently positioned to take advantage of these essential tax deductions:

  • Operating Costs: Expenses incurred during normal business operations, like rent, utilities, and supplies.
  • Home Office Deductions: For businesses operating from home, a portion of mortgage interest, insurance, and utilities are deductible.
  • Vehicle Expenses: Mileage or actual vehicle expenses if used for business.
  • Employee Salaries and Benefits: Includes wages, bonuses, and retirement plan contributions.
  • Advertising and Marketing Costs: Expenditures for promoting your business.
  • Education Expenses: Training or courses related to your business.
  • Depreciation: Deductions that cover the incurred cost of tangible assets over their useful life.

Ok, now take a second look at the list and consider the HR, operational, and sales initiatives that your business may positioned for in the future. For example, if you’re planning on moving to a remote work model, at least for you, a partner, or multiple owners, get ahead of the ball.

Let’s say you start the new year vowing a renewed push in marketing. What can you spend on marketing that’s not going to disrupt cash flow but is likely to produce results? Expenses are expenses. Looking ahead is important if you want to know how to prepare for tax season.

5. Explore these four recently updated tax credits.

Several tax credits can offer significant savings and tax refunds to eligible taxpayers:

New Markets Tax Credit

For businesses seeking to invest in new customer groups and future opportunities in underserved areas. See my article on the new markets tax credit program for more information.

Research & Development (R&D) Tax Credit

For businesses engaged in certain types of research and development. Only 3 in 10 qualifying small businesses claim the R&D tax credit. Look into it.

Work Opportunity Tax Credit

For hiring employees from certain groups facing significant barriers to employment.

Energy-Efficient Commercial Buildings Deduction

For energy-efficient improvements to commercial buildings.

This is a partial list. Note that some credits may have specific eligibility requirements.

6. Reconsider your tax preparation and filing options.

Let’s talk about how to prepare for tax season in regard to simple tax preparation. Is it time to bring in a professional or CPA?

Filing through tax software or by mail (in-house or D.I.Y.)

  • Pros: Software is often an appropriate and efficient choice for sole proprietors or single-member LLCs with relatively few transactions. An in-house accountant could be a cost-effective choice.
  • Cons: For growing businesses with a high number of transactions and complex tax situations, using tax software without a licensed professional is simply irresponsible.

Filing with a Certified Public Accountant (CPA)

  • Pros: Licensed tax experts maximize savings through deductions and credits, file tax documents correctly, and take the burden of taxes off of business leaders. In the event of an audit, your CPA handles the IRS.
  • Cons: For most small and large firms, the cost of hiring a quality CPA is easily covered by tax savings. However, small businesses that are not producing income should consider other means of tax preparation and filing.

7. Take steps to avoid filing errors that result in fines.

When I think about how to prepare for tax season, I’m going to make sure my clients stay vigilant regarding opportunities but also keep in mind the most common and costly mistakes:

  • Incorrect Income Reporting
  • Overlooking Deductions
  • Not Filing On-Time
  • Forgetting to Sign
  • Mathematical Errors

Employing a tax professional is the best strategy to avoid these mistakes.

Is it time to get serious with a tax professional?

Working with a tax professional does more than just save time. Many clients find that, even after accounting for service fees, they walk away with more financial benefits than if they had managed their taxes independently.

Tax planning services ensure compliance with tax obligations and optimize potential tax savings. If you’re ready to approach tax season with ease and increase tax savings for your business, I’m a phone call away.

Schedule a consultation, and we’ll get started.

Talk soon,
Jeremy A. Johnson, CPA


  1. Internal Revenue Service | An official website of the United States government [Internet]. Get Transcript | Internal Revenue Service; [cited 2023 Dec 19]. Available from: https://www.irs.gov/individuals/get-transcript
  2. Internal Revenue Service | An official website of the United States government [Internet]. About Form 1065, U.S. Return of Partnership Income | Internal Revenue Service; [cited 2023 Dec 22]. Available from: https://www.irs.gov/forms-pubs/about-form-1065
  3. Internal Revenue Service | An official website of the United States government [Internet]. [cited 2023 Dec 22]. Available from: https://www.irs.gov/pub/irs-pdf/f1040sse.pdf
  4. Internal Revenue Service | An official website of the United States government [Internet]. [cited 2023 Dec 22]. Available from: https://www.irs.gov/pub/irs-pdf/f1040es.pdf
Meet the Author
Jeremy A. Johnson, CPA, is an expert in strategic tax planning, accounting, CFO services, and thought leadership.

Jeremy writes for small business owners who need actionable information on tax strategy, efficient accounting practices, and plans for long-term growth.

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