Business Tax Compliance Checklist

Pull the IRS CP-575 or last-filed return to verify the EIN and entity election. Mismatches between the books (LLC) and the tax filing (1120-S election under Form 2553) are a frequent cause of mis-filed returns. Capture the filing form so downstream steps route correctly.

Confirm the Power of Attorney (2848) and Tax Information Authorization (8821) on file cover the current preparer and the year being filed. Stale POAs are the most common reason a preparer can't pull a transcript when an IRS notice arrives.

Update each owner's stock and debt basis for distributions, contributions, and prior-year K-1 income/loss items. S-corps without current basis schedules routinely lose loss deductions in IRS exam — Form 7203 has been required since 2021.

Send the engagement letter through Practice Ignition or TaxDome with scope, fees, and deliverable. Attach the Prepared-By-Client (PBC) list — trial balance, payroll registers, fixed-asset additions, loan statements, K-1s received, prior-year return — with named due dates.

Export the working trial balance from QBO or Sage Intacct and tie beginning balances to the prior-year Form 1120-S / 1065 / 1120 Schedule L. Investigate any retained-earnings rollforward variance before opening the return — a beginning-balance break will flow through every M-1 and K-1.

Reconcile gross wages on the GL to the four 941s and the annual W-3 totals. Reconciling items are usually pre-tax 125 deductions, third-party sick pay, or imputed income for >2% S-corp shareholders — flag the latter for the W-2 Box 14 entry.

Run the vendor payments report for the year, filter to non-corporate service vendors paid >$600, and confirm a W-9 on file. Missing W-9s trigger backup-withholding exposure under §3406. Don't pull 1099 candidates from accounting software's default flag — it misses payments routed outside QBO.

Pull revenue and transaction counts by ship-to state. Compare each state to its post-Wayfair threshold (commonly $100K in sales or 200 transactions; some states sales-only). Flag any new state crossings for income-tax and sales-tax registration.

Register for income-tax and sales-tax accounts in each new state through the state DOR or via Avalara. Look up each state's voluntary disclosure agreement (VDA) program if the threshold was crossed in a prior period — VDAs typically waive penalties and limit lookback to 3-4 years.

Use the chart-of-accounts mapping from the prior year. Re-map any new GL accounts before import — unmapped lines land in suspense and are easy to miss. Confirm beginning balances tie to the prior return after import.

Walk through the standard M-1 lines: 50% meals, federal tax expense, life-insurance premiums on key personnel, accrued bonuses unpaid within 2.5 months, and book/tax depreciation difference. Document each adjustment in the workpaper so the reviewer doesn't re-derive them.

Add current-year asset additions to the Form 4562 schedule. Confirm Section 179 election against business income limit and bonus depreciation phase-down (80% in 2023, 60% in 2024, 40% in 2025). Watch for listed property and luxury-auto caps.

Allocate per the operating agreement, not per stock percentages — special allocations and guaranteed payments often diverge from ownership. Confirm Section 199A (QBI) Box 17 / Box 20 codes are populated; missing QBI info forces owners to assume zero deduction.

Document the reasonable-basis or substantial-authority analysis for any uncertain position under §10.34. Confirm preparer has inquired into items that appear incorrect or inconsistent (§10.22) and that the return signer's PTIN is current.

Reviewing partner walks the return, workpapers, and review notes. Capture the disposition (release, hold for client questions, send back for rework) plus any reviewer comments and the signature block.

If K-1s, brokerage 1099s, or basis schedules aren't final, extend rather than file a return that will need amending. Remember an extension is for filing, not payment — owner-level estimated tax must still go in by the original deadline.

E-file Form 7004 (business returns) or 4868 (individual). Pair with a payment voucher for any estimated balance due — extending without paying still accrues failure-to-pay penalties at 0.5% per month plus interest. File state extensions separately where the state doesn't auto-conform.

Confirm Form 8879 / 8453 e-file authorization is signed and dated before transmitting. Watch for IRS acknowledgment within 24 hours; rejected returns must be corrected and re-transmitted within 5 days to be considered timely-filed.

Set up Form 1040-ES or 1120-W vouchers using safe-harbor (110% of prior year for AGI >$150K, otherwise 100%) or current-year projection. Enroll the client in EFTPS for direct ACH so payments don't depend on mailed checks.

Upload the filed return, K-1s, e-file acknowledgment, estimated-payment vouchers, and an executive summary memo to TaxDome / SmartVault / Liscio. Roll the organizer forward for next year and archive workpapers per the firm's 7-year retention policy.

Common post-filing notices: CP2000 (matching), CP14 (balance due), CP504 (intent to levy), state nexus questionnaires. Pull a transcript through the 8821 / 2848 within 5 business days of any notice — never rely on the client's photo of the letter alone.

Calendar the response deadline (CP2000 is 30 days; most state notices 30-60). Pull supporting workpapers from the engagement archive, draft the response with citations, and route through partner review before mailing certified or uploading to the IRS Document Upload Tool.