How to Set Up Your Contractor Business for Tax Season

The Shoebox Problem

If your tax prep involves digging through a shoebox of receipts in March, you're doing it wrong — and paying your accountant 3× what you should.

The Year-Round System

Monthly

• Review all invoices sent and payments received
• Categorize business expenses (materials, fuel, tools, insurance)
• Save receipts for purchases over $75
• Reconcile business bank account

Quarterly

• Calculate and pay estimated taxes (Apr 15, Jun 15, Sep 15, Jan 15)
• Review profit margins by job type
• Update mileage log

Annually

• Issue 1099s to subcontractors by January 31
• Gather all W-2s and 1099s received
• Review depreciation schedule for equipment
• Meet with accountant by February

The 5 Documents Your Accountant Needs

1. Income summary (all invoices/payments for the year)
2. Expense summary by category
3. Mileage log
4. List of all 1099 subs paid
5. Equipment purchases and depreciation schedule

If you use invoicing software, most of #1 is already done — just export your reports.

"My accountant charges $600 now instead of $2,200. The only thing that changed was I show up organized." — Mike S., Grand Rapids MI

Your next step: Set a 15-minute monthly calendar reminder: "Review business finances." That's all it takes to stay tax-ready year-round.