Tax Prep

When to use

Use this ahead of a quarterly estimated-tax deadline or at year-end to organize what the owner needs to file or hand to their accountant — so nothing is missed and the accountant's time isn't spent on cleanup.

Not for: tax advice or filing (the owner and a licensed accountant review and file); submitting payments or forms; bookkeeping reconciliation (use smb-month-end-prep).

Method

1. Set the job. Quarterly estimate or year-end (1099s, annual packet), and the period/deadline.
2. Summarize income and expenses. Revenue and deductible expenses by category from the books for the period.
3. For quarterly estimates. Compute estimated taxable income, apply the owner's effective rate or safe-harbor basis, show the estimated payment and due date. Decision point: label the tax figure an estimate, not filed advice, every time.
4. For year-end 1099s. List contractors paid over the reporting threshold, flag missing W-9s/TINs, total per payee. Decision point: an incomplete W-9 is a stop-and-collect before filing, not a guess.
5. Build the accountant packet. P&L, category totals, reconciliations, asset purchases, and open questions in one organized handoff.
6. List gaps. Missing receipts, uncategorized spend, unanswered items. The owner and accountant review, approve, and file; do not submit payments or forms.

Example

Q2 estimate. Income $62,000, deductible expenses $28,000 → taxable ~$34,000. Owner's effective rate 22% → estimated payment ~$7,480, due June 15 (estimate only — confirm with accountant). Gaps: 4 expenses uncategorized ($1,900), 2 receipts missing. Packet: P&L, category totals, open questions. Handed to the owner to review before it reaches the accountant.

Pitfalls

• Presenting an estimate as a filed or final number — always label it and point to the accountant.
• Filing 1099s with incomplete W-9/TIN data instead of flagging and collecting first.
• Missing contractors that crossed the reporting threshold across multiple small payments.
• Handing over a packet with uncategorized spend, forcing the accountant into cleanup you could have flagged.

Output format

• Job type / period / deadline.
• Income & expense summary by category.
• Quarterly: estimated taxable income | estimate | due date (estimate only).
• 1099s: payee | amount | W-9 status | threshold flag.
• Accountant packet contents.
• Gaps & open questions (for owner/accountant); nothing filed or paid without their sign-off.

Reference

Quarterly estimated-tax deadlines (US federal)

Quarter	Income period	Due date
Q1	Jan 1 – Mar 31	Apr 15
Q2	Apr 1 – May 31	Jun 15
Q3	Jun 1 – Aug 31	Sep 15
Q4	Sep 1 – Dec 31	Jan 15 (next year)
(If a date falls on a weekend/holiday, it shifts to the next business day. State estimates often mirror these — confirm the owner's state.)

Safe-harbor rule (avoid the underpayment penalty)

Pay at least the smaller of: 90% of this year's tax, or 100% of last year's total tax (110% if last year's AGI > $150k). Meeting safe harbor means no underpayment penalty even if you owe more at filing. Rough estimate path when books are clean: taxable income × effective rate ÷ remaining quarters. Always label it an estimate, never filed advice.

Self-employment tax reminder

Sole props, partners, and most LLC members owe SE tax = 15.3% (12.4% Social Security up to the annual wage base + 2.9% Medicare, no cap) on net self-employment earnings, on top of income tax. Half of SE tax is deductible above the line. S-corp owners pay this only on reasonable W-2 wages, not distributions — a common planning point to flag to the accountant.

1099 reference (year-end)

Form	Who gets it	Threshold	Notes
1099-NEC	Non-employee contractors, freelancers, unincorporated vendors for services	$600+ in the year	Due to recipient and IRS by Jan 31
1099-MISC	Rent, prizes, other income	$600+ (rent, etc.)	Due to recipient Jan 31; IRS Feb/Mar
1099-K	Paid via card/third-party platforms	Platform-reported	Don't double-report platform-paid amounts as NEC

• No 1099 needed for payments to C- or S-corporations (except legal fees), or for goods.
• Aggregate small payments — $200 + $250 + $300 to one contractor = $750 → over threshold, must file.
• Collect a W-9 before paying, not at year-end. Missing TIN = stop-and-collect, not a guess. Missing/late 1099 penalties run $60-$310+ per form.

Accountant packet — document checklist

• Year/period P&L and balance sheet.
• Expense category totals (mapped to Schedule C / tax buckets).
• Bank + credit-card reconciliations (all accounts tied out).
• Asset purchases over the de-minimis threshold (for depreciation / Section 179).
• Payroll reports (941s, W-2/W-3 if applicable).
• 1099 contractor list with W-9s and amounts.
• Mileage log and home-office square footage (if claimed).
• Loan statements (interest is deductible; principal isn't).
• Prior-year return and any estimated payments already made (dates + amounts).
• Open questions list — anything you couldn't categorize.

Common deductible categories (Schedule C buckets)

Advertising, car/mileage, contract labor, supplies, rent, utilities, insurance, professional fees, software/subscriptions, travel, meals (generally 50%), home office, depreciation, bank/merchant fees, education.

Gaps to surface before handoff

Uncategorized transactions, missing receipts over the substantiation threshold, personal-vs-business commingling, missing W-9s, and any estimated payments the owner made that aren't recorded.

Boundary

This skill organizes and estimates. It does not give tax advice, file returns, or submit payments. The owner and a licensed accountant review, approve, and file everything.