Having clean, reconciled books is critical for a smooth tax filing process. When doing your own books or having another bookkeeper handle your books using accounting software like Xero or Quickbooks, they should be able to pass our  Bookkeeping Readiness Checklist:

  1. Reconciliation Completed: All bank and credit card accounts have been reconciled in QBO or Xero.
  2. eCommerce Income & Expenses: Platform income and expenses match the year-end settlement reports provided by Amazon, Shopify, Etsy, or other platforms.
  3. Reserve Balances: eCommerce platform reserve accounts show the correct balances on your balance sheet.
  4. Loans Reconciled: All loans have been accurately reconciled in QBO or Xero.
  5. COGS Accuracy: Cost of Goods Sold (COGS) has been properly reconciled with any inventory management software.
  6. Journal Entries Documented: All journal entries include proper documentation and proof.
  7. Receivables & Payables: Accounts receivable and accounts payable are fully reconciled in QBO or Xero.
  8. Proper Categorization: All transactions are categorized in IRS-approved categories.

Your books must meet the criteria outlined in this checklist before submitting them for tax purposes. If you work with a bookkeeper, please ensure they review and validate each item on the checklist to confirm compliance.

Software like Inventory Lab, Seller Board, Sellerise, or Profit Cyclops is inventory management software and is not considered to be Tax-Ready on its own.

If you are not using appropriate accounting software like Xero or Quickbooks, you must complete a business tax worksheet outlining your expenses and income, or use our tax-ready bookkeeping service.