Checklist for preparing records for a partnership tax return

Hey there!

Here is a description of the kind of information needed to prepare a partnership tax return. This is a general discussion, in - I hope - non-technical terms. If you have questions about the information or the form in which to prepare it, (and if you are a client of John Schachter + Associates) please ask me OR assemble the data as best you can and arrange to meet to plan the most efficient way to proceed.

If you have used a computer bookkeeping software, lots of this information is probably already available in the reports from the program. In that case, I will want the file on disk or via email for reference. I can open and read files on the PC or Mac from:

QuickBooks
Quicken
MYOB
Excel
FileMaker
Microsoft Money (PC only)

-To prepare a partnership tax return, I will need to know the following:

1. Who the partners are, their names and addresses and tax id numbers, and each partner's share of partnership profit or loss and capital for the year. If there were changes in the partners or their shares of the business, I need to know about this.

2. Amounts invested in the partnership by the partners or loaned from them to it.

3. Amounts paid out by the partnership to the partners, and what amounts, if any, were so-called guaranteed payments, interest, salary, or draws.

4. The income and expenses of the partnership. How much the partnership received from its clients or customers, and how much it paid for office expenses, job costs, rent, travel, entertainment and meals, etc.

5. Equipment, furniture, real estate, software and leasehold improvements the partnership acquired or disposed of in the tax year.

6. Information about leases the partnership entered into or terminated during the year.

7. Information about loans the partnership took out during the year.

8. If the partnership has employees, payroll tax and wage information from the payroll system or service.

9. If the partnership has a retirement plan, information about the plan for the tax year.

10. If the partnership has bank accounts or credit card accounts, bank reconciliations for each account as of the year end and copies of the bank or credit card statements that cover the year end.

11. If the partnership collects sales tax, information about the amount collected and the amount paid over in the tax year, and a copy of the final sales tax coupon for the tax year.

Things to do BEFORE preparing totals for these reports:

a. Make sure ALL checks, deposits, bank fees, debit transactions, transfers and credit card charges are taken into account. It is easy to jump the gun, especially when credit card statements covering charges up till Dec 31 do not arrive till later in January. **You should report credit card charges in the year they hit the statement - not the year the statement comes or the year you pay the bill. So charges in December count towards LAST YEAR even though the bill comes in January.

b. Make sure partners' out of pocket or petty cash transactions are taken into account if the partners agree the partnership is responsible for these. Such transactions usually increase deductions of the partnership, and are counted as an investment in the partnership by that particular partner.

c. Make sure you have year end statements from banks, brokerages, etc for partnership investments and savings accounts.

d. Make sure you have complete payroll records (if you have employees) and that you file 1099MISC forms by Jan 31. We can help you with this if you tell us promptly the information for the forms.

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