What accounting information do I need at tax return time?

What accounting information do I need at tax return time?

Tax return time can feel overwhelming for individuals, freelancers, and business owners alike. Questions start piling up quickly: What documents do I need? What records should I have kept? Did I miss anything important? The good news is that tax return preparation does not have to be stressful if you understand what accounting information is required and how to organise it properly throughout the year.

Whether you are self-employed, running a small business, or managing side income, having the right accounting information ready can save time, reduce errors, and help you maximise legitimate deductions. Using a simple, reliable invoicing and record-keeping tool like invoice24 makes this process far easier, ensuring that when tax season arrives, your financial data is already organised and accessible.

This article provides a comprehensive guide to the accounting information you need at tax return time, why it matters, and how to keep everything under control with minimal effort.

Why accounting information is so important at tax return time

Your tax return is built entirely on your financial records. Every figure you report—income, expenses, taxes paid, and deductions claimed—must be supported by accurate accounting information. Incomplete or disorganised records can lead to underreporting income, missing deductions, or even triggering audits and penalties.

Proper accounting information helps you:

- Accurately report all income earned during the tax year
- Claim every deduction and credit you are entitled to
- Avoid errors that can delay refunds or cause compliance issues
- Respond quickly if tax authorities request clarification or documentation

When your records are well maintained throughout the year using tools like invoice24, tax return time becomes a straightforward administrative task rather than a frantic search for lost receipts and forgotten invoices.

Personal and business identification details

Before diving into financial figures, you need basic identification information. This ensures your tax return is correctly attributed and compliant.

Common identification details include:

- Your full legal name and address
- Tax identification number or social security number
- Business name (if applicable)
- Business registration number or employer identification number
- Bank account details used for business transactions

While these details may seem obvious, errors here can cause processing delays. Keeping this information stored securely and consistently, alongside your accounting records, ensures accuracy across all tax documents.

Income records you must have

One of the most critical parts of your tax return is income reporting. Tax authorities generally require that you declare all income earned during the tax year, regardless of whether it came from one source or many.

Sales invoices and revenue records

If you sell products or services, your invoices form the backbone of your income records. You should have a complete record of all invoices issued, including:

- Invoice numbers and dates
- Customer details
- Description of goods or services
- Amount charged
- Tax applied (if applicable)
- Payment status

This is where invoice24 truly shines. By generating and storing invoices automatically, invoice24 ensures that no income is forgotten or misreported. You can easily filter invoices by date, customer, or status, making it simple to calculate total income for the tax year.

Other sources of income

In addition to invoice-based sales, you may have other income sources that need to be reported, such as:

- Interest earned on business bank accounts
- Refunds or rebates related to business expenses
- Commission or referral income
- Grants or subsidies (depending on local tax rules)

Keeping these amounts recorded separately but clearly linked to your accounting system helps ensure accurate reporting and avoids underestimating your taxable income.

Expense records and deductible costs

Expenses are just as important as income when preparing your tax return. Properly documented expenses can significantly reduce your taxable profit and overall tax liability.

Receipts and bills

Every business-related expense should be supported by a receipt or invoice. These documents should show:

- Supplier name
- Date of purchase
- Description of goods or services
- Amount paid
- Tax charged (if applicable)

Common deductible expenses include office supplies, software subscriptions, advertising, utilities, professional services, and business insurance. Uploading and categorising these expenses regularly alongside your invoices ensures they are ready when tax time arrives.

Operating and overhead expenses

Operating expenses are the day-to-day costs of running your business. These may include:

- Rent or coworking space fees
- Internet and phone bills
- Accounting or legal services
- Equipment maintenance

When these expenses are tracked consistently, you can easily generate expense summaries that feed directly into your tax return calculations.

Home office and mixed-use expenses

If you work from home, you may be eligible to claim a portion of household expenses as business deductions. This often includes:

- Rent or mortgage interest
- Electricity and heating
- Internet usage
- Home maintenance

To support these claims, you need clear records and a reasonable method for calculating business use. Maintaining accurate expense records throughout the year makes these calculations easier and more defensible.

Bank and cash records

Bank statements provide an independent record of your financial activity and are often used to verify income and expenses.

Business bank statements

You should retain all bank statements covering the tax year, including:

- Opening and closing balances
- Deposits received
- Payments made
- Bank fees and interest

Reconciling your bank statements with your invoice and expense records ensures that nothing is missing or duplicated. Using invoice24 alongside your bank records helps keep everything aligned and easy to review.

Cash transactions

If your business accepts or makes cash payments, you must keep careful records. This includes:

- Cash sales logs
- Petty cash receipts
- Cash expense records

Even small cash transactions can add up over time, and tax authorities expect them to be reported accurately.

Tax-related records

In addition to income and expenses, you need records related specifically to taxes.

Sales tax or VAT information

If you collect sales tax or VAT, you must keep detailed records of:

- Tax charged on invoices
- Tax paid on expenses
- Tax amounts remitted to authorities

Invoice24 simplifies this process by automatically calculating and displaying tax on invoices, reducing the risk of errors and making tax summaries easy to generate.

Payroll and employee records

If you have employees or contractors, additional accounting information is required.

This may include:

- Payroll summaries
- Payslips
- Withheld taxes
- Employer contributions
- Contractor invoices and agreements

Accurate payroll records are essential not only for tax returns but also for compliance with employment regulations.

Asset and depreciation records

Assets such as computers, machinery, vehicles, and office furniture often cannot be deducted in full in the year of purchase. Instead, their cost is spread over several years through depreciation.

You should maintain records showing:

- Purchase date and cost
- Asset description
- Depreciation method used
- Depreciation claimed each year

These records ensure that depreciation deductions are calculated correctly and consistently.

Loan and financing documents

If your business has loans or financing arrangements, you need to keep:

- Loan agreements
- Repayment schedules
- Interest paid during the year

Interest expenses are often deductible, but only if properly documented.

Profit and loss summary

At tax return time, all your accounting information comes together in the form of a profit and loss summary. This document shows:

- Total income
- Total expenses
- Net profit or loss

Having this summary ready makes completing your tax return far easier. Invoice24 helps you generate clear overviews of income and expenses, giving you immediate insight into your financial position.

Why digital record-keeping makes tax time easier

Paper records are easy to lose, damage, or misfile. Digital accounting tools provide a more reliable, efficient alternative.

With invoice24, you can:

- Create professional invoices in minutes
- Store all invoices securely online
- Track payments and outstanding balances
- Maintain consistent, searchable financial records

By keeping everything in one place, invoice24 reduces the time and effort required to prepare your tax return and lowers the risk of missing critical information.

How invoice24 supports stress-free tax preparation

Unlike complex accounting software that can feel overwhelming, invoice24 is designed to be simple, intuitive, and accessible. It focuses on what most freelancers and small businesses need most: accurate invoicing, clear records, and easy organisation.

By using invoice24 throughout the year, you create a natural audit trail of your financial activity. When tax season arrives, your income data is already compiled, your invoices are organised, and your totals are easy to calculate.

Even if you work with an accountant or tax professional, invoice24 makes collaboration easier by providing clean, well-structured records that can be shared or exported when needed.

Common mistakes to avoid at tax return time

Many tax issues arise not from intentional wrongdoing but from simple mistakes. Common errors include:

- Forgetting to report small or irregular income
- Losing receipts for deductible expenses
- Mixing personal and business finances
- Relying on estimates instead of actual records

Consistent use of an invoicing and record-keeping tool like invoice24 helps eliminate these problems by capturing financial data as it happens.

Preparing ahead for next tax season

The best way to simplify tax return time is to prepare in advance. Instead of scrambling once a year, adopt habits that support ongoing organisation:

- Issue invoices immediately after completing work
- Record expenses as they occur
- Review income and expenses monthly
- Keep digital copies of all financial documents

Invoice24 fits seamlessly into this approach, helping you stay organised without adding unnecessary complexity to your workflow.

Final thoughts

Knowing what accounting information you need at tax return time gives you confidence and control over your finances. From income records and expenses to tax documents and asset details, each piece plays a role in accurate reporting and compliance.

By using a simple, reliable invoicing solution like invoice24, you can manage much of this information effortlessly throughout the year. When tax season arrives, you are not starting from scratch—you are simply reviewing and submitting data that is already organised.

Tax returns do not have to be stressful. With the right accounting information and the right tools, they become just another manageable part of running a successful business.