Getting your books ready for Block Advisors or another tax preparer

Preparing your books so that you can file your taxes via our Block Advisors integration or an external tax preparer is simpler than you might think. Though the needs of each business are unique, this guide will walk you through the common requirements for getting ready for tax season.

Getting your books for tax filing is quite straightforward in Wave. The steps we will cover below can be done at any time and as frequently as you’d like. Depending on how thoroughly you’ve organized your books throughout the year, much of the work may already be done!

Three simple steps for tax-readiness

  1. Ensure all of your business transactions are in Wave - this is the most straightforward step, and one you may already be familiar with. Whether you have your bank account(s) connected for transaction imports; upload CSVs from your bank; or add transactions manually, it is essential that you include all of your business’s relevant financial transaction information so that you can properly declare income and write-off expenses.

    Wave recommends that you separate out your business and personal transactions, ideally by running your business out of a separate bank account than your personal one. This ensures that your paper trails are clear and easy to understand, saving you or your tax preparer a lot of time when filing.

  2. Categorize all of your transactions - By categorizing your transactions, you are giving a basic explanation of why you received money, or why you spent money. This ensures your reports are meaningful and easy to understand. And if you come across a transaction you are having trouble categorizing, there’s a chance it’s a duplicate, or may not need to be recorded in your business at all.

  3. Reconcile your accounts and remove duplicates -  Reconciling ensures that your financial data in Wave perfectly mirrors your banking data so that your reports are correct. It helps you remove irrelevant transactions, clean up duplicates, or add anything that may be missing. You can reconcile at any time, but to save yourself extra work later, Wave recommends you reconcile once a month when your bank statement is available.

If you’d like to learn more, or watch videos of the steps mentioned above, please take a look at our Accounting Basics video guide!

We also have a handy checklist of year-end activities available here, or take a look at our Year-end guide for a more indepth look at other actions you may need to take at the end of your fiscal year. Finally, you can check out our “Tax Filing Integration with Block Advisors” to learn more about our new integration and tax filing offering.

General tax filing FAQ

How do I ensure my books are tax ready?

By following the steps above, you’re ensuring that your financial data is accurate and can be given to Block Advisors, a tax accountant/preparer, or to support your own tax filing. However, each business (and region) will have specific tax needs and requirements, and we recommend that you reach out to professionals like our Wave Advisors team should you have questions.

How do I look for duplicates?

Looking for duplicates can be intimidating, but the easiest way to find them would be via reconciliation. By reconciling you should be able to identify the amount and date of discrepancies between your Wave data and your bank, making it easier to find incorrect entries on your Transactions page. It is worth noting that if you have a bank connected to Wave, there is a chance entries entered as receipts, invoices, or bills may be duplicated by the transaction import.

What is the purpose of reconciling?

Reconciling is a way of verifying that your Wave data matches that of your bank(s), and is therefore a 100% accurate representation of money movement in and out of your business. It also ensures that there aren’t incorrect transactions or amounts in your Wave account, which can lead to the under or over-reporting of profit and expenses. We recommend reconciling at least monthly as it is a good way to be certain your books are consistently in order, and identify any issues or discrepancies early.

Why should I categorize my transactions?

When transactions are imported into Wave, they usually only contain a title, date, and amount. For certain bank-imported expense transactions, Wave will help you automatically categorize them by learning from you, but most income transactions will remain uncategorized without manual intervention.

We recommend that you categorize your transactions in Wave for a number of reasons. The simplest is that it creates a clearly identifiable paper trail of your business’s money movement. When filing taxes, it makes income declaration and expense write-offs a lot easier, and it also gives yourself, your accountant, or tax preparer a good idea of why each transaction occurred, and therefore can be handled appropriately. It also makes your books significantly more resilient in case of an audit, saving you time, energy, and stress.

Many reports in Wave also rely on categorization for accuracy. For Wave to sort and analyze your data, you need to tell Wave where that data belongs, which is exactly what you do when categorizing.

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