Reviewing a business tax return before you sign, and amending one after

The owner signs the return and is responsible for it, so read it. Compare revenue and total expenses with the profit and loss statement and explain differences. Check the names, EIN, and address. Confirm the ownership percentages and the K-1 amounts. Check that officer or owner compensation agrees with payroll. Make sure estimated payments are credited. Look at depreciation and new asset purchases. Check state returns and any extension. Make sure prior-year carryforwards are right. And read the preparer's questions and notes.

A good preparer will walk you through the main items and any judgment calls. Ask which positions are aggressive, which elections were made, and what you could do differently next year. Keep a copy of the return with the workpapers you provided.

Common reasons to amend are missed income or deductions, a classification mistake, a late-arriving Schedule K-1, or a correction after an audit. Different entities use different forms: a corporation uses Form 1120-X, an S corporation files an amended Form 1120-S, and a partnership generally files an amended return or an administrative adjustment request depending on its status. Your preparer will choose the right one.

Before amending, fix the books so they support the change. Reconcile the accounts, document the item in question, and write a short explanation of what changed and why. Then prepare the amended return from the corrected records. Amending from unsupported numbers can produce a second mistake.

A federal change often means a state amendment too. Amended returns have time limits for refunds and for the IRS to assess, so do not wait. Keep the filing confirmation, and update the books to match once the amendment is accepted.