Why this matters
Every legitimate expense you can't document is a deduction you either skip (paying extra tax) or claim without support (audit risk). If you kept books all year, this step is an export; if you didn't, it's an evening of statement archaeology. Either way, it happens before you open TurboTax, not inside it.
What "done" looks like
- Expenses are categorized in groups that mirror Schedule C Part II (advertising, supplies, insurance, and so on)
- Business bank and card statements for the full year are downloaded
- Receipts exist for big-ticket items; asset purchases are listed separately
- Mixed personal/business costs (phone, internet) have a defensible business-use percentage
How to do it
- Export a profit-and-loss by category from your bookkeeping — QuickBooks users can import directly into TurboTax, since both are Intuit products.
- Sweep statements for strays: subscriptions, app-store charges, and personal-card purchases made for the business.
- Separate assets from expenses — TurboTax asks about equipment separately, so list purchases with dates and amounts.
- Set business-use percentages for mixed costs once, and note the reasoning.
- Attach receipts to big items in your bookkeeping tool or one folder per year.
Common mistakes
- Categorizing a year of expenses inside tax software in April instead of keeping books monthly
- Claiming 100% business use on obviously mixed costs like a personal cell phone
- Forgetting expenses paid personally before the business account existed — startup costs count
Real-world examples
- IRS recordkeeping guidance treats bank statements plus receipts as core documentary evidence for deductions — "I know I spent it" isn't a category.
- QuickBooks-to-TurboTax import is a documented Intuit integration — an honest argument for keeping categorized books all year.
From a founder's point of view
Deductions are earned in the bookkeeping, all year long; tax season just harvests them. The founder who categorizes monthly files in an afternoon — the one who doesn't donates a weekend and, usually, some deductions.
Rule of thumb
If you can produce a categorized expense total for the year in under ten minutes, you're ready. If it takes a weekend, fix the bookkeeping step for next year.