Tax File Organization

If you have been in tax preparation you have likely seen or developed a million ways to organize your client files. And, if you are new to the profession, you are likely curious about an efficient organization method. I find that business tax return workpaper files tend to be disorganized, inconsistent, and hard to follow.

Here is an example of how I organize my tax client folders:

Where to save tax workpapers:

• File Share>Client File>Taxes> Year

Workpaper (WP) naming conventions:

• WP Number; Date Client Name; Description
• If the workpaper was provided by the client:
  • WP Number; Date Client Name; PBC Description
• If it was an email saved as a PDF for the file use “EM” in the naming convention
  • 9000; Date of email Client Name; EM Description
• If it was an excel sheet that has tabs that are provided by the client, rename those tabs to start with “PBC”
• Name tabs in excel sheets using alphabetic ordering for referencing purposes, for example:
  • A – Book to Tax Reconciliation
    B – PBC Income Statement
    C – PBC Balance Sheet
• The main WPs should be numbered as presented below, with related documents behind them using a XXXX.1 (and so on) numbering schema, for example:
  • 3000; 20XX-12-31 Client Name; PBC Salary Accruals
    3000.1; 20XX-12-31 Client Name; PBC Salary paid out within 2.5 months
    3000.2; 20XX-12-31 Client Name; PBC Vacation paid out within 2.5 months
• If you prepare WPs for planning before the return, you should name them with the appropriate WP number and a P following, include DRAFT, for example:
  • 2000P; 20XX-12-31 Client Name; DRAFT Book to Tax Rec

Business Returns WPs Standard Numbering:

• 1000 – Tax Compliance Memo – an overview of the client’s business and their tax positions (support to follow – research or memos, etc.)
• 2000 – Book to Tax Reconciliation
• 2500 – Book Income Statement (in PDF unaltered from client or our system)
• 2600 – Book Balance Sheet (in PDF unaltered from client or our system)
• 3000 – Tax Adjustment Support Schedules (e.g. detail on accruals and amounts paid within 2.5 months, detail on M&E if applicable, etc.)
  If these support WPs are provided in excel, please include them in the 2000 workbook.  If there is additional information provided outside of excel, use the 3000 group and reference the numbers back to 2000A (the first tab should always be the book to tax rec).
• 4000 – Tax Fixed Asset and Intangibles Schedules (support to follow)
• 4500 – Book Fixed Asset and Intangibles Schedules (support to follow)
• 5000 – Equity Worksheets
  • All returns should have an equity rollover that ties to the Schedule L and M-2
  • 1065 should also have partner basis calculations
  • 1120S should also have shareholder basis calculations
• 6000 – Tax Credit Support
• 9000 – All relevant client emails
• 9500 – PBC List (sent to client before tax return prep begins)
• 9999 – Open Items and Questions on Return (should be documented for next year PBC list preparation)
  • We should make sure that everything in here is answered and documented in the file before the tax return is signed off on.

Share in the comments how you organize your tax business client workpaper files!