TL;DR: Prepare your books for a CPA in 5 steps: (1) categorize all transactions, (2) reconcile every account to statements, (3) separate owner draws from expenses, (4) document unusual transactions, (5) export a clean trial balance. Done right, this cuts your CPA bill by $500–$2,000.
Your CPA is not cheap. The average small business CPA charges $150–$300 per hour. Every hour they spend categorizing your transactions is an hour you are paying advisor rates for data entry work.
Here is how to do the prep work yourself — or delegate it — before the appointment.
What "prepared books" actually means to a CPA
A CPA does not need perfect books. They need books that are complete, consistent, and traceable. That means:
- Every transaction has a category that matches your chart of accounts
- Bank balances match your statements as of the period end
- Income is reconciled to your payment processors
- Anything unusual has a brief note attached
The 5-Step Preparation Process
Step 1: Categorize every transaction
Open your accounting software and filter for uncategorized items. Work through them one by one. For recurring vendors — your Stripe fees, your SaaS subscriptions, your rent — set up rules so they auto-categorize going forward.
If you are more than 3 months behind, connect your accounts to Prosper to batch-categorize the backlog before your appointment — it auto-categorizes everything it is confident about and surfaces only the exceptions for your review.
Step 2: Reconcile every account
For each bank account and credit card, pull the statement for the period and compare the closing balance to what your software shows. They should match. Common causes of mismatches: duplicate entries, missing transactions, and bank transfers recorded on the wrong date.
Step 3: Separate personal and business
Any personal expenses that went through business accounts need to be coded as owner's draw, not expenses. Any business expenses that went through personal accounts need to be reimbursed or added as owner contributions. Your CPA cannot sort this efficiently without understanding every transaction — let them focus on tax strategy instead.
Step 4: Document the unusual
For any transaction over $500 that is not routine — a one-time equipment purchase, a client dinner, a payment to a new contractor — add a note with the business purpose. A single sentence is enough. This prevents your CPA from having to ask, and reduces your audit exposure.
Step 5: Export a trial balance
Most accounting software lets you export a trial balance — a summary of every account and its balance at a point in time. Export this as a PDF or spreadsheet and include it in your handoff. Your CPA will use it as the starting point for their work.
What to include in your CPA handoff
- Trial balance (PDF or spreadsheet)
- Bank and credit card statements for the period
- Payroll reports if applicable
- Loan statements showing interest vs. principal breakdown
- Prior year tax return (if it is their first year working with you)
- Notes on anything unusual
How much this saves you
A CPA who opens a clean, reconciled set of books does not need to clean them first. The difference between a prepared handoff and an unprepared one is typically 3–6 hours of CPA time — that is $450–$1,800 at standard rates.
Most founders spend 2–3 hours on their own prep work. The math heavily favors doing it yourself.
FAQ
What does a CPA need from me to do my taxes? A CPA needs categorized bank and credit card transactions, income tied to your payment processors or invoices, a reconciled balance sheet, any loan or payroll records, and prior year tax returns. The cleaner these inputs are, the less time — and money — they spend.
How far in advance should I prepare my books for a CPA? Aim for 2–4 weeks before your CPA appointment. This gives you time to fix any issues you find and request missing statements or receipts without rushing.
What happens if I just send my CPA my bank statements? Your CPA will categorize the transactions themselves and charge you their hourly rate for the privilege. At $150–$400/hour, sending raw statements instead of categorized books typically adds $500–$2,000 to your bill.