Tax Season Checklist for Los Angeles Business Owners, Contractors and Homeowners

Tax season is about more than locating a few tax forms and submitting a return. It is also an opportunity to review your business records, organize receipts, examine major changes from the past year and identify information that may need to be discussed with a tax professional or insurance agent.

For Los Angeles business owners, independent contractors, self-employed workers and homeowners, this process can involve much more than a W-2. You may need records related to business income, payroll, subcontractors, vehicles, equipment, property, insurance premiums and expenses associated with working from home.

The right preparation can make your tax appointment more productive and help you spot changes that may affect your insurance needs.

This checklist provides a starting point. Tax rules vary based on your income, business structure and circumstances, so questions about deductions, filing requirements and tax treatment should always be reviewed with a qualified tax professional.

Documents to Gather Before Meeting With a Tax Professional

Your tax preparer can provide more specific guidance, but gathering your records before the appointment can help reduce delays and avoid repeated follow-up requests.

Business owners and self-employed workers may want to collect:

• Income statements and payment records
• Bank and credit card statements
• Receipts for business purchases
• Payroll reports
• Employee and independent contractor records
• Equipment and tool receipts
• Business insurance statements
• Vehicle and mileage records
• Office rent and utility records
• Licensing and permit expenses
• Advertising and marketing expenses
• Professional service invoices
• Prior-year tax returns
• Estimated tax payment confirmations

It is also helpful to separate business expenses from personal purchases before meeting with your preparer. If an expense had both business and personal use, make a note so the tax professional can determine how it should be handled.

Tax Records Los Angeles Contractors Should Keep

Contractors often have expenses that vary considerably from one project to another. Waiting until tax season to reconstruct an entire year of jobs, purchases and travel can become difficult.

Depending on the work performed, useful records may include:

• Customer invoices
• Payments received
• Materials and supplies
• Tools and equipment
• Equipment rentals
• Subcontractor payments
• Payroll expenses
• Business mileage
• Fuel and vehicle maintenance
• General liability insurance premiums
• Workers’ compensation premiums
• Commercial auto insurance
• Contractor license fees
• Building permits
• Jobsite expenses
• Advertising costs
• Phone and software expenses
• Storage or warehouse costs

Contractors performing business within the City of Los Angeles may also have city registration and business-tax obligations. The Los Angeles Office of Finance states that businesses operating within the city, including many LLCs and people paid through 1099 arrangements, generally need to register for a Business Tax Registration Certificate. Contractor businesses are addressed under a specific city tax classification.

A tax professional familiar with Los Angeles businesses can help determine which city, state and federal requirements apply to your operation.

Can Business Insurance Premiums Be Tax Deductible?

This is an important question for business owners, but the answer depends on the type of policy, the purpose of the coverage and how the business is structured.

Certain insurance costs connected to operating a trade or business may qualify as business expenses. Examples that a tax professional may review include:

• General liability insurance
• Workers’ compensation insurance
• Commercial property insurance
• Commercial auto insurance
• Professional liability insurance
• Errors and omissions insurance
• Cyber liability insurance
• Business interruption insurance
• Insurance protecting business equipment
• Some health insurance costs

IRS guidance for small businesses includes a section addressing insurance expenses, deductible and nondeductible premiums, and the separate self-employed health insurance deduction. Eligibility and treatment depend on the taxpayer’s circumstances.

Do not assume that every payment made to an insurance company is automatically deductible. Personal auto, home and life insurance are handled differently from policies purchased for business purposes. Give your tax professional complete records and let them determine what may be claimed.

Workers’ Compensation, Payroll and Employee Records

If your business employed anyone during the year, collect accurate payroll and employee records before your tax appointment.

These may include:

• Gross payroll
• Payroll tax reports
• Employee classifications
• Overtime records
• Workers’ compensation statements
• Health benefit payments
• Bonuses and commissions
• Reimbursements
• New-hire records
• Termination records
• Payments made to temporary or seasonal workers

California employers are generally required to maintain workers’ compensation coverage even when the business has only one employee. The California Division of Workers’ Compensation states that employers with one or more employees must satisfy the state’s workers’ compensation requirement.

Tax season is a good time to compare the payroll reported to your tax professional with the payroll listed on your workers’ compensation policy. Large differences may need to be discussed with your insurance agent because workers’ compensation premiums are commonly affected by payroll and employee classifications.

You should also review whether anyone classified as an independent contractor may actually be treated as an employee under applicable rules. That is a legal and tax classification issue, so it should be addressed with qualified professionals rather than assumed based only on how someone is paid.

What Self-Employed Workers Should Review

Self-employed workers frequently receive income from several sources. This may include direct customer payments, online payment platforms, contract work and 1099 income.

California’s Franchise Tax Board states that self-employed individuals must report business income or losses and may be required to make estimated tax payments.

Before meeting with a preparer, review:

• All sources of business income
• Business expenses
• Estimated tax payments
• Home-office records
• Business mileage
• Health insurance payments
• Retirement contributions
• Equipment purchases
• Insurance premiums
• Payments to assistants or subcontractors
• Business registration requirements

For 2026, California estimated tax installments follow the state’s prescribed payment schedule, which differs from the federal installment percentages. Your tax professional can determine whether estimated payments are required and calculate the appropriate amounts.

Do not wait until the next filing deadline to ask about estimated payments. Reviewing the issue earlier may help you plan for upcoming obligations.

Homeowners and Home-Based Business Owners

Homeowners should gather records related to the property and any business activity conducted there.

Depending on the situation, relevant documents may include:

• Mortgage interest statements
• Property tax records
• Home purchase or refinancing documents
• Receipts for qualifying improvements
• Home insurance statements
• Rental income and expenses
• Records related to a dedicated workspace
• Utility statements
• Business equipment kept at the property
• Records of customers or employees visiting the home

Home-based business owners should also review their insurance. A standard homeowners policy may not be designed to cover every loss involving business inventory, equipment, customer injuries or commercial activity.

Ask your insurance agent whether your current policy addresses:

• Computers and business equipment
• Inventory stored at home
• Customer visits
• Employee activity
• Business deliveries
• Detached structures used for work
• Commercial vehicles parked at the property
• Loss of business income following property damage

The tax treatment of a home office and the insurance protection needed for a home-based business are separate questions. One should be discussed with a tax professional and the other with a licensed insurance agent.

Vehicle Records for Business Owners and Contractors

Vehicles can create some of the most confusing recordkeeping issues for self-employed workers and contractors.

Collect:

• Beginning and ending mileage
• Business mileage logs
• Personal mileage
• Fuel receipts
• Maintenance and repair expenses
• Registration costs
• Lease or loan records
• Parking and toll receipts
• Commercial auto insurance statements
• Purchase or sale documents

Your tax professional will need to determine how the vehicle expenses should be treated. An insurance agent will need to determine whether the way the vehicle is used matches the current policy.

Tell your insurance agent if a vehicle is regularly used to:

• Travel between jobsites
• Carry tools or equipment
• Transport employees
• Make deliveries
• Visit customers
• Tow business equipment
• Carry materials
• Operate under a business name
• Perform rideshare or delivery-app work

A personal auto insurance policy may not be suitable for every type of business use. Do not wait for a claim to discover that the policy was based on incomplete information.

Business vehicle expenses often go beyond fuel and mileage. Routine maintenance, tire replacement, registration, and smog checks may also be part of the overall cost of keeping a vehicle on the road. For more information, read our guides on California smog checks and tire maintenance for high-mileage vehicles.

General Liability Records to Review

General liability insurance can protect a business against certain third-party bodily injury, property damage and related liability claims, subject to the policy terms and exclusions.

At tax time, gather:

• Policy declarations
• Premium statements
• Certificates of insurance
• Additional insured requests
• Claims records
• Subcontractor certificates
• Revenue figures
• Payroll information
• Updated business descriptions
• Records of new services or operations

Your policy may have been written using estimated annual revenue, payroll, subcontractor costs or other rating details. If your business changed significantly, those figures may no longer reflect your actual operation.

Ask your insurance agent whether the policy should be reviewed when:

• Revenue increased or decreased
• You hired employees
• You began using subcontractors
• You purchased new equipment
• You moved locations
• You added services
• You started working on larger projects
• You began working in new cities or states
• Customers started requiring higher limits

Do You Need to Update Your Insurance After Tax Season?

Preparing a tax return often reveals how much a business changed during the previous year.

You may notice that you:

• Earned substantially more revenue
• Added employees
• Purchased a vehicle
• Bought expensive tools
• Started storing inventory
• Opened another location
• Began working from home
• Changed your business structure
• Added a new service
• Took on larger contracts
• Started using subcontractors

Those changes may affect both taxes and insurance.

Your accountant or tax preparer may use the information to prepare your return. Your insurance agent can use some of the same updated operational details to review whether your policies still reflect the business accurately.

Questions to Ask Your Tax Professional

Consider asking:

• Which records am I missing?
• Which business expenses may qualify for tax treatment?
• Am I required to make estimated tax payments?
• Do I have any Los Angeles city filing or registration obligations?
• How should I document business vehicle use?
• How should subcontractor payments be reported?
• Does my current business structure still make sense?
• Are there records I should begin tracking differently this year?
• How long should I retain supporting documents?
• Are any of my insurance expenses relevant to the return?

A tax professional should provide the final guidance on deductions, forms, filing status and tax obligations.

Questions to Ask Your Insurance Agent

Consider asking:

• Does my policy reflect my current revenue and payroll?
• Are all my services and operations listed correctly?
• Do I need workers’ compensation insurance?
• Should any vehicles be insured commercially?
• Are my tools and equipment covered?
• Are subcontractors creating additional exposure?
• Does my home policy address my home-based business?
• Are my liability limits appropriate for my contracts?
• Do my customers require additional insured status?
• Should I review business, home and auto together?

An insurance review does not require you to change coverage. It gives you an opportunity to understand what you currently have and identify areas that may need attention.

A Tax Professional and an Insurance Agent Serve Different Roles

Tax professionals and insurance agents may work with many of the same records, but they use them for different reasons.

A tax professional reviews information to help prepare returns, address filing obligations and provide tax guidance.

An insurance agent reviews business operations, payroll, property, vehicles and exposures to help determine what coverage options may be appropriate.

One professional should not replace the other. Business owners may benefit from keeping both informed when major changes occur.

Choosing a Los Angeles Tax Professional

When selecting a tax office, ask whether the preparer regularly works with people in your situation.

For example:

• Contractors
• Self-employed workers
• LLC owners
• S corporation owners
• Home-based businesses
• Landlords
• Employers
• Gig workers
• Retail businesses
• Professional service providers

A preparer who understands your type of work may be better positioned to ask relevant questions and explain which records are needed.

You may also want to ask:

• How long has the office served Los Angeles clients?
• Does it work with your business structure?
• Does it assist with estimated tax planning?
• Is year-round support available?
• Can it help with Los Angeles business registration questions?
• How are documents securely submitted?
• Who prepares and signs the return?

Need an Insurance Review?

Tax season is a practical time to review the information behind your business, home and auto insurance.

Farmers Insurance, Young Douglas helps California customers explore coverage for:

• Business insurance
• General liability
• Workers’ compensation
• Commercial auto
• Personal auto
• Home insurance
• Life insurance

Our licensed agents can review the information you provide, explain available options and let you know whether we may be able to help.

Request an insurance quote or contact our office to begin the review.

This article is for general informational purposes only and is not tax, accounting, legal or insurance advice. Tax rules and insurance eligibility vary. Consult a qualified tax professional regarding your tax situation and a licensed insurance agent regarding coverage.