Illinois, the fifth-largest economy in the U.S., offers a strategic location for entering the Midwest market. However, to succeed, businesses must follow a comprehensive Illinois bookkeeping checklist to navigate the state’s complex tax regulations and stay compliant.

This guide provides a detailed bookkeeping checklist to help Illinois businesses navigate their tax obligations, stay compliant, and avoid costly penalties.

Step 1: Maintain Accurate and Up-to-Date Financial Records

Diligent bookkeeping practices need to be put in place so financial records are accurate and easy to retrieve and reference. Income, expenses, payroll, and taxes paid should be correctly recorded in a set of books that are properly set up. When your books are correctly done and records entered in a timely manner, it makes it easy to reference in case you need to do so for the following reasons:

• Annual and quarterly tax filings
• Illinois state audits
• IRS audits
• Applying for loans, investors, and other sources of capital
• Third-party external audits when a bank, investor, or other party requests audited financial statements

Illinois has specific mandates regarding paid time off and payroll tax withholding, making regular access to payroll records crucial. Sales tax is also collected in the state, and sales tax collection and remittance records should be easily retrievable. When these records are up-to-date, they are more likely to be accurate and able to file information returns and other filings in a timely manner.

Step 2: Know Key Tax Deadlines for Illinois Businesses

Illinois small business tax returns follow a similar deadline framework to IRS tax filings. State business tax returns need to be filed by the 15th day of the fourth month following the end of the fiscal or calendar year, which is April 15th for business owners operating on a calendar year.

Form IL-941, the state equivalent of federal quarterly payroll tax information returns, are also due quarterly. The State of Illinois will assign you a payroll tax payment due date that is semi-weekly or monthly.

These payments for state income taxes withheld from employees’ paychecks are due on the 15th of every month for amounts withheld in the preceding month if on a monthly payment schedule. Semi-weekly taxpayers must make payments on Wednesdays for amounts withheld on the preceding Wednesday, Thursday, or Friday, and Fridays for amounts withheld on the preceding Saturday, Sunday, Monday, or Tuesday.

Illinois businesses that collect sales tax must make quarter-monthly payments if your average monthly sales tax liability is $20,000 or more. These payment dates are the 7th, 15th, 22nd, and last day of the month.

If your sales tax liability is less than $20,000 per month, the State of Illinois assigns you a monthly or quarterly sales tax return filing schedule. They will mandate that you file and remit sales tax monthly, quarterly, or annually. Generally, these deadlines are the 20th day of the month following the end of that month or quarter (e.g. January sales tax filing and remittance would be due February 20, Q2 filings from April-June would be due July 20.)

A bookkeeping system that diligently tracks payroll tax, sales tax payments, and other relevant transactions ensures that these critical deadlines are met, and you can avoid onerous penalties and late filing fees by having this information ready in time.

Step 3: Understand Required Financial Statements

Whether your business is a small sole proprietorship or multinational publicly-traded company, there are four key financial statements stemming from your accounting records: income statement (also known as profit-and-loss), balance sheet, cash flow statement, and retained earnings statement. Most small business owners rely on the first three for both external users like banks and investors, and internal use to gain insights about operations.

Proper bookkeeping is the solid foundation of these financial statements’ accuracy. Entering and auditing bookkeeping data is necessary for correctly preparing them. Profit-and-loss statements help decision-makers identify areas that need improvement, such as revving up revenue drivers and cutting expenses where possible. Cash flow statements provide critical insights on how much cash is flowing into the organization and if it creates havoc or harmony with the timing of major cash outflows.

Not only do accurate financial statements help with more sound business decisions, they are also required by external users that request them such as banks, consultants, and tax authorities. Failure to produce accurate and fairly-presented financial statements in a timely manner can result in loss of opportunities, or fines and penalties.

Step 4: Keep Track of Deductible Business Expenses

It’s vital to keep track of business expenses because they can drastically reduce tax bills. A solid bookkeeping system makes it easier at tax time to find your deductible business expenses rather than sorting through receipts in a haphazard manner. Business deductions to track include:

• Office Supplies
• Internet and other utilities
• Rent for the office, storefront, storage units, and other property used for business purposes
• Mileage
• Wages, salaries, and contractor payments
• Insurance
• Marketing and advertising
• Professional services
• Travel and lodging for business events

Step 5: Prepare for Year-End and Quarterly Tax Filings

Year-end and quarterly tax filings go a lot faster and more smoothly when you have thorough and accurate books to reference. All of these filings require referencing specific items, accounts, and payments that can quickly become cumbersome to retrieve if they are incomplete, inaccurate, or disorganized. Neglecting these filings or submitting them with incorrect information causes an expensive and disruptive halt to operations and steep fines and penalties.

Accounting Freedom can assist with these filings when you’re overwhelmed and need to get through a busy period or are seeking a longer-term accounting partner to handle your Illinois business tax needs.

Step 6: Utilize Accounting Software or Professional Services

Accounting software assisted by an accounting professional is key to staying compliant with tax obligations and ensuring records are thorough and accurate. Manual recordkeeping systems are prone to errors and inefficiency. Accounting software also often necessitates having a professional show you how to use the program to ensure information is inputted correctly while you get the most value out of the program.

Accounting Freedom’s experienced professionals are highly familiar with the Illinois business environment and can help your business stay on top of your information return filing requirements and the specific deadlines the state assigns to you in addition to your federal obligations.

This checklist can help ensure that your books are accurately kept to facilitate future tax filings and other situations that call for financial statements.

Ready to streamline your bookkeeping and stay compliant with Illinois tax laws? Contact Accounting Freedom to learn more about our bookkeeping services that help you avoid penalties and stay organized year-round.