A workpaper is one page per number that will appear on your tax return. It holds four things: what your books say, what anyone is changing and why, the entries that prove it, and who signed it off. Accountants have worked this way for a century. What is unusual is having it inside your own books, kept up all year, instead of assembled once in a rush after the year has ended.
The reason that matters is simple. A mistake found in March costs you a correction. The same mistake found the following February, after the return is filed, costs you an amended return.
The tax folder: files to and from your accountant
Each company has a Tax folder per tax year, on its Tax area. Use it to send your accountant the year's papers whenever you have them (W-2s, 1099s, payroll returns, bank year-end statements), not only when they ask, and to get the draft and the filed return back in the same place.
- Three sections. From you is what you send. From your accountant is their questions and working files. The return holds the drafts, then the filed return and K-1s.
- Add files by picking the section, saying what they are (a W-2, a draft return; your earlier entries are suggested), and choosing the files.
- The status shows where the year stands: Collecting, With the accountant, Draft ready for you, Approved, Filed, Closed. Anyone who can work on the year moves it forward; moving it back, and above all reopening a filed or closed year, takes an owner of the books.
- Review and approve. When your accountant marks the draft ready (it must be under The return), you get a phone notice. Read it, ask about it in Comments (your accountant is told), and press Approved: your name, the date and the exact files you approved are recorded, and those files can no longer be deleted. Only an owner of the books approves, and filing waits for the approval.
- The checklist writes itself. Each year's folder lists what last year's From you held - every kind of paper and how many ("W-2, 1 of 3") - and ticks each as files of that kind arrive. Your accountant can add what else they need, or turn one of their document requests into a line (it ticks when the request is closed). Either of you can mark a paper Received (it came another way) or Not this year, and Undo either.
- Closed is the permanent record: after the return is filed, close the year and nothing more is added, deleted or commented. An owner can reopen it; stepping back before Approved clears the approval.
- Who sees it. Only people who can open these books - your accountant at Read and suggest or higher sees the same folder from their own sign-in. A writer of the books adds to From you; the accountant adds to their two sections. From Approved on, nothing under The return can be deleted.
- A phone notice goes to the others who work on these books when a file arrives.
Tax-folder files count toward the company's storage like its documents, and they never appear in the receipts inbox, bank matching or Documents.
Who sees the folder. A personal return's folder (your own books, a sole proprietor, a single-member LLC, or a company whose entity type is not set yet) is private: only the owners of these books and the accountant you name see it, so a bookkeeper who keeps your books does not see your tax papers. A business folder is open to everyone who can open the books. In the folder's Who sees this folder card an owner can name the preparer - the one accountant this company's tax notices go to - and open a private folder to everyone, or let the entity type decide again. Changing the entity type later never opens a private folder by itself.
Share with an accountant outside TaDa Books. In the folder's Shared with an outside accountant card, give their name and email and how long (7 to 90 days), and press Make the link. Send them the link. It opens nothing on its own: they ask for a one-time code, which goes to their email - or, until code emails are switched on, you are told they are waiting and press Show the code to give it to them yourself. With it they can download this folder's files and add theirs under From your accountant (and The return while the return is being made). You see when the link was last used, and Switch off ends it at once.
Billing. Your accountant's invoice waits in the folder's Billing card until an owner of these books enters it as a bill - pick the vendor (the firm, which can be added as one) and the expense account - or declines it with a reason. The person who put an invoice in never enters it themselves. Pay opens the firm's own payment page when it has one; record the payment in your books as usual. Under "Firms that bill these books" you see which firm is linked, and can remove a link that should not be there.
Send a K-1 to a partner. Once the return is approved (an owner of the books) or marked Filed (the accountant), a K-1 under The return has a person button. Pick the partner from the people who already sign in to these books: the K-1 lands in their own Inbox, private to them, and they send it on to their accountant from there. A partner who does not sign in here does not appear - download the K-1 and send it to them yourself.
Send the return to the Analyzer. A PDF under The return - the filed return, a K-1, an IRS transcript - has a magnifier button: one click reads it into the Tax Return Analyzer exactly as an upload there would, and the row then says Analyzed. A company return appears on that company's Tax tab analyzer, a personal one in your Tax Return Analyzer on the dashboard.
The books go in too. When you sign the year off and freeze the workpapers, the year-end package lands in that year's folder under From you by itself: the cover, trial balance, general ledger, working trial balance, adjusting entries, income tax summary, 1099s and the index of the year's documents (the document files themselves stay in Documents, so your storage is not charged twice). The Year-end package download, and the documents half of the full books export, both carry the tax folders too - the package the year's files under tax-folder/, the export every year's under Tax folders.
Where it lives
Open your company's Tax area and choose Open workpapers. Pick a tax year and start it. Starting a year changes nothing about your books: it lays what you already have out against the lines of your return.
Your fiscal year is respected. If your year runs July to June, tax year 2026 covers July 2026 to June 2027, and the window is fixed the moment you start the year, so changing a setting later cannot quietly re-cut a year you already signed.
The working trial balance
The first tab is the heart of it. One row per line of your return, with the accounts that feed it underneath, and four columns:
- Book is what your ledger says today.
- Adjusting is a correction someone has drafted.
- Reclass is a move from one account to another.
- Final is what the return would say if every draft were posted.
The book figure and the drafts never mix. You can always see both what the business recorded and what the return will say, which is the whole point.
It reads in ledger signs, the way a trial balance always has: a debit is positive and a credit prints in brackets. So income shows in brackets and costs show positive. The figures tie exactly to your Income Tax report, because both are computed from the same place.
Any figure will show you the entries behind it. That is what "the support is one click away" means here.
Drafting an adjustment changes nothing
This is the rule everything else rests on.
When you draft an adjusting entry or a reclass, it lives only in the workpaper. Your reports do not move. Your account balances do not move. Your bank does not move. Nothing you or anyone else looks at anywhere else in the product knows it exists.
That is deliberate, and it is why this is safe to use on a live business. You can work out what the return should say, see it side by side with what the books say, and change your mind, all without touching the record.
When you are satisfied, choose Post to the books. Only then does it become an ordinary journal entry, dated inside the tax year, honouring your lock date exactly like an entry you typed yourself. Afterwards the amount appears in the Book column and leaves the Adjusting column, so it is never counted twice.
Changed your mind after posting? Un-post voids the entry rather than deleting it, so your history still says what happened and that it was reversed, and the draft comes back to the workpaper.
An adjustment must balance and must be dated inside the tax year. Both are checked while you type, so nothing is a surprise at save time.
Signing a line off
Each return line moves through four states: not started, being worked, reviewed, signed off. The first two are ordinary bookkeeping. Reviewing and signing off need owner access to the books, because a sign-off is a statement about the business's own record.
Every line has a note, and the note is part of the support. Write what you checked and what you concluded. A year from now it is what tells you, or your accountant, why the figure is what it is.
Freezing the year, and starting the next one
When every line is signed off and no draft is still waiting, you can freeze the year. Freezing stamps all four figures onto every line, so the year reprints exactly as it was signed even as the books carry on. A frozen year stops accepting changes, and you can reopen it if something really has to move.
Rolling forward starts the next year from this one: the same return lines, this year's notes carried across and marked with the year they came from, and sign-offs cleared. Adjustments deliberately stay behind, because an adjustment belongs to the year it corrected.
Tax facts
Some things about a tax year are not a balance in your books: a quarterly estimated payment, an extension, an election, the day the return went in, the day an asset went into service. Record them on the Tax facts tab and the year's story stays in one place.
Due dates are typed, never filled in for you. Filing deadlines move for weekends, holidays and disaster relief, so a guessed date would be worse than an empty one. Enter the date your return actually carries.
What is worth a look
The last tab reads your own ledger and points at things a person should judge:
- accounts with activity that are not mapped to any line, so their figures will not appear on the return at all;
- a line that moved a long way against the same line last year, past a percentage you set yourself in Company settings;
- money still parked in a holding account at year end;
- fixed assets that nothing was posted against all year;
- a quarter with no estimated payment recorded;
- your ledger disagreeing with itself, which makes every other figure suspect until it is fixed.
Every one of these is a fact about your books. None of them is advice about what to put on a return.
Recommendations about your return are a different kind of statement, so they stay switched off. The tab says plainly what would have to be true before any could appear. Everything above that box is unaffected.
What this does not do
TaDa Books prepares the numbers. A licensed preparer files the return. There is no depreciation calculator here: the workpaper reads the depreciation your books already carry and tells you when there is none. The handoff itself is on the same Tax tab: the Year-end package bundles this year's working trial balance and adjusting entries with the trial balance, ledger, Income Tax summary, 1099 set and documents, and the Trial Balance report downloads in the layouts Lacerte and UltraTax CS import.