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As a small business owner, you've got a lot on your plate. Between managing employees, tracking inventory, and trying to keep your customers happy, tax season is likely the last thing you want to think about. But the reality is that taxes aren’t going anywhere, and the more you prepare now, the easier your corporate tax accounting will be when you file your business's tax return. If you've been scrambling to find a small business tax preparation checklist to help you get ready for tax season, you're in the right place. This article will walk you through the ins and outs of small business tax preparation so that you can get organized and make this year's tax filing a breeze.
Haven offers customized accounting services for small businesses that can help you organize your financial documents, identify applicable tax deductions, and prepare for a smooth tax filing experience.
Table of Contents
Small Business Tax Preparation Checklist for Business Owners
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Understanding Small Business Tax Requirements
Small business owners face a range of tax responsibilities that go beyond personal income taxes. At a basic level, there are two main types of taxes: personal taxes on income earned through the business and business taxes tied to the company’s financial activity.
While personal taxes are filed annually, most business taxes operate on a quarterly payment schedule, which means consistent planning and organization are essential to avoid penalties.
Key Factors in Tax Obligations
Many factors influence your tax obligations, including your business structure, location, and whether you qualify for any credits or deductions. Understanding these elements helps you remain compliant and avoid last-minute stress. Businesses that stay ahead of their tax obligations often find themselves with fewer surprises and more cash flow available for growth.
Federal Business Taxes
At the federal level, most small businesses are responsible for four key taxes:
Income tax
All businesses except partnerships pay income tax on their profits. Partnerships file informational returns, while partners report their share of income or losses on personal tax returns.
Self-employment tax
This covers Social Security and Medicare for self-employed individuals, currently set at 15.3%. Unlike employees who split this tax with their employers, self-employed people pay the full amount.
Employment taxes
If you have employees, you must withhold federal income tax, share the cost of Social Security and Medicare, and pay Federal Unemployment Tax (FUTA), which funds unemployment benefits.
Estimated taxes
If you run a C Corporation and you think you'll owe more than $500 in taxes, you have to pay estimated taxes every quarter.
Excise tax
Applied to specific industries such as fuel, alcohol, and tobacco. These taxes are often embedded in product pricing but still require regular reporting and payment.
State and Local Taxes
In addition to federal taxes, small businesses must navigate state and local obligations.
State income tax
Most states collect income tax, with rates ranging from under 5% to over 10%. Nevertheless, nine states, including Florida, Texas, and Washington, do not levy personal income tax.
Sales tax
This is one of the more complex areas, especially for businesses operating across jurisdictions. You must register for sales tax permits, determine which products or services are taxable, collect the correct rates, and file returns with each applicable state or locality.
Property tax
Applied to business-owned real estate and, in many cases, business personal property like equipment or inventory.
Local levies
Some areas impose additional business-related fees such as local business licenses, gross receipts taxes, or industry-specific charges.
Types of Business Taxes by Structure
Your business structure
Whether you operate as a sole proprietorship, partnership, LLC, S corporation, or C corporation determines both the taxes you pay and the filing process. For example:
Sole proprietors: Report business income on personal tax returns.
LLCs: They can be taxed as sole proprietorships, partnerships, or corporations.
C corporations: Pay corporate income tax separately from owners.
Each structure comes with different compliance requirements, so choosing the right one can have long-term tax implications.
Payroll Taxes for Employers
If you employ staff, you must also handle payroll taxes. This includes withholding federal income tax and FICA contributions (Social Security and Medicare) from wages, paying the employer’s share of FICA, and covering unemployment taxes. State-specific payroll taxes may also apply, along with reporting obligations for employee benefits and any local levies.
Building Robust Systems for Tax Management
Getting your business taxes right requires understanding both your obligations and deadlines. Setting up robust systems for bookkeeping, payroll, and quarterly tax payments can turn what often feels like a daunting task into a manageable routine. Ultimately, precise tax planning not only keeps you compliant but also creates opportunities to save money and reduce stress.
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Small Business Tax Preparation Checklist for Business Owners
Identify Your Business Structure
Your business structure determines how you file your taxes and the forms you need. This affects everything from what deductions you can claim to your tax rate. Each structure has different tax rules, so it’s important to classify your business correctly to avoid overpaying taxes or missing deductions. Make sure to download the correct tax forms for your business from the IRS website and verify your classification to avoid errors.
Gather Financial Documents
Gathering all your financial documents is a crucial step in your small business tax preparation checklist. These documents include income statements, expense receipts, and bank statements. By keeping everything organized, you can make tax filing easier and avoid missing any necessary deductions.
Your Essential Tax Documentation Checklist
If you use accounting software, it’s even easier to manage your financial records. Software that links to your bank accounts can automatically update transactions, keeping financial records current. This reduces the chances of overlooking important details during tax season. What to gather:
Income statements (profit and loss)
Receipts for business expenses (supplies, utilities, marketing, etc.)
Bank statements (checking and savings accounts)
Payroll records (if applicable)
Credit card statements (for business-related purchases)
Invoices (for services or products provided)
1099 forms (for payments received as a contractor or issued to vendors)
Loan interest statements (if you have business loans)
This list covers the essential documents you’ll need, as well as a few common ones that can make a big difference in your tax filing. While it’s not exhaustive, it provides a solid starting point to help you stay organized and prepared during tax season.
Know What Business Tax Forms You Need to File
There isn’t a one-size-fits-all business tax form. Depending on your business structure, you’ll need specific forms—like Form 1099-MISC or Form 1120—to report profits, losses, deductions, and credits to the IRS. Here are some common IRS forms for reporting small business taxes:
Schedule C: If you're a sole proprietor, you use this form along with Form 1040 to report your income.
Schedule K-1: For owners of pass-through entities like S corporations or partnerships, this form is used to report income.
1099-MISC: Use this form to report rental income to landlords or payments to attorneys.
1099-NEC: This form is for reporting non-employee compensation.
Form 1120: If your business is a C corporation, use this form to report income.
Form 1120-S: For S corporations, this form is used to report income. It's filed separately from your personal income tax return.
Form 1065: Owners of partnerships use this information return, filed separately from their personal income tax return.
Form 720: This is for reporting excise taxes related to your business. If you have questions about which forms to file or how to fill them out, a dedicated tax professional can help ensure you file correctly and on time.
Track Income Sources
Accurately tracking all income sources is critical for filing taxes correctly. Be sure to account for all revenue, whether it comes from sales, investments, or other business activities. Key steps: Record all sources of income, including:
Side work
Investment income
Include expected amounts from services, even if you haven’t received all my 1099 forms yet. Keeping detailed records ensures your tax filing is accurate and helps avoid mistakes that could lead to penalties or audits.
Organize Business Expenses
Organizing your business expenses helps reduce your taxable income and ensures you don’t miss any deductions. Keep records of all business-related costs, including:
Rent
Utilities
Marketing expenses
Deducting Home Office Expenses
If you run your business from home, you can also deduct a portion of your mortgage or rent, as well as utilities and insurance. Be sure to keep digital copies of receipts for these expenses so they’re easy to access during tax filing. Everyday deductible expenses:
Rent and utilities
Office supplies
Marketing and advertising costs
Business travel
Home office expenses (if applicable)
Calculate Estimated Tax Payments
If you expect to owe more than $500 in taxes, you’ll need to make estimated quarterly payments. This is especially important for small businesses that don’t have taxes withheld throughout the year. Steps to calculate estimated payments: Divide your total yearly tax liability by four.
Estimating and Managing Quarterly Payments
Use last year’s tax amount to estimate this year’s liability if your earnings are similar. Making these payments on time helps you avoid penalties and keeps your cash flow steady. Quarterly payments are due on April 15th, June 15th, September 15th, and January 15th. Be sure to mark these dates on your calendar.
Understand Self-Employment Taxes
If you’re self-employed, you’re responsible for paying both the employer and employee portions of Social Security and Medicare taxes. The Social Security tax applies to the first $168,600 of net earnings, and the total self-employment tax rate is 15.3%. Planning ahead for self-employment taxes helps you avoid surprises at tax time.
Make sure to account for these taxes in your estimated payments if you’re self-employed. What to remember: The total self-employment tax rate is 15.3%. This tax applies to the first $168,600 of net earnings in the previous year.
Manage Payroll Taxes
If your business has employees, you must withhold payroll taxes like Social Security, Medicare, and federal unemployment taxes. Proper payroll management helps you stay compliant with IRS rules and avoid penalties. Make sure to classify workers correctly as either employees or independent contractors.
Misclassifying employees can result in fines and additional taxes. Payroll tax responsibilities: Withhold Social Security, Medicare, and unemployment taxes. Correctly classify workers to avoid fines.
Review Tax Deductions and Credits
Tax deductions and credits can significantly lower your taxable income. Common deductions for small businesses include health insurance premiums, self-employment taxes, and home office expenses. There are also various tax credits available for small businesses, such as credits for hiring employees or purchasing equipment.
The Value of Professional Tax Guidance
To make sure you’re taking full advantage of these opportunities, consult with a tax professional who can guide you through the process. Popular deductions:
Health insurance premiums
Self-employment taxes
Marketing expenses
Home office expenses
Check Compliance with Employment Tax Requirements
Employment tax compliance is crucial to avoid penalties. Make sure to classify workers correctly. As employees or contractors, submit the proper forms (e.g., W-4 for employees and 1099-NEC for contractors). Consulting a tax professional can help ensure compliance and reduce your risk of penalties.
Consult a Tax Professional
A tax professional can help you maximize deductions, file accurately, and avoid potential issues. For small business owners, hiring a tax expert can save time and money by ensuring everything is done correctly the first time. If your business has employees or inventory, a tax professional is especially useful in navigating complicated tax codes and regulations.
Plan for Future Tax Years
Planning for future tax years helps avoid last-minute stress. Keeping detailed records and using accounting software to track income and expenses throughout the year makes tax filing much smoother. It also enables you to see trends in your business’s finances, making it easier to plan. Consider setting up a retirement savings plan to take advantage of tax benefits and stay updated on any changes in tax laws that could affect your business.
Deadlines for Filing Small Business Taxes
Small business tax deadlines involve multiple dates throughout the year, including annual filing and quarterly estimated payments. Staying on top of these key IRS deadlines is essential to avoid penalties and interest charges. Here’s a detailed overview:
Annual Income Tax Filing Deadline
The main tax filing date for 2025 is 15 April. This deadline applies to individuals, sole proprietors, and C corporations following the calendar year. In Maine and Massachusetts, the deadline is 17 April due to state holidays. If you live in areas affected by declared natural disasters, the IRS has extended the deadline to 1 May 2025, covering states such as:
Alabama
Florida
Georgia
North Carolina
South Carolina
US citizens living abroad (expats) have until 16 June 2025 to file their tax returns. Farmers and fishermen must also file by 15 April (or 17 April in Maine and Massachusetts), though those in disaster areas may file by 1 May.
Quarterly Estimated Tax Deadlines
Businesses and self-employed individuals must make quarterly estimated tax payments to avoid underpayment penalties. For calendar-year taxpayers, these deadlines are:
15 January 2025: Final 2024 estimated tax payment.
15 April 2025: Q1 estimated tax payment.
16 June 2025: Q2 estimated tax payment.
15 September 2025: Q3 estimated tax payment.
Those using a non-calendar fiscal year must adjust payments accordingly, with due dates on the 15th day of the 4th, 6th, and 9th months of their tax year, plus the 15th day of the month following year-end.
LLC Tax Filing Deadlines
LLCs taxed as sole proprietorships: File by 15 April 2025 using your Form 1040. LLCs taxed as corporations: File corporate tax returns by 15 April 2025 (calendar year) or the 15th day of the fourth month after your fiscal year ends.
Employment Tax Deadlines
If you have employees, employment tax deposits and filings are critical:
Monthly deposit schedule: Deposit taxes by the 15th of the following month.
Semi-weekly schedule: Wages paid
Wednesday–Friday: deposit by the following Wednesday.
Wages paid Saturday–Tuesday: deposit by the following Friday.
Key dates include:
31 January 2025: Issue W-2s to employees and file Forms W-3, 940 (FUTA), and 943 (if you employ farmworkers).
16 February 2025: Begin withholding tax for employees who no longer qualify for exemption.
28 February 2025: Paper filing deadline for health coverage forms (1094/1095 series).
31 March 2025: Electronic filing deadline for the same forms.
30 April, 31 July, 31 October 2025, and 31 January 2026: Form 941 quarterly payroll tax returns due.
Extensions
If you need more time to file, you can request an automatic 6-month extension by submitting Form 4868 by 15 April. This extends the filing deadline but does not extend the payment deadline. Taxes owed must still be paid by the original due date to avoid penalties.
From Bookkeeping to CFO
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Book a call today to learn how our dedicated team can help you focus on building rather than bookkeeping.
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5 Tips for Effective and Stress-Free Tax Filing
1. Team Up with an Accountant Year-Round
Instead of waiting until tax season to hire an accountant, work with one throughout the year. An accountant can help keep your small business organized, and that can substantially reduce the stress of tax season. For example, an accountant can help you track income and spending and make sure that you are assembling and maintaining the proper documents.
Accountants can spot and address cash flow problems and work with you to monitor the health of your business. You and your bookkeeper should be using accounting software, and your accountant can assist you with how to use it properly to generate documents needed at tax time.
2. Keep Thorough and Accurate Records
In addition to having an accountant on call when needed, best practices for tax preparation include keeping thorough and accurate records throughout the year.
Without adequate record keeping, you could be leaving deductions on the table and find yourself with a higher tax responsibility. Worse, if documentation is unclear or inconsistent, you could be putting yourself and your business at risk for an audit.
3. Separate Business and Personal Finances
Many small business owners, especially solopreneurs, commingle expenses and accounts since they are the principals funding the business and accepting payments from customers. As another best practice, and not just for the sake of reporting taxes, create separate accounts for your business and personal expenses.
4. Classify Your Business Properly
Failing to classify your business entity correctly could result in the unnecessary overpayment of taxes. When classifying your business, several factors must be considered, such as whether you plan to include business partners, accept investment from outsiders, or hire employees, or how closely you want your personal and business finances aligned.
5. Monitor Payroll
While you might have separate payroll software or a service and maintain a separate payroll account at your bank, mismanaging payroll can have a dramatic effect on taxes. This might occur, for example, when a payroll service isn’t remitting payroll taxes correctly.
Book a Call to Learn More About our Accounting Services (Trusted by 400+ Startups)
Haven gives you time back. By outsourcing your tax needs to Haven, you can focus on growing your business instead of getting bogged down with complex tax codes and business tax preparation. Haven’s experts understand the nuances of startup tax prep. We’ll help you get every deduction available and prevent you from overpaying taxes or missing important deadlines.
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