First Time Business Owner Tax Checklist: Essential Steps

Tammy Swasey-Ballou

Feeling the Pressure of Tax Season?

Whether you're running a side hustle or a full-time operation, we understand how fast tax season can sneak up on you. Rest assured, preparing for taxes doesn't have to be overwhelming. Follow these practical steps to navigate the process smoothly and clear up some common myths along the way.

Get Your Business Records in Order

Start by organizing essential documents like bank statements, issued and received invoices, receipts, payroll records, mileage logs, and 1099s for contractors paid $600 or more. A common myth is that you can use your personal bank account and sort it out later—this is a mistake. Keeping business and personal finances separate is crucial to avoid headaches and ensure accurate record-keeping.

Organize Your Deductible Expenses

It's important to know which expenses are deductible. Common deductions include office rent or home office, software/tools, marketing, business meals (50%), travel, and professional services. Beware of the myth that everything you spend for your business is deductible. Many expenses are only partially deductible, while others are not deductible at all. Being aware of these exceptions will help you avoid unwanted surprises.

Know Your Tax Deadlines

Familiarize yourself with different tax deadlines: S corporations and partnerships have a deadline of March 15, while C corporations and sole proprietors must file by April 15. Additionally, quarterly estimated tax payments are due in April, June, September, and January. Mark these dates early to avoid penalties.

Know Which Forms You’ll Need

Tax forms can vary depending on your business type. As a sole proprietor, you'll need a Schedule C. If you're operating as an LLC or a partnership, you'll require Form 1065/K-1, and if you're an S corp or C corp, you'll need Form 1120-S/K-1 or Form 1120, respectively. Don't fall for the myth that LLCs don’t pay taxes; they can be classified differently by the IRS, impacting your filing requirements.

Move Forward Confidently

With the right documents, organized records, and clear deadlines, you can file accurately and retain more of your hard-earned money. Start organizing now or consult a tax professional for personalized guidance. You're more than capable of tackling this tax season head-on.