First Time Business Owner Tax Checklist

Organize Your Deductible Expenses

Starting a business is an exhilarating journey, but when tax season approaches, it can quickly become overwhelming. Whether you're operating a full-time venture or a side hustle, staying ahead of taxes is crucial. Begin by organizing your deductible expenses. Common deductions include office rent, software, marketing costs, business meals (which are typically 50% deductible), and travel. Remember, not everything qualifies. The myth that "everything I spend for my business is deductible" can lead to costly mistakes. Some expenses are only partially deductible, and personal expenses don't count.

Get Your Business Records in Order

One of the most essential tasks is getting your business records in order. This includes maintaining invoices, receipts, bank statements, payroll records, and mileage logs. For instance, any contractors paid $600 or more should receive a 1099. It's crucial to address the misconception that you can use a personal bank account for business transactions and sort it out later. Keeping business and personal finances separate helps in maintaining clear records and can prevent tax issues.

Know Which Forms You’ll Need

Understanding which forms you'll need is pivotal and depends on your business structure. Sole proprietors usually file a Schedule C, while LLCs might file a Form 1065 if they have multiple members. Partnerships also use Form 1065, distributing profits via K-1s. S corporations need a Form 1120-S, and C corporations file Form 1120. A common myth is that "LLCs don’t pay taxes," which stems from IRS classification rules that actually require LLCs to choose their tax status.

Know Your Tax Deadlines

Tax deadlines vary and missing them can lead to penalties. S corporations and partnerships need to file by March 15, while C corporations and sole proprietors have until April 15. Don't forget about quarterly estimated taxes due in April, June, September, and January. Setting reminders early can help you avoid last-minute stress.

Take Action Now

Tackling taxes might seem daunting, but it doesn't have to be overwhelming. With organized records, the right documents, and clear deadline reminders, you can file accurately and keep more of your earnings. Start organizing now, and consider reaching out to a tax professional for personalized guidance.