Your first year of business taxes

What you'll owe, when it's due, what you can deduct, and when to hand it to a professional.

Series 8 steps 1 hr 19 min of reading

Start with step 1: Work out what you'll owe

The 8 steps, in order

  1. Step 1 Work out what you'll owe How To Calculate Small Business Taxes Calculating business income for tax purposes starts with accurate bookkeeping throughout the year to have a reliable income statement. Once you have your income statement, you need to do an extensive search for other sources of income, unclaimed tax deductions, and potential tax credits that can offset your tax. It’s a lot of work, but… 14 min read
  2. Step 2 Understand how your LLC is taxed Guide To Small Business LLC Taxes & LLC Tax Returns Generally, limited liability company (LLC) taxes are reported as a sole proprietor on Form 1040 Schedule C if there is only one owner or on Form 1065 as a partnership if there are multiple owners. Sole proprietors and partnerships are flow-through entities, so the income is taxed on the owner’s tax return. However, it may… 6 min read
  3. Step 3 Budget for self-employment tax What Is Self-employment Tax: Rates & Calculations Self-employment tax consists of Social Security (12.4%) and Medicare (2.9%), for a total of 15.3%. It is assessed on income earned and must be paid even if you don’t receive a 1099-MISC for your services. If you’re a sole proprietor, freelancer, general partner, or independent contractor making $400 or more in self-employment income then you’ll… 4 min read
  4. Step 4 Put the deadlines in your calendar Small Business Taxes Deadlines Every SMB Should Know Small business tax deadlines are easier to remember when you group them by how the business is taxed, not by trying to memorize every date. A simple trick is to ask one question first: Does the business pass income through to the owner, or does it pay its own tax? That distinction usually tells you… 11 min read
  5. Step 5 Claim your write-offs 18 Tax Write-offs for Self-employed Taxpayers There are numerous tax write-offs for self-employed professionals that individuals can claim to save thousands of dollars. Here are 18 tax write-offs you should claim as a small business owner: Qualified business income tax deduction (QBID) Self-employment tax deduction Home office or work space tax deduction Depreciation deduction Internet and phone expenses Health insurance premiums… 16 min read
  6. Step 6 Deduct big purchases Section 179 Deduction for Property, Equipment & Vehicles The IRS Section 179 deduction lets business owners deduct the full amount of the cost of qualifying new and used machinery, furniture, vehicles, and certain improvement property up to $1,220,000 in 2024. Property purchased in excess of that threshold is eligible for regular depreciation. In the absence of Section 179, the cost of that same… 7 min read
  7. Step 7 File 1099s for contractors IRS Form 1099 Reporting for Small Businesses: Ultimate Guide IRS Form 1099 is a series of forms used to report certain types of income that don’t come from a direct employer in the form of wages, salaries, tips, etc. Form 1099-NEC (nonemployee compensation) is the most common version, frequently used by small business owners. If businesses pay $600 or more in compensation throughout the… 13 min read
  8. Step 8 Get help filing 5 Best Online Tax Preparation Services for Small Businesses Small business tax returns are complicated, and it’s usually worth it to hire a professional to prepare your partnership, corporation, or individual business return. However, you don’t have to spend a fortune on a local certified public accountant (CPA). This guide provides a list of online tax professionals who will prepare your small business tax… 8 min read

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