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Small Business Tax & Bookkeeping Blog | Zero Fluff Books
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Form 1099-K: What Small Business Owners Actually Need to Know
There has been a lot of confusion around Form 1099-K over the last few years. For a long time, many small sellers and freelancers only received Form 1099-K if they had more than $20,000 in payments and more than 200 transactions through a third-party payment platform. Then the threshold became a moving target, which created a lot of panic and bad information online. But the more important point never changed: The 1099-K does not create the tax liability. The income does. If y
Lauren Twitchell, EA
12 hours ago4 min read
SEP-IRA, Solo 401(k), or SIMPLE IRA: Choosing the Right Retirement Plan for Your Small Business
Retirement planning is one of the few areas where the tax code is genuinely trying to help you. As a self-employed business owner, you have access to retirement vehicles that allow you to contribute significantly more than a traditional employee—and, in many cases, deduct contributions within IRS limits. The three most common options for small business owners are the SEP-IRA, the Solo 401(k), and the SIMPLE IRA. Each one fits a different situation. SEP-IRA (Simplified Employe
Lauren Twitchell, EA
1 day ago2 min read
Trust Fund Recovery Penalty: When the IRS Holds You Personally Liable for Business Payroll Taxes
If your business owes payroll taxes, you might assume that's a business problem. The IRS disagrees. Under the Trust Fund Recovery Penalty (TFRP), the IRS can assess the unpaid employee portion of payroll taxes directly against individuals—piercing through the business entity entirely and going after personal assets. This is one of the few places in tax law where the protection a business entity normally provides simply disappears. What Are Trust Fund Taxes? When you run payro
Lauren Twitchell, EA
2 days ago2 min read
What the IRS Expects When You Close a Business (And Why Most Owners Don't Plan for It)
Closed sign Closing a business isn't just a business decision—it's a tax event. The IRS has specific expectations for what needs to happen when you shut down operations, and skipping these steps creates problems that follow you long after the doors close. Most owners focus on the operational side and never think through the tax side until it's too late. Filing Final Returns Every entity type has a required final return process. For a sole proprietor filing on Schedule C, no s
Lauren Twitchell, EA
3 days ago2 min read
What Triggers an S-Corp Payroll Audit (And How to Defend It)
S-corps are one of the IRS's most consistent examination targets in the small business space. The reason is straightforward: owner compensation is the primary mechanism through which S-corp owners avoid self-employment tax on business income, and the IRS knows it's frequently abused. Here's what triggers scrutiny, what agents look at during an S-corp payroll examination, and what makes a defensible position. How S-Corp Owners Get Selected The IRS uses automated scoring system
Lauren Twitchell, EA
May 222 min read
The Real Cost of DIY Bookkeeping for a Growing Small Business
A lot of small business owners do their own bookkeeping, especially early on. It makes sense at the start — the transaction volume is low, the categories are simple, and paying someone to do it feels like an unnecessary overhead. But as the business grows, that calculation changes. And most owners don't realize it until the cost has already been paid. The Time Cost Is Larger Than It Looks Small business owners consistently underestimate how long bookkeeping takes. Logging tra
Lauren Twitchell, EA
May 212 min read
What a QBI Deduction Mistake Costs You Over 5 Years
The Section 199A qualified business income deduction is now permanent. For pass-through business owners — sole proprietors, S-corps, partnerships — it's worth up to 20% of qualified business income. It's one of the most valuable deductions available to small business owners. It's also one of the most commonly miscalculated. Let's put a number on what a planning error here actually costs over time. How the Deduction Works (Briefly) QBI is the net income from a qualified trade
Lauren Twitchell, EA
May 202 min read
You Got a Refund. That Doesn't Mean Your Return Was Right.
A refund feels like a passing grade. It means you paid more than you owed, the IRS processed your return, and you're getting money back. For most people, it signals: no problems here, move on. That's not how it works. What a Refund Actually Means A refund is a cash flow calculation — it reflects the difference between your tax liability and what you prepaid through withholding or estimated payments. It says nothing about whether the return was prepared correctly. You can have
Lauren Twitchell, EA
May 192 min read
Why Zero Fluff Books Now Uses Online Intake for Prospective Clients
Starting the process with a tax or bookkeeping firm should not require phone tag. Many small business owners reach out when something already feels messy. The books may be behind. A tax return may need to be filed. An IRS notice may have arrived. Or there may simply be a question that is too detailed to explain well in a voicemail. That is why Zero Fluff Books now allows prospective clients to begin through our secure online intake portal. This change is not about making the
Lauren Twitchell, EA
May 183 min read
Partnership Basis: The Tax Problem That Builds Silently Until It Explodes
If you're in a partnership — or an LLC taxed as a partnership — there's a number you're supposed to be tracking every year. It's called your outside basis. Most partners have no idea what it is. And the IRS doesn't track it for you. The consequences of ignoring basis don't always show up immediately. They accumulate quietly over years, and then they surface at exactly the worst time: when you sell your interest, when you receive a large distribution, or when the partnership g
Lauren Twitchell, EA
May 183 min read
Bank Deposit Analysis: The IRS Audit Method Most Business Owners Have Never Heard Of
When the IRS suspects unreported income, they don't just ask you to prove what you earned. They build their own number. One of the most common methods they use to do that is bank deposit analysis. If you don't know what this is, that's a problem — because it can result in a significant tax assessment based entirely on deposits you made and can't adequately explain. How It Works Bank deposit analysis is an indirect method of reconstructing income. The IRS totals all deposits m
Lauren Twitchell, EA
May 152 min read
What Is a Tax Advisory Retainer and Who Actually Needs One?
Most business owners interact with their tax professional once a year: hand over the documents, get the return filed, pay the bill. That model works fine if your tax situation is stable, simple, and doesn't change much. But for a lot of small business owners, that's not what's happening. A tax advisory retainer is a different kind of engagement — one structured around ongoing access, proactive planning, and year-round oversight rather than a single annual transaction. What It
Lauren Twitchell, EA
May 142 min read
The S-Corp Checklist: 7 Things That Should Happen Every Year (Not Just at Tax Time)
Running an S-corp isn't just a tax strategy — it's a compliance structure. And compliance structures require maintenance. Most S-corp owners do two things consistently: run payroll and file the return. That's not enough. Here are seven things that should happen every year inside an S-corp, and why each one matters. 1. Document Your Reasonable Compensation Basis The IRS expects S-corp owners who perform services for the company to pay themselves a reasonable salary before taki
Lauren Twitchell, EA
May 133 min read
Why Tax Season Prep Starts in May, Not January
Most small business owners treat taxes like a one-time event. File the return, pay what you owe, move on. Then January hits and they're scrambling — missing records, making rushed decisions, and handing their tax preparer a mess to sort out in six weeks. The business owners who have the easiest tax seasons aren't more organized by nature. They made better decisions in May. The Window That Opens After Filing Once your return is filed, you have roughly eight months before thing
Lauren Twitchell, EA
May 112 min read
Building an Audit-Ready Business: A Year-Round Documentation Checklist
Being audit-ready doesn’t mean you expect the IRS to show up. It means your records are organized enough that if they did, you wouldn’t need to scramble. The businesses that survive audits cleanly aren’t doing anything special at audit time — they’re doing basic things consistently throughout the year. Here’s a year-round checklist for building an audit-ready business. It’s not complicated. It’s just consistent. Monthly: Close Your Books Every month, categorize all transactio
Lauren Twitchell, EA
May 82 min read
How to Respond to an IRS Letter 2531 (1099/Income Discrepancy Notice)
An IRS Letter 2531 is a correspondence examination notice related to income discrepancies. It means the IRS compared the income you reported on your return with the information returns (1099s) filed by third parties, found a difference, and is asking you to explain it. It’s not a full audit — it’s a targeted inquiry about specific income items. What Triggers a Letter 2531 The IRS receives copies of every 1099-NEC, 1099-MISC, 1099-K, and W-2 filed by payers and platforms. Thei
Lauren Twitchell, EA
May 72 min read
What Small Business Owners Get Wrong About the SALT Deduction After the OBBBA
The state and local tax (SALT) deduction has been one of the most debated provisions in tax law since the TCJA capped it at $10,000 in 2018. The One Big Beautiful Bill Act raised that cap to $40,400 for 2026, with income-based phase-downs for higher earners. For small business owners — especially those in states with income tax — this changes the math on itemizing, entity structure, and pass-through entity tax elections. What Changed Under the TCJA, the SALT deduction for ind
Lauren Twitchell, EA
May 62 min read
Independent Contractor vs. Employee: How the IRS Makes the Determination
construction workers Hiring someone as an independent contractor instead of an employee has real tax consequences — for both you and the worker. When the classification is wrong, the IRS can reclassify the relationship and assess back employment taxes, penalties, and interest. Worker misclassification is one of the IRS’s top enforcement priorities because it directly affects employment tax revenue. Why the Classification Matters If someone is an employee, you’re required to w
Lauren Twitchell, EA
May 52 min read
Depreciation and Section 179 for Small Business Owners: When to Expense vs. Depreciate
heavy duty bulldozer When you buy equipment, a vehicle, or technology for your business, you generally can’t deduct the full cost in the year you purchased it. Depreciation spreads the deduction over the asset’s useful life. But Section 179 and bonus depreciation let you accelerate that deduction — sometimes taking the entire cost in year one. Knowing when to use each method is a significant tax planning lever. Section 179: Full Expensing in Year One Section 179 allows you to
Lauren Twitchell, EA
May 42 min read
IRS Penalty Abatement: First-Time Abatement vs. Reasonable Cause
Envelope IRS penalties add up fast. A failure-to-file penalty is 5% of the unpaid tax per month, up to 25%. A failure-to-pay penalty is 0.5% per month. On a $20,000 balance, penalties alone can add thousands of dollars to what you owe. But the IRS has formal processes for reducing or removing penalties when the circumstances warrant it. There are two primary paths: first-time penalty abatement (FTA) and reasonable cause. They work differently, have different requirements, and
Lauren Twitchell, EA
May 12 min read
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