Small Business Basics: Bookkeeping, Taxes & Financial Tips

For 2026, the business standard mileage rate is 72.5 cents per mile. Vehicle weight, business use, depreciation elections, and documentation determine whether mileage, actual costs, Section 179, or bonus depreciation is available.

An asset purchase and a stock or equity purchase can produce very different basis, tax-character, liability, contract, and reporting results. LLC interest sales require separate entity-classification analysis.

Schedule K-1 reports an owner's share of pass-through tax items, not simply cash received. Distributions, basis, loss limitations, guaranteed payments, and separately stated items can all create differences.

A domestic LLC generally defaults to disregarded-entity treatment with one owner and partnership treatment with two or more owners, unless a valid election or special rule applies.

An LLC receives a default federal tax classification based largely on the number and type of owners unless a valid corporate election is made. The state-law entity and federal tax classification are separate issues.

When your quarterly Form 941 filings don't reconcile with your annual W-2/W-3 totals or your deposits, the IRS notices — and the letters that follow are worth understanding.

Ask most business owners what tax rate they pay and they'll give you their top bracket—37%, 32%, 24%, whatever it is. That number is their marginal rate, and while it matters for decision-making at the margin, it's not the rate they actually pay on all of their income. The effective tax rate—the percentage of total income actually paid in federal taxes—is almost always lower, sometimes significantly so. Understanding the distinction between these two concepts isn't just an ac

The default advice for most small business owners who want to reduce self-employment taxes is to elect S-Corp status. And for the right situation, that's correct. But the reflexive assumption that an S-Corp is always better than a C-Corp ignores scenarios where the corporate flat tax rate—21% under TCJA and maintained under the OBBBA—produces meaningfully better after-tax outcomes. Understanding when a C-Corp wins requires looking at effective tax rates, retained earnings str

Cryptocurrency isn't a fringe asset class anymore—small business owners are using it to pay contractors, accept customer payments, hold it as an investment, and make purchases. And the IRS has been unambiguous since 2014: cryptocurrency is property for federal tax purposes, not currency. Every transaction involving crypto has potential tax consequences, including transactions that feel routine. Beginning with certain 2025 digital asset transactions reported in 2026, the IRS i

Making the S-Corp election is theoretically straightforward: file Form 2553, get confirmation, done. In practice, Form 2553 has a surprising number of failure points, and many business owners don't discover the problem until they're mid-audit or trying to prepare returns years after the fact. Here's where the election goes wrong. Missing the Filing Deadline For a calendar-year entity, the S-Corp election is generally due no more than 2 months and 15 days after the beginning o

Starting a business costs money before you make any. Market research, legal fees, training, licenses, state filing fees—all of this happens before you open. The IRS has specific rules for how these pre-opening costs are treated, and a lot of new business owners either miss the deduction entirely or get the timing wrong. Here's how it actually works. What Are Startup Costs? Startup costs are amounts paid or incurred to investigate the creation of an active business or to creat

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

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

You started selling things on Etsy. Or freelancing on the side. Or doing photography on weekends. It started as extra income, but now it’s generating real money. At some point, the IRS stops treating that activity as a hobby and starts treating it as a business — and the tax consequences of that distinction are significant. Here’s how the IRS draws the line, what factors they look at, and why getting this right matters for your deductions and your liability. Why the Distincti

You filed your return. The extension is submitted or the e-file went through. That feeling of relief is real — but this is exactly the moment most business owners make a mistake. They close the laptop, move on, and don’t think about their books again until January. By then, they’re behind again. Here’s what to do in the 30 days after filing to set yourself up for a significantly easier next year. Save a Copy of Everything Download a PDF of your filed return, all schedules, an

Bookkeeping is a vital part of running a small business, yet many owners struggle with it. Mistakes in bookkeeping can lead to cash flow problems, tax issues, and poor financial decisions. Understanding the most common bookkeeping mistakes small business owners make helps you avoid costly errors and keep your finances on track. Common bookkeeping clutter with receipts and ledger Mixing Personal and Business Finances One of the biggest bookkeeping mistakes small business owner

Tax season can be stressful, especially when your tax preparer asks for documents you don’t have on hand. Missing paperwork often leads to delays, extra phone calls, and sometimes even penalties. To avoid these headaches, it’s crucial to come prepared with the right documents. This post offers a clear checklist and practical advice to help you gather everything your tax preparer needs for a smooth and timely filing. ! Eye-level view of organized tax documents neatly stacked o

Getting your 1099 forms done is a big relief for many business owners, but the work doesn’t always stop there. Many miss critical steps that can lead to penalties or compliance headaches later. If you think your 1099s are all set, it’s worth a quick review to avoid common mistakes and understand what true 1099 compliance requires. This post covers what you need to know to stay on track, including TIN matching, frequent errors, when you can still fix issues, and the difference

If you are self-employed and have been putting off bookkeeping, you are not alone. Many freelancers, consultants, and small business owners think they can just "figure it out at tax time." But this approach often leads to higher costs, stress, and even trouble with the IRS. Understanding what the IRS expects and how clean records can save you money and headaches is crucial as tax season approaches. Messy bookkeeping materials on a desk . Why Waiting Until Tax Time Usually Cos

Running a business involves many moving parts, but two of the most critical functions often overlooked are bookkeeping and tax preparation. Both play distinct roles in managing your finances, yet they work best when combined. Without proper bookkeeping, tax preparation becomes a guessing game, and without accurate tax preparation, your business risks penalties and missed opportunities. This post explains why you need both and how they support your business’s financial health.