Tax Tips for Small Business Owners | Practical Advice

The home office deduction is one of the most commonly claimed — and most commonly questioned — deductions for small business owners. The IRS has specific rules about what qualifies, and they’re stricter than most people think. Getting it right means documenting your space and your usage. Getting it wrong means losing the deduction entirely during an examination. The Two Requirements: Regular and Exclusive Use To claim the home office deduction, your workspace must meet two te

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

The Section 199A Qualified Business Income (QBI) deduction was set to expire after 2025. It didn’t. The One Big Beautiful Bill Act made it permanent starting in 2026. If you own a pass-through business — sole proprietorship, S-Corp, partnership, or LLC — this deduction directly reduces your taxable income by up to 20% of your qualified business income. Here’s what the QBI deduction is, how it works, who qualifies, and what changed now that it’s permanent. What the QBI Deducti

If you’re self-employed or own a business that doesn’t withhold taxes from your income, the IRS expects you to pay taxes throughout the year — not just at filing time. These are quarterly estimated tax payments, and getting them wrong is one of the fastest ways to end up with a penalty you didn’t see coming. Here’s how estimated taxes actually work, when they’re due, how to calculate them, and how to avoid the most common mistakes. Who Needs to Pay Estimated Taxes If you expe

If you run an S-Corp, you’ve probably heard that you can save on self-employment taxes by paying yourself a “reasonable salary” and taking the rest as distributions. That’s true in concept. But the execution is where most S-Corp owners get into trouble — and it’s one of the most common issues flagged in S-Corp examinations. Having been on the IRS side of these examinations, I can tell you: the issue isn’t usually that an owner is paying themselves too little. The issue is tha

Filing a Schedule C can be a straightforward way for entrepreneurs and small business owners to report income and expenses. Yet, certain patterns and claims on this form often catch the IRS’s attention and increase the chance of an audit. Understanding these red flags can help you avoid unnecessary scrutiny and keep your business tax filings smooth. This post explores seven common Schedule C audit red flags, explaining why they raise questions and how you can address them. Wh

Keeping tax records organized and knowing how long to keep them can save you from headaches during an audit or when reconstructing your financial history. The IRS has specific rules about how long you should retain different types of tax documents. Understanding these rules helps you stay compliant and avoid unnecessary clutter. This post explains the IRS record retention guidelines, focusing on the standard statute of limitations, special cases, differences between business

Setting a reasonable salary for S-Corporation owners is one of the most critical tax issues these businesses face. Reasonable compensation is a recurring focus area in S-Corporation examinations because it directly affects employment tax reporting. Getting this wrong can lead to costly audits and penalties. This post breaks down what the IRS looks for, how to document your salary decisions, and why guessing a number can cause serious problems. IRS review of S-Corp salary docu

Keeping the right business records for the right amount of time can save you from costly audits, fines, and lost opportunities. Many business owners struggle with knowing which documents to keep and for how long, especially under IRS rules. This guide breaks down the essentials of record retention, helping you stay compliant and organized without drowning in paperwork. Organized filing cabinet with labeled folders Why Record Retention Matters Proper record retention is more t

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

Tax season often leaves taxpayers wondering if they missed something important on their returns. One common question is whether you can amend a tax return to add more deductions. The answer is yes, but deciding if you should is more complex. This post explores when amending your tax return makes sense, what risks to watch for, and how to approach the process responsibly. ! Close-up view of a tax form with a pen resting on it When Amending a Tax Return Is Appropriate Amending

When tax season arrives, many small business owners face a crucial question: how does filing as a Schedule C sole proprietor differ from filing as an S-Corporation? Understanding these differences can save time, reduce stress, and potentially lower your tax bill. This post breaks down what changes and what stays the same at tax time when you move from Schedule C to an S-Corp. The goal is to give you clear, practical information so you can make informed decisions based on fact

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

Filing taxes for S-Corporations and Partnerships involves more than just filling out forms. The IRS requires specific documents that must be accurate and complete to avoid penalties and ensure smooth processing. As the March 16 deadline approaches, understanding which documents are non-negotiable for 1065 (Partnership) and 1120-S (S-Corporation) filings becomes critical. This post breaks down the essential paperwork and explains the concept of basis reporting, a key element o

Every year, businesses and tax professionals face a critical deadline that can cause confusion and costly mistakes: the February 28 deadline for paper filing 1099 forms. This date is often overlooked or misunderstood, especially as the IRS increasingly pushes for electronic filing. Missing this deadline can lead to penalties and delays. It's essential to understand the rules and the shift toward digital submissions. This post breaks down the key facts about the 1099 paper-fi

If you’re self-employed, chances are you’ve had this moment: You file your tax return. You see the tax bill. You think,  “There’s no way this is right.” It usually is. Self-employment taxes aren’t mysterious—but they are widely misunderstood. Most stress around them doesn’t come from the amount itself. It comes from  not knowing what you’re paying, why you’re paying it, or how to plan for it . This guide explains self-employment taxes in plain English: What they actually ar

Tax season has a way of making otherwise rational people spiral. Even taxpayers who’ve filed for years suddenly second-guess everything: Did I miss something? What if I did this wrong? What if the IRS flags me? Should I rush and just get it over with? Here’s the reality I want you to understand — grounded in how the IRS actually works: Tax season panic almost never aligns with IRS risk. I didn’t see tax returns in real time. I didn’t see people rushing to file. I didn’t see t

January is a quiet month for taxes—and that’s exactly why it matters. There are no filing deadlines breathing down your neck yet. Forms are still arriving. The IRS isn’t actively chasing most people. And because of that, January is when many taxpayers do… nothing. That’s a mistake. From inside the IRS, January is where a lot of future tax problems quietly start—not because people are doing anything wrong, but because they delay simple, foundational steps that make the rest of

Every December, the internet explodes with tax advice. “Write everything off!” “Buy a truck!” “Open an LLC tonight!” “Spend money to save taxes!” Most of that advice is either  misleading, incomplete, or flat-out wrong . Here’s the reality, grounded in IRS rules and how returns are actually reviewed: By December 31, only certain tax moves still matter—and only if they’re done correctly. This post walks through: What legitimately counts before midnight What does  not  work (de

Every year, tax season shows up like it owns the place. And every year, the internet does the same thing: screams about “massive changes,” “new rules,” and “big refunds,” while most taxpayers are still trying to find their W-2. So let’s cut through the noise. Tax Season 2026  means you’re filing your  2025  federal return (generally due April 15, 2026). A few things  did  change. A lot stayed the same. And only a handful of updates actually matter for real people—especially s