Tax Tips for Small Business Owners | Practical Advice

The individual estimated-tax penalty is based on required installments during the year, not merely the balance due with the return. Current-year tax, prior-year tax, adjusted gross income, withholding timing, annualized income, exceptions, and waivers all matter.

The Section 41 research credit may apply outside traditional technology companies, but qualified activities, expenses, funding rights, documentation, and the separate domestic research-expensing rules must be analyzed carefully.

Section 1031 generally applies only to qualifying real property held for business or investment. The 45-day identification rule, 180-day completion rule, qualified intermediary, related-party rules, debt relief, cash boot, basis, and depreciation all matter.

A home office inside the dwelling generally does not require allocating gain away from the Section 121 exclusion, but depreciation allowed or allowable after May 6, 1997 remains taxable. Detached structures and nonqualified use require separate analysis.

IRC §280A(g) may exclude rent from a residence rented for fewer than 15 days during the year. A related business receives a deduction only when the payment is a genuine, ordinary, necessary, reasonable, and properly supported business expense.

Selling depreciated business property can produce ordinary income under Section 1245, unrecaptured Section 1250 gain for individuals, Section 1231 gain or loss, and additional entity or installment-sale consequences. The original cost, adjusted basis, depreciation allowed or allowable, and sale allocation control.

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.

The de minimis safe harbor can let a business expense qualifying small-dollar purchases instead of tracking them on multi-year depreciation schedules—but the accounting procedure and annual election requirements matter.

A former C corporation may owe corporate-level tax when it recognizes gain that existed on the first day of S corporation status. The five-year recognition period, NUBIG limit, taxable-income limit, and asset records all matter.

Partnership tax items do not always have to follow ownership percentages. Special allocations must be supported by the agreement, capital-account rules, economic effect, or the partners' interests in the partnership.

By July, you're past the halfway point of the calendar year. The tax return you just filed—or the extension you're working under—covers 2024. But the return you're building right now is 2025 (or 2026, depending on when you're reading this), and the decisions you make between now and December 31 will determine what that return looks like. Year-end tax planning is reactive. Mid-year planning is proactive—and it almost always produces better outcomes because you still have time

The Qualified Business Income deduction under IRC §199A allows eligible pass-through business owners to deduct up to 20% of qualified business income. OBBBA made the deduction permanent and expanded the phase-in range for higher-income taxpayers beginning in 2026. But for owners above the taxable income threshold, the deduction is not always a simple 20%. Two additional limitations may apply: one based on W-2 wages paid by the business, and one based on the unadjusted basis o

Self-employed business owners who choose a High-Deductible Health Plan (HDHP) gain access to one of the most tax-advantaged savings vehicles in the Internal Revenue Code: the Health Savings Account (HSA). The HSA is not an employer benefit—it's an individual account that you own, control, and take with you regardless of business changes. The combination of three separate tax advantages makes it unique among savings tools, and the ability to invest HSA funds creates a long-ter

Short-term rental platforms like Airbnb, VRBO, and Hipcamp have made it easy to turn a spare room or vacation property into income. What they haven't made easy is understanding the tax consequences. Short-term rental income doesn't fit neatly into a single tax category—depending on how many days you rent and how much time you spend managing the property, it can be treated as passive rental income, active business income, or even excluded from gross income entirely. Getting th

Small business owners who want to help employees pay for health insurance but cannot afford, or do not want to manage, a traditional group health plan may have two alternatives to consider: the Qualified Small Employer Health Reimbursement Arrangement, or QSEHRA, and the Individual Coverage Health Reimbursement Arrangement, or ICHRA. Both arrangements can allow employers to reimburse eligible employees for individual health insurance premiums and qualified medical expenses on

If your business carries debt—whether a line of credit, equipment loans, commercial real estate financing, or acquisition debt—you may be affected by the Section 163(j) limitation on the business interest expense deduction. Before 2018, interest on legitimate business debt was generally fully deductible. The Tax Cuts and Jobs Act capped that deduction for larger businesses and introduced a formula that limits deductible interest based on a percentage of a metric called Adjust

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

The Tax Cuts and Jobs Act introduced a limitation that surprises many business owners who have a large loss year: the excess business loss limitation under IRC §461(l). In plain English, this rule can stop you from using all of your business loss against other income in the current year. That does not mean the loss disappears. It means part of the deduction may be delayed and carried forward. This is one of the reasons tax planning across years matters. A loss year is not jus

Pass-through losses from an S-Corp or partnership flow through to your personal return on Schedule K-1. But a K-1 loss doesn't automatically translate into a deduction. Multiple limitation systems — including basis, at-risk, and passive activity loss rules — can block or defer that deduction, sometimes for years. Understanding how these work prevents surprises on your return and helps you plan around them. Basis Limitations In an S-Corp or partnership, your ability to deduct

If you're self-employed and paying for your own health insurance, you may be entitled to deduct 100% of your premiums without itemizing. It's one of the few above-the-line deductions that directly reduces your adjusted gross income, which can ripple through your entire return—affecting other calculations on the return, including QBI in some cases, eligibility for certain credits, and ultimately your tax bill. Many business owners either miss this entirely or set it up incorre