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5 Things You Need to Know Before Filing Taxes

Updated: Jan 24, 2021

Tax season can be a super stressful time for a new business owner, but it doesn't have to be. If you haven't hired a bookkeeper yet, take advantage of these 5 tips to get through tax season without a headache.


  1. Check out your tax form ahead of time at look at questions you'll be asked, and what line items you'll be expected to fill out.


2. If you're a sole proprietor running a home-based business, remember to take advantage of your "Home Office Deduction" if you use a dedicated space in your home exclusively for work. You'll be asked to measure the square footage of your office space to determine the deduction value - but this little trick could save you hundreds of dollars each year.


3. Don't forget to file 1099-NEC forms for your contractors that provided a service to your business that you paid more than $600 to during the calendar year. The best business practice is to obtain your vendor's W-9 form before issuing their first payment, that way you're not tracking down their SSN or EIN at the end of the year.


4. If you use a vehicle for your business, keep careful track of all your auto expenses and mileage. Keep a log of miles, where you traveled to, who was seen, and what the business purpose was. Hold onto receipts from any maintenance, repairs, and registration as well.


5. Make sure that you're setting aside money every month for Self-Employment Tax. A lot of business owners forget that this can be a big chunk of your tax bill, and can come as quite a shock when they end up owing thousands of dollars that they weren't saving for. A good business practice is setting aside 20-25% of your revenue for taxes.


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