For franchise and small business owners, the earlier you start, the better when it comes to tax preparation. January is the perfect time to get your tax season off on the right foot. Waiting until the last minute can lead to missed opportunities, errors, or even penalties, but by taking the time now to organize, review, and plan, you can simplify the process and maximize your savings.
Step-by-Step Guide to Small Business Owner Tax Preparation
Step 1: Organize Your Financial Documents
The first step is gathering all the financial records you’ll need for accurate reporting. This includes:
- Receipts for business expenses, including supplies, travel, and utilities.
- Payroll reports for employees and independent contractors.
- Bank and credit card statements to verify income and expenses.
- Previous year’s tax return to compare and ensure consistency.
Taking the time to compile these now will make the rest of the process much smoother.
Step 2: Review and Reconcile Financial Statements
Before filing, you’ll want to ensure that your financial statements are accurate. Focus on:
- Income Statement: Verify that all income sources and expenses are recorded.
- Balance Sheet: Reconcile assets, liabilities, and equity to ensure they match your records.
- Cash Flow Statement: Look for discrepancies in cash inflows and outflows.
Reconciling your accounts early on can help you identify any errors or irregularities right away, avoiding delays later.
Step 3: Prepare Employee and Contractor Tax Forms
By law, you need to provide W-2s to your employees and 1099-NECs to contractors who earned $600 or more during the year. Confirm that names, addresses, and Social Security Numbers are accurate to avoid processing issues.
Step 4: Confirm Filing Requirements and Deadlines
Your filing requirements will count on your business structure:
- Sole Proprietors and LLCs: File Schedule C with Form 1040.
- S-Corps: File Form 1120S and distribute Schedule K-1s to shareholders.
- C-Corps: File Form 1120.
- Partnerships: File Form 1065 and distribute Schedule K-1s to partners.
Staying aware of all the tax deadlines can help you manage your time and obligations effectively.
- January 15, 2025:
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- Final Estimated Tax Payment for 2024 due for self-employed individuals and businesses making quarterly payments.
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- January 31, 2025:
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- W-2 Forms must be sent to employees and filed with the Social Security Administration.
- 1099-NEC Forms must be distributed to contractors and filed with the IRS.
- File Form 940 (Federal Unemployment Tax) and Form 941 (Quarterly Employer Tax Return).
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- March 17, 2025:
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- S-Corporation (Form 1120S) and Partnership (Form 1065) tax returns due, unless an extension is filed.
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- April 15, 2025:
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- Individual tax returns (Form 1040) and C-Corporation tax returns (Form 1120) due.
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- September 15, 2025:
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- Extended deadline for Partnership and S-Corporation returns.
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- October 15, 2025:
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- Final day to file for Sole Proprietorships and C-Corporations with extensions.
Also, be sure to check for any state or local tax obligations, like sales tax or property tax filings.
Step 5: Identify Tax Deductions and Credits
One of the most significant benefits of proactive tax preparation is finding tax deductions that can reduce your tax liability. Common tax deductions include:
- Office expenses (rent, utilities, supplies).
- Vehicle expenses (mileage or maintenance for business use).
- Depreciation of business equipment.
- Employee benefits and wages.
- Travel, meals, and entertainment related to business.
Research tax credits, like the Work Opportunity Tax Credit (WOTC) or energy efficiency incentives, that may apply to your business. For small business owners like you, these savings can make a big difference.
Step 6: Plan for Estimated Taxes
If you anticipate a significant tax liability for 2025, begin setting aside funds now to cover quarterly estimated tax payments. This forward-thinking approach ensures you won’t face cash flow issues later.
How Ceterus Can Help
At Ceterus, we understand how overwhelming tax prep can be for franchise and small business owners. That’s why we’ve built a suite of solutions designed to simplify the process and give you peace of mind.
Year-Round Financial Support
Our bookkeeping services guarantee your financial records are always organized, up-to-date, and ready for tax season. By working with your data year-round, we’re able to provide accurate and actionable insights when it matters most.
Comprehensive Tax Solutions
From preparing and filing W-2s and 1099s to handling complex filings for multi-location franchises, we take the hassle out of compliance. Whether it’s business, sales, or personal taxes, we’re here to help.
Proactive Tax Planning
Because we know your financials inside and out, we help you identify deductions, minimize your tax burden, and avoid surprises. Our expertise ensures you’re taking full advantage of the tax code while staying compliant with federal, state, and local regulations.
Start 2025 Strong with Proactive Tax Preparation
Now is the time to take control of your tax obligations and set your business up for a successful year. By organizing your financials, meeting deadlines, and leveraging expert support, you can make tax season far less stressful—and far more beneficial.
Ready to simplify your small business tax preparation? Schedule a call with Ceterus today to learn how we can help.
