Frequently Asked Questions
Clear answers on the best small business tax deductions, credits, and quarterly payments — so you keep more of what you earn.
…more clarity about what they owe.
…confirmation they’re not overlooking the best small business tax deductions
…the assurance that their records will hold up if the IRS comes calling.
Why?
Because running a South Shore business means making dozens of decisions every week. And few of them carry as much weight as the ones tied to your finances and taxes.
Instead of leaving you to sort through it all on your own, I’ve gathered the most common issues I’m asked about, with clear answers here. So you can stay compliant, keep your cash flow steady, and make informed decisions for your business.
FAQ
What paperwork do I need for small business taxes?
(Psst…a big mistake I see small business owners make here? Mixing personal and business expenses. Keep them separate from day one. It’ll save you hours during tax prep.)
If you don’t have a system in place yet, that’s where good bookkeeping practices come in. With organized records, tax preparation becomes far less stressful.
Should I be an LLC or S-Corp for taxes?
With LLCs, you file a Schedule C, pay self-employment tax on all profits, and don’t need payroll. Which makes them great for newer businesses or those with smaller profit margins.
With S-Corps, you have to pay yourself a reasonable salary through payroll. But remaining profits aren’t subject to self-employment tax (which can mean pretty significant savings).
The magic number: Most business owners see benefits switching to S-Corp taxation when their profits consistently hit $60-$80K or more annually. So, choose based on your current profit level and whether you’re ready for the heavier administrative burden that comes with S-Corp status.
What’s the difference between a profit and loss statement and a cash flow statement?
A cash flow statement tracks the actual movement of cash into and out of your business over the same period. It answers the question, “Does my business have enough cash to pay its bills?
Having both reports 1) prepared accurately and 2) reviewed regularly is one of the cornerstones of sound accounting. Because these are the tools that let you actually see the health of your business.
How can I improve my business’s cash flow?
The first strategy I recommend to clients is invoicing immediately upon delivery. And aggressively follow up on overdue accounts. Most small businesses lose thousands because they’re too polite about collecting what they’re owed.
You can also flip the script on payables by negotiating longer payment terms with suppliers while maintaining good relationships. This essentially uses their financing to keep cash in your business longer.
If you carry inventory, focus on lean inventory management. And create a simple 90-day cash flow forecast to anticipate tight spots before they hit.
How do I know if someone is an employee or an independent contractor?
Getting this right is crucial. Because misclassifying someone can lead to penalties for unpaid payroll taxes. Proper payroll accounting keeps you compliant and gives you a defensible position if the IRS ever asks questions.
As a business owner, do I have to pay taxes to the IRS when I file or throughout the year?
And be sure to follow the Safe Harbor Rule: Pay 100% of last year’s tax liability (110% if AGI exceeded $150K) to avoid penalties.
Tax planning is what keeps you ahead here. By reviewing your financials during the year, we can project what you’ll owe and make sure your estimated payments are accurate.
What can I write off for my business?
Home office expenses, business meals, professional development, equipment, software subscriptions, and travel costs are all legitimate deductions you can take when they directly support your revenue-generating activities.
The critical test is whether you would have incurred this expense without your business. If the answer is no, you’re likely on solid ground for a deduction. However, the IRS will ask for detailed records and receipts at the time of purchase. Not reconstructed paperwork during tax season.
Can I write off my home office?
This is one of the best small business tax deductions, but one I see a LOT of small business owners get tripped up on. If you’re unsure if your home office qualifies, I can help.
What tax credits can my small business get?
Also, a lot of business owners overlook the Research and Development Credit, which applies more broadly than you’d think. Even developing new processes, software, or improving existing products can qualify. Not just traditional lab research. And the Disabled Access Credit provides up to $5,000 annually for accessibility improvements.
This is by no means an exhaustive list. And I see a lot of business owners miss credits they qualify for because they don’t know to ask about them. We can look at your business’s situation and find credits you might not realize are available to you.
How do I pay less taxes as a small business owner?
The core strategy is to be meticulous about deducting all of your normal and necessary business expenses. Everything from your rent and supplies to your advertising costs.
You should also explore different tax credits, which directly reduce your tax bill. Another powerful tool is contributing to a retirement plan like a SEP IRA or Solo 401(k). Which not only saves for your future, but also lowers your taxable income right away.
Ultimately, the best way to ensure you’re not overpaying is to keep excellent records and work with a tax pro who can spot all the deductions and credits that apply to you.
Not sure if you’re claiming all the best small business tax deductions?
Confused by quarterly payments?
Or just want a second set of eyes on your numbers?
BA, Inc. can help..
Let’s talk about where you are now and where you want to be.
Let Us Help:
Ready to come in for an appointment?
Click here to schedule a time to meet with us. We will NOT make dealing with a tax professional as painful as it’s been in the past!