Key Steps for Small Business Owners to Start the Year Right

For small business owners to start the year right, more than just fresh goals and opportunities are involved. It’s also the perfect time to begin preparing for tax season. By staying ahead of the game, you can minimize stress, maximize your deductions, and ensure compliance with the latest tax laws. Here’s your winning playbook for effective tax season preparation.

 1. Organize Your Financial Records

Keeping your financial records organized throughout the year is crucial for a smooth tax season. Start by reviewing your income statements, balance sheets, and other financial documents. Ensure all receipts, invoices, and proof of payments are easily accessible.

Why it matters: A well-organized record-keeping system helps avoid costly mistakes, reduces the chances of an audit, and speeds up the process for your CPA.

2. Review Business Expenses and Deductions

Many small businesses miss out on tax-saving opportunities because they don’t fully understand which expenses are deductible. Common deductions for small business owners include:

– Office supplies and equipment
– Employee wages and benefits
– Business-related travel and meals
– Home office expenses

Why it matters: Taking advantage of available deductions can significantly reduce your taxable income, saving your business money.

3. Stay Updated on Tax Law Changes, Including the Corporate Transparency Act

Tax laws can change from year to year, and it’s especially important to stay informed about new regulations that might affect your business. One key update is the Corporate Transparency Act (CTA), which introduces new Beneficial Ownership Information (BOI) reporting requirements.

However, it’s important to note that BOI reporting and CTA enforcement have been paused once again following a reversal by the Fifth Circuit Court. The January 13, 2025, extended deadline that had been previously set by the Treasury and FinCEN is now rendered obsolete. Despite this temporary pause, it remains advisable for business owners to continue the information-gathering process, especially for more complex ownership structures.

Why it matters: While enforcement may be on hold for now, businesses should still prepare in case there is another abrupt change or reversal in the future. Staying ahead of these requirements will ensure your business is ready when compliance is required.

For the latest updates and information on BOI reporting, visit the official FinCEN website.

If you’re uncertain about how these changes impact your business, reach out to us at Anderson, Adkins & Crawford, CPAs for the latest updates and guidance on BOI reporting.

4. Evaluate Your Tax Structure

The type of business entity you operate under (Sole Proprietorship, LLC, Corporation, etc.) can have a big impact on your taxes. At the start of the year, it’s worth reviewing whether your current tax structure is still the best option for your business.

Why it matters: Some tax structures offer advantages in terms of deductions and overall tax rates. Consulting with a CPA can help you determine if a change is needed.

5. Consult Your CPA Early

Engaging with a trusted CPA early in the year can provide clarity on your tax situation and help you set realistic financial goals for the year. Your CPA will review your financials, help you spot potential tax savings, and ensure you stay on the right track with tax planning.

Why it matters: Working with a CPA ensures you’re following best practices and avoiding common pitfalls that could lead to penalties or missed deductions.

6. Plan for Quarterly Estimated Taxes

If your business doesn’t withhold taxes throughout the year, you may need to make quarterly estimated tax payments. Make sure to set aside the necessary funds and schedule your payments to avoid penalties for underpayment.

Why it matters: By proactively managing your quarterly tax payments, you avoid a large tax bill at the end of the year and keep your business in good standing with the IRS.

7. Set Financial Goals for the Year Ahead

January is the perfect time to set financial goals for the year. Whether it’s increasing revenue, reducing overhead costs, or investing in new equipment, having clear objectives will help you stay focused and motivated throughout the year.

Why it matters: Having a financial plan in place not only helps your business grow but also makes tax season easier when your finances are aligned with your goals.

In Summary: Small Business Owners Should Get Ahead of Tax Season

Preparing for tax season doesn’t have to be overwhelming. By staying organized, understanding your deductions, staying updated on tax laws (especially with the Corporate Transparency Act and BOI requirements), and consulting with a CPA, you can start the year off strong and set your business up for success. If you’re ready to tackle tax season and maximize your savings, Anderson, Adkins & Crawford, CPAs is here to help.

Contact Anderson, Adkins & Crawford, CPAs today to schedule a consultation. Our team of experts is ready to guide you through tax season with confidence and ease. Let’s make this year your most successful yet! Visit us at www.augustacpas.com.