Actionable Tax Preparation Tips

11 Jun 2024

Small business owners spend much of their time wearing many hats. Aside from ensuring operations are functioning properly, they must also think of important tasks not related to day-to-day business, such as their business and personal taxes. For many small business owners, the two are entwined.

Tax season has just wrapped up, but it is never too early to start for the next tax cycle. Preparing now not only gets you a jump on next year’s tax return, it relieves stress, keeps your record-keeping organized, and, ultimately, sets you up for success.

Ready to start your next tax prep checklist? Let’s take a look at top tax tips for individuals.

How to Stay Organized For Taxes Throughout the Year

One of the most important factors in doing IRS tax prep correctly is to keep careful records and generally stay organized throughout the year. This way, everything you need for the next tax cycle is already at your fingertips.

● Make a detailed list of tax-related tasks

● Note and schedule the important tax dates throughout the year

○ Pay quarterly taxes on time

○ Issue W-2 and 1099 by the deadline (if you have employees and is applicable)

○ IRS Form 941 (if you have employees)

○ Any other relevant forms required by federal and state tax agencies

● Try expense-tracking apps rather than spreadsheets

○ Save receipts relating to expenses you can claim in a dedicated location

○ Separate receipts in separate files for different kinds of deductions

○ Separate personal and business receipts

● Prioritize working through tax items every week

● If you work from home with a dedicated workspace, you can claim certain home improvement expenses and receive a partial tax credit or deduction

If you have a small business you run from home, online, or have a storefront, be sure to keep a separate banking account. There are many reasons for this.

● Easier to identify business expenses

● Keeps personal and business funds separate

● Documents expenses able to be claimed as credits and deductions

● Simplifies tax reporting process

By staying organized year-round, you’ll save yourself both time and money come next tax season. You also can avoid the need to file a tax extension and pay penalties for late tax payments if you owe taxes.

The Best Tax Tips for Individuals & Businesses

Filing taxes is a tedious process, but by embracing the inevitable and being prepared, you can significantly lessen your burden. The following IRS tax prep tips can significantly help make the process more efficient and seamless.

Good bookkeeping and record-keeping

One of the biggest mistakes people often make is stashing aside receipts and other tax-related documents in a “safe” spot, but either a) forget where the documents are, b) papers are so disorganized it takes hours to sort through, or c) documents go missing completely. To avoid this, try the following actionable tips:

● Created a dedicated file system. In some cases, this may be paper, but if you can digitize everything, even better. Whatever you use, make sure it’s organized either by alphabetization, color coding, or sorted by date.

● Organize your receipts. Categorize them by date and type so you know which ones are applicable for tax purposes. Using accounting software can help with this task.

● Scan paper receipts. This makes taxes far easier since everything you need is at your fingertips.

● Lock up sensitive documents. Any documents containing your, your employees’, or your clients’ personal identifiable information (PII) should be properly secured or, if no longer needed, shredded. You don’t want anyone to become a victim of identity theft or tax fraud.

If you’ve decided to digitize all your records, be sure to perform routine backups so you don’t lose any pertinent and required information for your future tax returns.

Choose a reputable tax preparer

As an individual or small business owner, you can file your taxes yourself, but it might be worthwhile to work with a reputable tax preparer. Your job will be to keep the records and provide everything for your tax preparation, and they’ll know how to best file your tax return.

The IRS offers several small business tax deductions and credits. Aside from making the tax process easier, your tax preparer may know about these credits, deductions, and other obscure details you might not be aware of to receive legal tax breaks.

Additionally, working with a reputable tax preparer can help make certain your tax return is error-free. They can also ensure your paperwork is filed according to up-to-date tax laws, which might otherwise inadvertently be overlooked.

Tip: Reach out to prospective tax professionals in summer or fall, before they get busy during tax time.

Complete your taxes on time

Always aim to complete your taxes on time, if not before the April deadline. While you can file an extension, this doesn’t delay any tax due. You’ll still pay the taxes you owe and will have financial penalties added for lateness.

Embrace deductions

Individuals and small businesses are usually eligible for several deductions (often referred to as “write-offs”), which help reduce their taxable income. These are typically necessary expenses (e.g., required to operate) you incur while running a business, lowering your taxable income. By keeping careful and consistent records for your company, you can claim deductions and offset money you owe the government.

If you’re running a business, common deductions you can claim include but are not limited to:

● Expenses relating to your business or home office

● Office expenses and office utilities

● Advertising and marketing costs

● Maintenance and repairs

● Legal and professional fees (e.g., attorneys, accountants, etc.)

● Depreciation on assets (e.g., office equipment, furniture, or business car)

● Business travel (portions spent on personal travel cannot be claimed)

● Health insurance for yourself and any employees

● Labor expenses for employees

● Business insurance

● Educational seminars

● Conference attendance

To successfully use business write-offs, you must keep meticulous records and be able to substantiate any expenses you claim. Tracking deductible expenses throughout the year is helpful.

File electronically

While theoretically, you can still file a paper tax return, it’s much more efficient to file electronically. It’s easier, decreases the chances of errors, is more secure, and, if expecting a refund, you typically receive the funds faster. Many tax programs walk you through the entire process.

Obtain your Employer Identification Number (EIN)

If you have employees, you must obtain an Employer Identification Number (EIN) by law. As a small or home business owner, if you’re the only employee, you technically don’t need this tax ID. However, it’s to your benefit to obtain one.

Chances are you work with third parties, and for tax purposes, you need to supply a tax identifier, which, if you don’t have an EIN, would be your Social Security number. This increases your risk of exposing your SSN, and having an EIN is a safer way to conduct business. It also looks more professional.

To obtain your EIN, you’ll need to do the following:

● Assemble required documentation, including your legal business name, DBA designation (“doing business as”), business address, and the date you began doing business.

● List your business entity type (e.g., sole proprietor, partnership, LLC, or corporation)

● Name the individual responsible for the business (this is likely you) and your SSN or ITIN

● Select the reason you are applying for an EIN

● Note the approximate number of people you employ or plan to hire

Lastly, you submit your EIN application and wait to receive your tax ID. Once you receive it, you can hire employees, obtain business loans, file business taxes, and apply for various permits and licenses.

Using a Small Business Tax Preparation Checklist

As you start your IRS tax prep, it’s helpful to have a small business tax preparation checklist. Here’s a handy list of what you should have ready before you begin to start your tax prep online or offline.

● Last year’s taxes

● Social Security Number and/or tax ID numbers (including Employment Identification Number)

● Bank account numbers

● Income items, including gross receipts, sales records accounts receivable), returns and allowances, and all other income you’ve gotten

● Cost of goods sold documentation if you sell products, including a list of inventory value, inventory purchases, ending inventory dollar amount, materials and supplies, etc.

● Financial statements (e.g., balance sheet, profit/loss statement, cash flow, etc.)

● List of all relatable business expenses as outlined above

● Wages paid to employees

● Employee benefit expenses, if applicable

● Applicable forms (not the same for everyone)

○ 1099-INT

○ 1099-NEC

○ W-2

○ W-3

○ 1099-K

○ 1096

○ 1065 (partnerships)

○ Schedule K-1

○ 940

○ 941

●     Charitable contributions information

You may have other forms if you are an LLC being taxed as an S Corp, or if you’ve incorporated your company, other forms are likely involved. Always do your due diligence or work with an experienced tax professional to ensure you file the correct forms.


The tax season is going to roll around every year—it’s inevitable. It’s difficult to stay on top of taxes if you only prioritize them in the first quarter of every year as you prepare for April 15. If you’re not taking actionable tax preparation tips, it’s a good idea to revamp your thought process and make it a year-round task.

Because filing individual and business tax returns is predictable, by setting good tax-related habits and getting ahead by doing small tasks throughout the year, you can make the process less cumbersome, mitigate potential errors, and reduce your stress.