Your Guide to Small Business Taxes (For Schedule C Filers)
Based on IRS Publication 334, this interactive guide breaks down essential tax topics, from maximizing deductions to strategic business planning, helping you file with confidence.
Setup & Filing Essentials
Correctly setting up your business finances is the foundation of good tax management.
Identification Numbers
Use your Social Security Number (SSN) as your primary Taxpayer ID. You must get an Employer Identification Number (EIN) if you hire employees or file certain tax returns.
Accounting Period
Most sole proprietors use a calendar year (Jan 1 - Dec 31). If you don't keep books, you must use the calendar year.
Accounting Method
Choose between the Cash method (income/expenses recorded when paid) or Accrual method (income/expenses recorded when earned/incurred). Most small businesses without inventory use the simpler Cash method.
Maximizing Your Deductions
Deductible expenses must be both "ordinary" (common in your industry) and "necessary" (helpful for your business). Click to explore key categories.
Asset Management & Depreciation Benefits
Powerful deductions are available for property and equipment purchases.
Section 179 Deduction
Allows you to immediately deduct the full cost of qualifying new or used equipment in the year of purchase, rather than depreciating it over time. This provides a significant, immediate tax benefit.
2024 Limit: You can deduct up to $1,220,000, but this amount begins to phase out if your total equipment purchases exceed $3,050,000.
Bonus Depreciation
Allows you to deduct a large percentage of the cost of new and used qualifying assets in the first year. This benefit is currently being phased out.
Phase-Out Schedule: The deductible percentage is decreasing each year. It is critical to plan major purchases accordingly.
Growth Strategy: Sole Prop vs. S-Corp
As your income grows, electing to be taxed as an S-Corporation can significantly reduce your Self-Employment tax burden. Use the simulator below to see the impact.
An S-Corp allows you to pay yourself a "reasonable salary" (subject to payroll taxes) and take the remaining profit as a distribution (NOT subject to self-employment tax). Move the slider to see how total tax liability changes as net income increases.
