Small business tax preparation checklist for 2025: 7 things business owners should know

1. Know the types of small business taxes

All businesses have to pay certain taxes to the IRS and state tax authorities. As a small business owner, it’s your responsibility to ensure that you meet your federal and state tax obligations. 

Whether you run a sole proprietorship, partnership, S corporation, or C corporation, these are the five main types of taxes your business may be responsible for.

Income taxes

Income taxes are based on the money your business makes and are paid at both federal and state levels. The way you pay these taxes and how much you owe depends on how your business is structured.

• C corporations: C corporations face "double taxation." They pay taxes first on the company's profits (at the current federal rate of 21%). Then, when shareholders receive their dividends, they pay taxes on those profits again at their individual tax rates.

Sole proprietorships, partnerships, and S corporations are considered "pass-through" entities. This means the business itself doesn't pay federal income tax. Instead, the profits or losses "pass through" to the owners' personal income tax returns.

• Sole proprietors report their business income and expenses on Schedule C of Form 1040. Their profits are taxed at their individual income tax rates.
• Partnerships file Form 1065 to report income and losses. Each partner receives a Schedule K-1 showing their share of the profit or loss, which they report on their individual Form 1040.
• S corporations file Form 1120-S to report income and losses. Similar to partnerships, each shareholder receives a Schedule K-1 to include with their Form 1040.

A business’ state income tax varies by state—and sometimes by city. Depending on where you do business and make money, you may have filing requirements in different jurisdictions. The rules and requirements are complex, and it’s best to consult your tax advisor if those rules apply to you. 

Estimated taxes

Businesses are required to pay estimated taxes quarterly. If you run a C Corporation and you think you'll owe more than $500 in taxes, you have to pay estimated taxes every quarter. For all other business structures, you need to pay estimated taxes, too, but only if you expect to owe more than $500 on your personal tax return.

The estimated tax deadlines for 2025 are as follows:

• Jan 15, 2025: 2024 fourth quarter estimated taxes due 
• April 15, 2025: 2025 first quarter estimated taxes due   
• June 16, 2025: 2025 second quarter estimated taxes due 
• Sept 15, 2025: 2025 third quarter estimated taxes due 
• Jan 15, 2026: 2025 fourth quarter estimated taxes due 

If the date for paying taxes falls on a holiday or weekend, taxes will be due the following business day. 

Self-employment taxes

If you're a sole proprietor or a partner actively involved in your business, you need to pay both the employee and employer parts of Social Security and Medicare taxes. The current self-employment tax rate in 2025 is 15.3% and is divided as follows: 

• 12.4%: Social Security tax
• 2.9%:  Medicare tax

Get tax tips and a tax preparation checklist

Employment taxes

When you have employees in your small business, there are certain taxes you need to handle, known as employment or payroll taxes. Here's what's included:

• Social Security and Medicare tax: Employers are responsible for deducting Social Security and Medicare taxes from employee paychecks. Your business pays part of these taxes, too. The current rates are 12.4% for Social Security (6.2% from the employee and 6.2% from your business) and 2.9% for Medicare (1.45% from the employee and the other half from your business).
• Federal and state income tax withholding: As a business owner, you are responsible for withholding income taxes on behalf of your employees. The exact amount varies depending on how your employees fill out their W-4s.
• Federal unemployment tax: The current federal unemployment tax rate (FUTA) is 6% on the first $7,000 of income for each employee. You might also need to pay state unemployment taxes, which can be different from the federal rate.

Consult a tax advisor if you’re unclear about any employment taxes you may be responsible for. 

Excise tax

Excise taxes are additional taxes you may have to pay on specific goods or services. If your business performs any of the following, you may have to pay excise taxes:

• Communication and air transportation taxes
• Fuel tax
• Retail tax (truck, trailer, semi-trailer chassis and bodies, and tractor)
• Ship passenger tax (transportation by water)
• Manufacturers taxes (coal)

For a full list of which goods and services excise taxes may apply, refer to the excise tax overview page on the IRS website.

Sales tax

Many states require businesses to collect sales tax on goods or services sold. Rules vary by state, so you'll need to:

• Register for a sales tax permit in your state (if applicable)
• Understand and comply with your state's sales tax nexus rules (which determine where you have to collect sales tax)
• Keep accurate records of sales tax collected
• File sales tax returns as required by your state

2. Know what business tax forms you need to file

There isn’t a one-size-fits-all business tax form. Depending on your business structure, you’ll need specific forms—like Form 1099-MISC or Form 1120—to report profits, losses, deductions, and credits to the IRS. Here are some common IRS forms for reporting small business taxes:

• Schedule C: If you're a sole proprietor, you use this form along with Form 1040 to report your income.
• Schedule K-1: For owners of pass-through entities like S corporations or partnerships, this form is used to report income.
• 1099-MISC: Use this form to report rental income to landlords or payments to attorneys.
• 1099-NEC: This form is for reporting non-employee compensation.
• Form 1120: If your business is a C corporation, use this form to report income.
• Form 1120-S: For S corporations, this form is used to report income. It's filed separately from your personal income tax return.
• Form 1065: Owners of partnerships use this information return, filed separately from their personal income tax return.
• Form 720: This is for reporting excise taxes related to your business.

If you have questions about which forms to file or how to fill them out, a dedicated tax professional can help ensure you file correctly and on time.

3. Gather the needed business tax return documents

When filing taxes for your small business, the paperwork can be overwhelming. Knowing which forms to fill out and what documents to provide is crucial. 

Here's an overview of the tax documents you might need to gather before filing:

General information

Start with your basic identifying information. This includes your:

• Federal Tax ID number (EIN): If your business has one.
• Social Security number (SSN): Required for sole proprietors.
• Previous year's tax returns: Keep copies of your federal and state tax returns for at least three years, as you may need them for future reference or in case of an audit.

Income and expense documentation

Accurate records of your income and expenses are the foundation of your tax return. You'll need documentation to support the figures you report.

Income might include: 

• Accounting journals and ledgers: These provide detailed records of your business transactions throughout the year, showing the date, amount, and accounts affected by each transaction.
• Balance sheet and income statement: These summarize your business's financial position (assets, liabilities, and equity) and performance (revenues and expenses) over a specific period.
• Transactional supporting documents: This includes any documents that provide evidence of your transactions, such as receipts, invoices, and bank statements.
• Bank deposit slips: These verify the amounts of cash and checks deposited into your business bank accounts.
• Bank account statements: These summarize all transactions that occurred in your bank accounts during the period.
• Invoices received and paid: These document the purchases you made for your business and the sales.
• Checkbook: If you use checks for business transactions, your checkbook register records those payments.
• Credit card statements: These track purchases and payments made with your business credit cards.
• Vehicle and mileage logs: If you use a vehicle for business, these logs track your mileage and related expenses for potential deductions.

And to claim deductions, you'll need receipts and documentation for all eligible business expenses. 

Receipts for expenses are grouped into the following categories:

• Supplies: General office supplies
• Recurring operational costs: Rent, utilities, and subscription-based services
• Meals/travel: Any applicable business meals and travel expenses
• Marketing/advertising costs: Expenses used to promote your business
• Professional fees: Attorneys, consultants, accountants, bookkeepers, etc.
• Insurance policy details: Gather both individual and group plan documents, company vehicle policies, and any other insurance coverage documentation 
• Equipment and assets: Include depreciation schedules for each 

Employment taxes (if applicable)

If you have employees, you'll need to gather and file additional documentation related to payroll taxes. These forms include:

• W-9: Collect a W-9 from every independent contractor to obtain their Taxpayer Identification Number. Employees should present their Social Security card when they are hired.
• I-9: Maintain I-9 forms to verify your employees' legal working status.
• W-2: You'll need to provide W-2 forms to each employee by January 31st of the following year, reporting their wages and taxes withheld.
• 1099-NEC: If you hire independent contractors, you'll need to file 1099-NEC forms to report payments made to them.

Home office deductions (if applicable)

If you claim a home office deduction, be prepared to provide documentation to support it.

• Square footage of office space and total square footage of home: You'll need this information to calculate the percentage of your home used for business.
• Mortgage interest or rent paid: If you own your home, you can deduct a portion of your mortgage interest. If you rent, you can deduct a portion of your rent payments.
• Utilities: A portion of your utilities, such as electricity and gas, may be deductible.
• Homeowner's insurance: If you own your home, you can deduct a portion of your homeowner's insurance premiums.

4. Make note of common tax deductions and credits

Tax deductions and credits are excellent opportunities to reduce your small business tax bill. This is because certain expenses—such as health insurance and office expenses—and investments may be deductible from your taxable income, reducing how much you’ll owe after you file your return. 

Knowing which tax breaks and credits may apply to your business is an important step in preparing your business taxes.

Small business tax deductions

Some of the notable small business tax deductions you may qualify for include:

• General business expenses
• Advertising
• Legal services
• Mileage
• Insurance
• Rent
• Interest
• Internet and phone services
• Depreciation of assets
• Employee salaries and benefits
• Training and education
• Meals and entertainment for business dealings
• Licenses

Small business tax credits

There are many different small business tax credits that you may qualify for. Here are some common business tax credits you should be aware of:

• Small Employer Health Insurance Premiums Credit: For employers with fewer than 25 employees contributing to health insurance premiums. 
• Investment Credit: Includes credits for energy, reforestation, rehabilitation, and similar projects.
• Disabled Access Credit: Applies to expenses for improving accessibility.
• Work Opportunity Credit: For businesses hiring targeted groups, such as veterans and ex-felons.
• Alternative Motor Vehicle Credit: Applies to electric cars and hybrids for business use. 
• Paid Family and Medical Leave Credit: For eligible employers providing paid family and medical leave.

Visit the IRS’s Business Tax Credits page for more information on tax credits your small business may be eligible for.

5. Complete your small business tax checklist

Whether you’re tackling your business taxes on your own or hiring a professional tax preparer, this small business tax checklist can guide you in the right direction to make filing your small business taxes easier. 

Download the checklist below to compile all the essentials.

6. Create a tax filing calendar

As a small business owner, it's easy for tax deadlines to slip your mind. So, it’s important to keep track of when tax payments are due and when you need to file taxes. 

Unfortunately, the IRS doesn’t take tardiness or failure to pay lightly. To keep your business cash flow in good shape, consider creating a tax calendar. 

Here are the essential small business tax dates for 2025:

• Jan 31, 2025: Deadline to send W-2s to your employees and 1099s to independent contractors. This is also the final day to submit copies of these tax documents to the IRS.
• Feb 28, 2025: Deadline for companies to file their information return using a 1099 or 1096.
• Mar 15, 2025: Partnerships, S corporations, and multi-member LLCs must file their yearly tax return by this date.
• April 15, 2025: Single-member LLCs, sole proprietors, and C corporations (that follow the standard calendar year for accounting) must file their yearly tax return by this date.
• April 15, 2025: First quarter estimated tax payment due.
• June 16, 2025: Second quarter estimated tax payment due.
• Sept 15, 2025: Third quarter estimated tax payment due.
• Sept 15, 2025: Partnerships, S corporations, and multi-member LLCs who received an extension must file their return by this date.
• Oct 15, 2025: Single-member LLCs, sole proprietors, and C corporations who received an extension must file their return by this date.
• Jan 15, 2025: Fourth quarter estimated tax payment due.

7. Request a filing extension if needed

If your tax situation is complicated, or you can't gather all your documents by the regular tax deadline, consider requesting an extension. You can use Form 7004 to get a six-month extension for reporting your business income.

Remember, an extension to file doesn't mean you get more time to pay. You still need to keep up with your estimated tax payments during this period. Falling behind could result in a fine. 

As with other taxpayers, the IRS is eager to collect tax payments, so they’re often willing to work with small business owners to find a solution. If paying on time is tough, contact the IRS early to discuss a payment plan. The sooner, the better.

Consider tax prep services

If you find the complexities of small business taxes overwhelming, consider leveraging technology to simplify the process. Software like QuickBooks and TurboTax can be lifesavers for small business owners during tax season.

QuickBooks automatically tracks your income and expenses throughout the year, so you don't have to scramble to gather receipts and records come tax time. And if you're not sure how to categorize something or have a tax question, you can connect with a live tax expert.

Intuit, the company behind QuickBooks and TurboTax, also offers a powerful AI tool called Intuit Assist. You can use it with QuickBooks to simplify tax preparation even further. Intuit Assist leverages your QuickBooks data to provide personalized recommendations and insights, such as suggesting specific deductions based on your industry and expenses.

Intuit Assist can also automate tasks like categorizing transactions and generating reports, simplifying your workflow. Plus, if you still need human expertise, it's only a click away, connecting you with tax professionals who can answer your questions and provide guidance.

Find peace of mind come tax time

Running a business can be stressful, but filing taxes doesn’t have to be. This small business tax preparation checklist can help save precious time you’d be spending navigating complex state tax, sales tax, and employment issues, so you can put that time back into your business. 

With small business tax planning software like QuickBooks, you can find all necessary documentation in one place for a more seamless tax preparation process. Enjoy the peace of mind that proper tax preparation and compliance brings by applying these essential steps in 2025 and beyond.

Disclaimers

*Intuit Assist and certain other AI features and functionalities are currently available at no additional cost to certain QuickBooks users. Pricing, terms, conditions, special features, and service options are subject to change without notice. Intuit reserves the right to discontinue the feature at any time for any reason in its sole and absolute discretion.

*QuickBooks Live Tax, powered by TurboTax, is an integrated service available with a QuickBooks Online subscription. Additional terms, conditions, and limitations apply. Pay when you file.

**QuickBooks Live Bookkeeping Guided Setup is a one-time virtual session with a Live Bookkeeper. Available to new QuickBooks Online Simple Start, Essentials, Plus, or Advanced subscribers who are within their first 30 days of their subscription. The QuickBooks Live Setup service includes instructions on how to set up your chart of accounts, customize invoices, set up reminders, and connect bank accounts and credit cards. QuickBooks Live Setup does not include Payroll setup or services. Your bookkeeper will only guide you through the setup of your QuickBooks Online account, and cannot set it up on your behalf.

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