5 Tips for filing small business taxes for the first time

Filing taxes for the first time as a small business owner can feel intimidating, especially if you’ve been operating in “build mode” all year and suddenly realize it’s time to face the IRS.

Maybe you’ve been focused on launching your offers, booking clients, or finally getting cash flow rolling, until tax season sneaks up and you’re wondering, “Where do I even start?”

You’re not alone, and the good news is, with a few smart decisions early on, you can avoid common mistakes, reduce stress, and potentially save thousands. Here are five essential tips to help you confidently file small business taxes for the first time, the right way.

1. Choose the Business Structure That Works Best for You (Not Just “What Was Fast to File”)

A lot of first-time business owners start as sole proprietors or single-member LLCs because it’s fast and easy. But as your income grows, that initial choice could actually cost you more in taxes than it should.

Here’s why structure matters:

• A sole proprietorship or default LLC means all income is taxed as personal income

• You’ll owe self-employment tax (roughly 15.3%) on top of income tax

• The right move later may be switching to an S-Corp, which can legally reduce how much you owe

Maybe your first year was modest, but now you’re bringing in $70K+ in profit and weren’t expecting a tax bill nearly that high. Many business owners don’t realize they could’ve structured things differently and saved money.

Before filing: ask a tax professional if your current structure is still the smartest for your growth.

2. Separate Personal and Business Expenses — Immediately if You Haven’t Already

If your business is still using a personal checking account or a Venmo mixed with Target, Uber Eats, and business expenses… this step is critical.

Why this matters:

• It protects you if you're ever audited

• It prevents you from missing deductions

• It makes tax prep faster and far less stressful

At minimum, you should have:

• A separate business bank account

• A business credit/debit card

• A system (even simple software like QuickBooks or Wave) categorizes transactions properly

Better now than later. You don’t want to spend hours in March trying to remember if that $122 at Staples was business or back-to-school shopping.

3. Close Out Your Year Before You File — Do Not Skip This Step

Most people think they can sit down and “do their taxes” — when in reality, their books must be clean and finalized first.

This means before any tax filing begins, you should:

• Reconcile every bank and credit card account

• Make sure all income and expenses are categorized correctly

• Confirm all invoices and payments are accounted for

• Ensure no duplicate or missing transactions

• Record major asset purchases or depreciation, if relevant

Skipping this step is one of the biggest first-year mistakes; it leads to underreporting income, overpaying taxes, or needing to file an amendment later (which means more time, more stress, and possibly more IRS attention).

4. Know Which Tax Deductions You Can Actually Take

The whole point of being a business is that you don’t get taxed like a regular employee — but only if you know what you can deduct.

Here are common deductions most first-year business owners miss:

• Home office deduction (must be a dedicated workspace)

• Business mileage or vehicle usage

• Software + subscriptions (QuickBooks, Canva, Zoom, Adobe, etc.)

• Equipment (laptop, camera, monitor, etc.)

• Marketing + branding costs (website, ads, design)

• Business meals with a clear business purpose

• Contractors, virtual assistants, or support team

• Professional education, memberships, certifications

Important: You must be able to prove it if asked — so always keep records and receipts. Digital is fine.

5. Decide If You Should Be Paying Taxes Quarterly (Not Just Once a Year)

This is the thing that catches most first-time business owners off guard:

Once your business starts making consistent income, the IRS usually expects quarterly estimated tax payments — not just one big payment at the end of the year.

You may need to pay quarterly taxes if:

• You expect to owe more than $1,000 in taxes this year

• You’re earning a steady profit

• You operate as a sole prop, LLC, or S-Corp

Paying quarterly helps you avoid penalties — and it’s far less stressful than waiting until April and being hit with a number you weren’t ready for. If you’re unsure, this is exactly something a tax advisor should confirm before your first filing.

Ready to File...Without Stress or Guessing?

Your first year of business taxes sets the tone for every year after. If you want to avoid mistakes, overpaying, or IRS surprises…

BAS is here to help. We specialize in helping small business owners file confidently, save money legally, and set systems in place so tax season never feels overwhelming again.

Let’s make your first year a strong one. Book your tax consultation with us today, and we’ll handle the rest.