Step-by-Step Guide to Preparing Taxes for Small Business Owners

As a small business owner, tax preparation is more than just filling out a form, it’s a strategic process that can significantly affect your bottom line. From choosing the right business structure to maximizing deductions, every decision matters. London’s Tax Services LLC has been helping small business owners in Westchester and Rockland County for over 20 years. Here’s your step-by-step guide to small business tax preparation.

Step 1: Organize Your Financial Records

Good tax preparation starts with good bookkeeping. Throughout the year, you should be tracking all income, expenses, payroll, and receipts. At tax time, you’ll need your profit and loss statement, balance sheet, bank statements, and any 1099s issued to contractors. If your books are a mess, our bookkeeping services can get you sorted before we file.

Step 2: Choose the Right Business Tax Form

Your business structure determines which tax form you file:

• Sole Proprietors: Schedule C (attached to your personal Form 1040)
• Partnerships: Form 1065
• S-Corporations: Form 1120-S
• C-Corporations: Form 1120
• LLCs: Depends on how the LLC is taxed (default or elected)

If you’re unsure which structure is right for you, this is one of the most valuable conversations to have with a small business tax accountant near you.

Step 3: Identify All Deductible Business Expenses

Small business owners can deduct a wide range of legitimate business expenses:

• Home office deduction (if you use part of your home exclusively for business)
• Vehicle mileage or actual vehicle expenses for business travel
• Business insurance premiums
• Employee wages and contractor payments
• Marketing and advertising costs
• Professional fees (accounting, legal)
• Equipment, software, and supplies
• Self-employed health insurance premiums
• Retirement plan contributions (SEP-IRA, SIMPLE IRA, Solo 401(k))

Step 4: Account for Self-Employment Tax

Unlike W-2 employees, self-employed individuals pay both the employer and employee portions of Social Security and Medicare taxes, totaling 15.3% on net earnings. The good news: you can deduct half of this self-employment tax on your personal return.

Step 5: Don’t Miss Estimated Quarterly Taxes

If you expect to owe $1,000 or more in taxes for the year, the IRS requires you to make quarterly estimated tax payments (typically due in April, June, September, and January). Missing these payments can result in underpayment penalties.

Step 6: Work with a Small Business Tax Accountant Near You

Tax laws change every year, and so do the opportunities to save. Partnering with a local small business tax professional like London’s Tax Services ensures you stay compliant, maximize deductions, and plan proactively for the future.

Ready to get started? Contact London’s Tax Services LLC at (646) 917-7714 or visit londonstaxservices.com to schedule your free consultation today. Serving Westchester, Rockland County, and the greater New York area.