Preparation Guide: Taxes for Design Firms in 2025
March 16, 2025 | Small Biz Tips | Tax Guide
Ready, Set Tax...GO!
Tax season is nearly upon us, but don't let it stress you out! As a savvy business owner, you've got this. Here's a breakdown of common taxes and a handy checklist to help you prep for tax season 2025.
Before You Start
Mark your calendars, it's almost April, and you wouldn't want to miss that deadline! Make the most of Q1 by organizing your papers from the past few years. Review key dates for the first couple months of 2025 to determine your tax obligations this year.
Taxes Your Biz Might Owe
Small-business taxes can be a tangled web. You may find yourself dealing with federal and state income, self-employment, payroll, sales, excise, use, and property taxes. Some businesses also pay taxes on dividends and interest. The type and amount of taxes you owe will depend on your business's legal entity or tax structure.
Self-Employment Tax
A significant part of self-employment tax includes Social Security and Medicare taxes. If you owe self-employment tax, the current rate is 15.3%, breaking down to 12.4% for Social Security and 2.9% for Medicare.
Employment or Payroll Taxes
Businesses with employees must pay FICA taxes on the employees' wages, amounting to 15.3%. Employers only pay half, with the other 7.65% being the employees' share.
Estimated Quarterly Taxes
Most business owners are required to pay estimated taxes quarterly, based on the previous year's income. These payments are due in April, June, September, and the following January. While nonprofit organizations are exempt from many taxes, some are still required to make estimated quarterly payments.
Small Business Tax Preparation Checklist
Now that you know the types of taxes you might owe, let's dive into our small business tax preparation checklist. Remember, this is just a guide; feel free to follow it in your own order.
1. Gather Necessary Documents
Start by rounding up all documents related to your 2024 tax year, as well as relevant papers from prior years. You'll need tax returns from 2021, 2022, and 2023, along with specific information about any federal and state grants, loans, stimulus checks, and assistance. Other required documents include your business license, EIN, banking information, and expense and income documentation.
2. Pay Outstanding Invoices
Before the end of January, pay any outstanding invoices from 2024 and collect on unpaid invoices from the previous year.
3. Review Sales, Excise, and Use Tax Remittance Rules
Take a close look at your state and local government's sales, excise, and use tax remittance rules. Make sure you know when to pay each bill and be aware of any changes to your assigned filing period.
4. Send Tax Documents to Workers
Make sure employees and independent contractors have all the necessary tax documents, such as W-2, W-9, and 1099 forms. The deadline for sending these forms is 31st January 2025.
5. Balance Books and Reconcile Bank Accounts
Review your business' financial statements, ensuring all transactions are correct and make any necessary adjustments.
6. Check the 2025 Tax Calendar
To stay on top of deadlines, review the 2025 tax calendar. Determine which forms to file according to your business' structure, such as Form 1040, 1040-ES, 1040 Schedule SE, Schedule C, and/or Schedule 1 for sole proprietorships.
7. Research Tax Credits and Deductions
Take advantage of tax deductions and credits designed to help small businesses, such as those related to car mileage, employee bonuses, and the Work Opportunity Credit.
8. Hire a Tax Professional
Consult with a tax professional to streamline the tax preparation and filing process.
9. Make Your Final Estimated Tax Payment
The final estimated tax payment is typically due on 15th January of the following year, or the following Monday if the 15th falls on a weekend.
10. Determine Which Forms to File
Identify the forms you need to file, such as Form 1040, 1040-ES, 1040 Schedule SE, Schedule C, and/or Schedule 1 for sole proprietors. Partnerships and corporations will need different forms.
11. Open a Business Bank Account (optional)
Separate personal and business finances by opening a business checking or savings account for the 2025 tax year.
12. Reconsider Business Structure (optional)
Review your business structure to determine if you can lower your tax bill by incorporating or changing your structure.
Stay Informed and Stay Calm
Tax season doesn't have to be a headache. By staying informed, maintaining accurate financial records, and planning for tax payments, you'll be ready to tackle 2025's tax season with confidence. Good luck!
- For a swift and healthy start to your personal-finance planning in 2025, consider the impact of tax laws on your interior design business.
- Stay updated on the latest news regarding tax regulations for small businesses in the technology sector, as these can significantly affect your investing strategies.
- Follow the news about potential changes in healthcare policies, as these might influence your business and personal-finance circumstances, especially with regards to self-employment taxes.
- Keep an eye on business-related financial news, as economic conditions can impact finance, investing, and tax obligations for your small enterprise.
