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The January Tax Checklist for Small Business Owners and Freelancers

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January is the busiest month of the tax year for small business owners, and most of it has nothing to do with filing your own return. Several deadlines land before February 1. Here is the checklist I give clients, in date order. By January 15 Fourth-quarter estimated tax payment (Form 1040-ES) for the prior year, if you are self-employed or have other income without withholding. By January 31 Form 1099-NEC to each contractor you paid at or above the reporting threshold for services, and filed with the IRS. (Check 1099 Changes for 2026 : the threshold changes for payments made after 2025.) W-2s to employees and Form W-3 with copies to the Social Security Administration. Form 941 for the fourth quarter and Form 940 (federal unemployment) for the year, if you have employees. State withholding reconciliations and city filings where required, such as Kansas City, Missouri earnings tax returns for employers. During January: close out the books Reconcile every business bank and card acc...
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How Long to Keep Tax Records (and Exactly What to Keep)

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"How long do I have to keep this?" is one of the most common questions I get, usually from someone holding a shoebox of receipts. The answer depends on how long the IRS has to question a return. Here is the practical version. The time limits 3 years from the date you filed (or the due date, if later): the general rule for most returns. 6 years if you left out more than 25% of the gross income you should have reported. 7 years if you claim a loss from worthless securities or a bad debt deduction. Indefinitely if you never filed a return or filed a fraudulent one. 4 years for employment tax records if you have employees, from the date the tax was due or paid, whichever is later. Records that follow the asset, not the year Keep records for property (your home, rental property, equipment, investments) until the time limit expires for the year you sell or dispose of it. That means purchase documents, improvements and depreciation records can need to be kept for many years. H...
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SEP IRA vs. Solo 401(k): Which Retirement Plan Saves Self-Employed People More?

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For self-employed people, a retirement plan is one of the few deductions that also builds your own wealth. The two most popular choices are the SEP IRA and the Solo 401(k). Both can shelter far more than a regular IRA. Here is how they differ and how to choose. SEP IRA: simple and flexible Who contributes: only the business ("employer") contributions. How much: up to 25% of compensation. For a sole proprietor that works out to roughly 20% of net self-employment earnings after the deduction for half of self-employment tax, up to the annual IRS dollar cap. Deadline: you can open and fund a SEP for the prior year up to your tax filing deadline, including extensions. Paperwork: minimal. Most brokerages open one in minutes. Employees: if you have eligible employees, you must contribute the same percentage for them. Solo 401(k): usually more room at lower incomes Who contributes: you contribute twice, as the "employee" (elective deferrals, up to the annual limit, wi...
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Hiring Your First Employee: The Payroll Tax Checklist

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Hiring your first employee is a milestone, and it also turns you into a payroll tax collector for the federal government and your state. Most first-time employers get into trouble not because the rules are hard, but because nobody gave them the list. Here it is. Step 0: Employee or contractor? Before anything else, make sure the person really is an employee. The IRS looks at control: if you decide how, when and where the work is done, provide the tools, and the relationship is ongoing, that person is usually an employee, no matter what the paperwork calls them. Misclassifying an employee as a 1099 contractor can lead to back payroll taxes and penalties. Before the first day Get an EIN from the IRS if you do not already have one (free, online). Register with your state for income tax withholding and for state unemployment insurance. Check workers' compensation rules in your state. Requirements depend on the number of employees, payroll size and industry. Choose a payroll method....
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Living in Kansas, Working in Missouri (or the Reverse): State Tax Basics

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In the Kansas City metro, thousands of people sleep in one state and work in the other. That usually means filing two state returns. The good news: the system is designed so you are not taxed twice on the same income. Here is how it works. The core rule Your home state taxes all of your income , wherever you earn it. The state where you work taxes the income earned there , as a nonresident. Your home state gives you a credit for the tax you paid to the work state, so the same dollars are not fully taxed twice. Kansas and Missouri do not have a reciprocity agreement, so you generally cannot just file in your home state and skip the other one. Live in Kansas, work in Missouri Missouri nonresident return (Form MO-1040 with the nonresident section) reporting the wages earned in Missouri. Your employer will usually withhold Missouri tax. Kansas resident return (Form K-40) reporting all of your income, then claiming the credit for taxes paid to other states for the Missouri tax. Kansas C...
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Taxes for Uber, DoorDash and Instacart Drivers: A Plain-English Guide

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Driving for Uber, Lyft, DoorDash, Instacart or Amazon Flex makes you an independent contractor, which means you run a small business, whether it feels like one or not. Here is what gig drivers need to know to file correctly and keep more of what they earn. 1. You are self-employed No one withholds tax from your gig pay. You report your earnings and expenses on Schedule C, pay income tax on the profit, and pay 15.3% self-employment tax on about 92.35% of it. I explain that math in How Self-Employment Tax Works, Step by Step . 2. Report all of your income, form or no form Platforms may send a Form 1099-NEC or 1099-K, or nothing at all if you fall under the reporting thresholds. All of your earnings are taxable either way. Use the annual earnings summary in each app as your starting point, and remember the gross amounts on a 1099-K can include fees the platform kept, which you can deduct. 3. Mileage is usually your biggest deduction Most drivers use the IRS standard mileage rate, which c...
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Home Office Deduction: Simplified vs. Regular Method (2026)

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If you run a business from home, the home office deduction can be worth hundreds or a few thousand dollars a year. It is also one of the most misunderstood deductions. Here is who qualifies, how the two calculation methods compare, and how to choose. Who qualifies You must be self-employed (or a business owner). W-2 employees who work from home cannot claim it on their federal return under current law, even if the employer requires remote work. Regular and exclusive use. The space must be used only for business, on a regular basis. A desk in the corner of the guest room can qualify if that corner is used only for work; the kitchen table usually does not. Principal place of business , or a place where you regularly meet clients. If you do your administrative and management work there and have no other fixed location for it, that generally counts. Two exceptions to the exclusive-use rule: space used regularly to store inventory or product samples, and qualifying home day care. Method 1...
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