Robert Allen Bautista | Kansas City Tax Guides

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...

"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...

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...

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....

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...

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...

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...

If you freelance, drive for an app, or run a one-person business, the tax that surprises people most is not income tax. It is self-employment tax , the Social Security and Medicare tax that an employer would normally split with you. When you work for yourself, you pay both halves. Here is exactly how it is calculated, step by step. Step 1: Figure your net profit Self-employment tax is based on net earnings, not gross revenue. Start with what you were paid, then subtract ordinary and necessary business expenses on Schedule C (or your share of partnership income on Schedule K-1). Every legitimate expense you record lowers both income tax and self-employment tax. Step 2: Multiply by 92.35% You do not pay the tax on 100% of profit. The IRS lets you multiply net profit by 92.35% first. This mirrors the fact that employees do not pay Social Security and Medicare on the employer's share. If net earnings after this step are under $400, you generally owe no self-employment tax. Step ...

"Should I be an LLC or an S corp?" is one of the most common questions small business owners ask, and it is a little bit of a trick question. An LLC is a legal structure created under state law. An S corporation is a tax election made with the IRS. Many small businesses are both: an LLC that elects to be taxed as an S corporation. Here is how to think about it. 1. What an LLC does A limited liability company separates your business from you personally, which can protect your personal assets from business debts and lawsuits if you keep the business truly separate. For federal taxes, a single-member LLC is ignored by default: profit goes on Schedule C of your personal return, and you pay self-employment tax (about 15.3 percent) on nearly all of it. 2. What the S corporation election does When an LLC (or corporation) elects S status by filing Form 2553, you become an employee of your own company. You pay yourself a reasonable salary through payroll, which is subject to payroll ...

Every January, small business owners scramble to send 1099s to the contractors they paid. Recent federal tax law changed the rules, so the checklist you used last year may not match this year. Here is what to know before January 31. 1. The 1099-NEC and 1099-MISC threshold went up For years, you had to send a Form 1099-NEC to any contractor you paid $600 or more for services in a year. Under the 2025 federal tax law, that threshold rises to $2,000 for payments made after December 31, 2025 , and it is scheduled to adjust for inflation in later years. The same change applies to most 1099-MISC payments, such as rent. That means fewer forms for small payments, starting with the forms you will file in early 2027 for 2026 payments. For 2025 payments (the forms due January 31, 2026), the old $600 threshold still applies. 2. The 1099-K threshold went back to $20,000 and 200 transactions Payment apps and card processors send Form 1099-K. After several years of planned reductions, the law restore...

The last six weeks of the year are when small business owners have the most control over their tax bill. Once January 1 arrives, most of these choices are locked in. Here is a practical checklist to work through before December 31. 1. Get your books current first You cannot plan around numbers you do not have. Reconcile your bank and credit card accounts through October or November, clear out uncategorized transactions, and run a year-to-date profit and loss. Then estimate December. Every decision below depends on knowing roughly where profit will land. 2. Decide whether to accelerate expenses If you use cash-basis accounting, expenses generally count in the year you pay them. If this year's profit is high, paying January's supplies, software renewals, or professional fees in December can lower this year's tax. Only buy what the business actually needs; spending a dollar to save thirty cents is not a strategy. 3. Time big equipment purchases carefully Equipment, vehicles, a...

Most new business owners put off bookkeeping until tax season, and that is when it hurts. Cleaning up twelve months of mixed-up receipts is slow and expensive. Setting things up in the first month takes a few hours and saves you far more. Here are ten steps in a sensible order. 1. Open a separate business bank account Do this first. Mixing business and personal money is the most common bookkeeping mistake, and it makes everything harder: figuring out profit, claiming deductions, and showing a lender or tax authority that your records are reliable. Depending on how your business is set up, you may need your entity paperwork and an EIN to open the account. 2. Get an EIN if you need one An Employer Identification Number is free from the IRS and identifies your business. Sole proprietors without employees can sometimes use their Social Security number, but many owners prefer an EIN to avoid handing out an SSN to clients and banks. Never pay a website to get you one; the IRS provides it at ...

Most small business owners claim the obvious deductions and stop there. The ones they miss are small one at a time, but together they can add up to thousands. The test for any business expense is simple: it has to be ordinary (common in your line of work) and necessary (helpful and appropriate for the business). Pass that test, keep the proof, and it counts. The write-offs I see missed most often: Home office. The space must be used regularly and exclusively for business. The simplified method is $5 per square foot, up to 300 square feet. The regular method can be bigger when housing costs are high. Phone and internet. Deduct the business share, and write down how you figured it. Self-employed health insurance. Taken on Form 1040, not Schedule C, so it's easy to forget. Not allowed for months you could have joined an employer-subsidized plan. Card and payment-app fees. Report the gross sale and deduct the fee separately. Education that improves skills you already use in your...

If you're self-employed, nobody withholds tax from your pay. The IRS still wants it during the year, not all at once in April. That's what quarterly estimated payments are for. The four standard due dates are April 15, June 15, September 15, and January 15 of the next year. If one lands on a weekend or holiday, it moves to the next business day. The part most people never hear about is the safe harbor . You generally avoid the underpayment penalty if your withholding and estimates add up to at least the smaller of: 90% of this year's tax, or 100% of last year's tax (110% if last year's AGI was over $150,000, or $75,000 married filing separately). The prior-year option is the secret. You can pay based on a number you already know, even in a year when business booms. You may still owe a balance in April, but without the penalty. Two more tips: withholding from a W-2 job counts as paid evenly through the year, and the penalty is figured quarter by quarter, so skipping ...

Most owners ask "what can I deduct for my car?" The better question is which method you're using, and whether you picked it correctly the first year. The IRS gives you two choices. The standard mileage rate (70 cents a mile for 2025) covers gas, insurance, repairs and depreciation in one number. Actual expenses means adding up real costs and deducting the business-use percentage. Parking and tolls for business trips count on top of either one. Here's the trap. If you own the car and want the standard rate, you generally have to use it in the first year the car is in service for your business. Start with actual expenses, and the standard rate is generally gone for that car for good. Start with the standard rate, and you can switch to actual expenses later. Three quick rules: Commuting from home to your regular workplace is never deductible. Keep a mileage log as you go: date, destination, business purpose, miles. Run both methods every year, even if you plan to use t...

Say you run a small landscaping business as a sole proprietor and your profit is $90,000. You file your taxes, and your preparer mentions a "QBI deduction" that knocked your taxable income down. You nod. You have no idea what it is. This is one of the biggest deductions available to owners of pass-through businesses, and you do not need to spend a dime to get it. You just need to know the rules. The rule in plain English Section 199A lets you deduct up to 20% of your qualified business income, or QBI. It was originally set to expire after 2025. The 2025 law (the One Big Beautiful Bill Act, Public Law 119-21) removed that expiration, so the deduction is now permanent. It applies to income from: Sole proprietorships and single-member LLCs Partnerships and multi-member LLCs S corporations C corporations do not qualify. The deduction is taken on your personal return. It does not reduce your self-employment tax, and it is not a business expense on Schedule C. It comes off taxable ...

Owing the IRS money you do not have is stressful, but it is one of the most fixable problems in taxes. The biggest mistake people make is doing nothing. Here are your options, in the order I would think about them. 1. File on time, even if you cannot pay The penalty for not filing is much larger than the penalty for not paying. Failure to file is generally 5% of the unpaid tax per month, up to 25%. Failure to pay is generally 0.5% per month, also capped at 25%. Filing on time (or filing an extension) stops the bigger penalty from building. Interest still runs on any balance, so pay whatever you can with the return. 2. Short-term payment plan (up to 180 days) If you can pay in full within about six months, ask for a short-term plan. You can request it online through your IRS account. There is generally no setup fee, though penalties and interest continue until the balance is paid. 3. Long-term installment agreement If you need longer, a monthly installment agreement spreads the balance ...

Si trabajas por tu cuenta, ya sea limpiando casas, haciendo construcción, manejando para una aplicación, vendiendo comida o dando servicios, el IRS te considera un trabajador independiente. Eso significa que nadie te retiene impuestos de tus pagos, y tú eres responsable de declarar tus ingresos y pagar lo que corresponda. Con orden se puede hacer bien. Aquí te explico cómo funciona, paso a paso. 1. Qué significa ser trabajador independiente Si eres empleado, tu patrón te retiene impuestos de cada cheque y te da un formulario W-2. Si trabajas por tu cuenta, recibes el pago completo y después tú declaras la ganancia. No importa si trabajas tiempo completo o solo en tus ratos libres: todos los ingresos se declaran, incluso en efectivo y aunque no te hayan mandado ningún formulario. 2. Los formularios que puedes recibir Formulario 1099-NEC: lo manda una empresa que te pagó $600 o más por tus servicios. Para pagos hechos después de 2025 el límite está programado para cambiar, así que convi...

"Fractional CFO" sounds like a fancy title, but the idea is simple: a part-time finance leader who works with your business a few hours a week or month, instead of a full-time executive on payroll. For a growing small business, that can be the right amount of help at the right price. First, what a CFO is not A CFO is not a bookkeeper and not a tax preparer, though they care about both. A bookkeeper records what already happened. A tax preparer files returns about the past year. A CFO looks forward, using financial information to help you decide what to do next. Think of it this way: the bookkeeper keeps score, the accountant checks the scoreboard, and the CFO helps plan the game. What a fractional CFO typically does Financial reporting you can use. Clean monthly statements (profit and loss, balance sheet, cash flow) with plain-English explanations of what changed and why. Cash flow forecasting. Many profitable businesses still run short of cash. A forecast shows when money ...