Tax Filing for Small Businesses and Tips for Keeping Good Records

June 1, 2023

How to Keep Good Records for the Next Filing Season for Small Businesses

Small businesses have a ton of challenges. They need to make the right decision around every corner and save on as many overheads as possible to remain profitable and grow. One of the luxuries small businesses don't have is a dedicated finance team to address tax filing and record keeping. Instead of outsourcing, the business might decide to do their taxes themselves. 


It's commendable! But as a small business, you can't afford to make mistakes, and you need to keep pristine records to make the subsequent tax filing easier. You also need to keep your ear to the ground on any taxation developments you must comply with. 


For instance, the IRS has made changes to the Form 1099-K from 2023 onwards on all amounts of payments which puts extra weight on maintaining proper records to make filing easier. 



Here are some tips small businesses should consider to make the next tax filing easier and ensure they don't run into any problems in case of an audit.

Nebraska property tax credits concept - Tax credit written on a notebook, dollar bills, marker, and calculator on a table.

Have a Document Management System 

All business transactions should be documented either on paper or electronically. As your business grows, your pile of paper and files will also increase. 


You need to have a management system, preferably categorized, to make it easy to know which documents go where. 


If you can go paperless, that would be amazing. It would make management and access to the records easier. You can then use a digital document management system that will organize your business's documents. 


For added safety, you can add a document control system that will outline how often you need to review and update the documents.

Keep Up with Record Retention Mandates 

There's more to keeping good records within small businesses than for tax filing purposes. You are also obligated to comply with document retention mandates in case of an audit. 


These mandates can vary between two and six years. But to be safe, you should maintain records for the past seven years. 


Remember that some records, like a nonprofit's tax-exempt certificate or the business tax ID, never become irrelevant, so keep them close. 



If you're suspected of tax fraud, the IRS could audit your business's financials up to seven years ago. That's why most CPAs will tell you to keep records for up to seven years. The records mandate extends to the following documents: 


  • Employee information (names, addresses, and contact information)
  • Employee timesheets and pay stubs
  • All tax forms associated with and submitted to the IRS
  • Insurance documents
  • Bank statements
  • Contracts
  • Financial statements
  • Tax returns
  • Email correspondence
  • Legal files
  • Meeting minutes from the board of directors
  • Business registration documents
  • Customer invoices
  • Contracts, including loan and mortgage documents
  • Purchase receipts

Invest in an Accounting and Payroll Software that Generates Records

The most effective way to cut costs and remain compliant is to invest in technology where possible. An accounting and payroll software that can generate records, payroll tax forms, and customer invoices should be high on your list of must-haves. 



Go for software with bookkeeping basics like keeping accounts receivable records when you bill a customer. The software should also generate different IRS tax record forms so you can easily search for these forms when you need them.

Match Your Records to Transactions During Bank Reconciliations 

Bank reconciliations can help small businesses catch errors and understand their financial positions. But you can only do this if you keep proper records. Make it a habit to match every transaction in your accounting software to a record. Make sure you have a matching invoice, receipt, or contract. 

Back-Up and Secure the Records 

Keep a backup of all your records, preferably off-site. If you suffer a data break or a natural disaster, you can avoid a catastrophe. It doesn't hurt to be extra careful and have a backup of a backup. Also, ensure your backups are regularly updated. 

Get External Help 

You might not have the budget to run an entire team of accountants to comb through your books and ensure compliance. But you can contact a specialized small business tax professional like myself for a free consultation, especially on new tax advancements like the new reporting threshold for Form 1099K Payment Card and Third-party Network Transaction for the tax year beginning 2023. 



Outsourcing certain aspects of tax filing can save owners of small businesses money while ensuring they remain updated and compliant with the latest tax trends and requirements. Contact us today and find out how we can help.


Keep on Booking is based out of Lincoln, Nebraska, and provides exceptional booking and accounting services in Nebraska, Colorado, New Mexico, and Arizona.

How to Estimate Taxes When You’re Self-Employed: A Simple Guide

By Patricia Moore • April 23, 2025
Working for yourself is exciting—you're your own boss, setting your own schedule, and building something you're proud of. But when it comes to taxes, things can get a little tricky. Unlike traditional employees who have taxes withheld from their paychecks, self-employed individuals are responsible for managing and paying their own taxes throughout the year. That’s where estimated taxes come in. They help you avoid a surprise tax bill (or penalties) when tax season rolls around, and they’re a big part of staying compliant and financially healthy as a business owner.  Let’s break down how estimated taxes work and what you need to do to stay on top of them. What Are Estimated Taxes? Estimated taxes are payments you make to the IRS throughout the year on income that isn’t subject to withholding. This includes money you earn from freelancing, gig work, contract jobs, or running your own business. If you expect to owe at least $1,000 in taxes for the year after subtracting withholding and tax credits, you’ll likely need to make estimated payments. These payments cover both your income tax and self-employment tax (which includes Social Security and Medicare). When Are Estimated Taxes Due? Estimated tax payments are made four times a year: - April 15 – for income earned January 1 to March 31 - June 15 – for income earned April 1 to May 31 - September 15 – for income earned June 1 to August 31 - January 15 (of the following year) – for income earned September 1 to December 31 If the due date falls on a weekend or holiday, your payment is due the next business day. How Much Should You Pay? There are a couple of ways to figure this out: - Safe Harbor Method: If your income is similar to last year’s, you can avoid penalties by paying at least 100% of last year’s tax liability (or 110% if your adjusted gross income was over $150,000). - Current-Year Estimate: If you expect to earn more or less than last year, aim to pay at least 90% of what you’ll owe this year. You can use IRS Form 1040-ES and your prior year’s return to help calculate your estimated payments. How to Make Payments You have a few options when it comes to sending in estimated tax payments: - IRS DirectPay – an easy way to pay online - IRS2Go mobile app – convenient for on-the-go payments - Mail a check – using Form 1040-ES - IRS online account – track payments, balances, and access past tax records No matter how you pay, be sure to mark your calendar and avoid missing a deadline. What If You Don’t Pay Enough? If you underpay or make late payments, the IRS may charge you a penalty. For 2025, the interest rate for underpayment is 7% plus 3 percentage points, and the interest is compounded daily, which can add up quickly. You can usually avoid this penalty if: - You owe less than $1,000 when you file, or - You paid at least 90% of your current year’s tax bill, or - You paid 100% of your prior year’s tax (or 110% if your income was higher) Reassess When Life Changes Life happens—maybe you got married, took on a second job, or had a child. Any of these events can change how much tax you owe. Check in on your income and expenses every few months and adjust your estimated payments if needed. If you also earn W-2 income, consider increasing your withholding through your employer by submitting an updated Form W-4. This can help offset your self-employment tax and reduce what you need to pay quarterly. Why Hiring a Bookkeeper Can Make a Big Difference Being self-employed means wearing a lot of hats—and tax planning doesn't have to be one of them. A professional bookkeeper can help you stay organized, track your income and expenses, and make sure your estimated payments are accurate and timely. At Keep-On-Booking, I work with self-employed individuals and small business owners to take the guesswork out of tax season. From ongoing bookkeeping to estimated tax support and financial reporting, I'm here to help you stay on top of your finances—so you can focus on doing what you love.
Schedule a consultation today and let’s make your next tax season the easiest one yet!

Top 10 Commonly Missed Tax Deductions for Self-Employed People

By Patricia Moore • January 28, 2025
Tax season can be a challenge for self-employed individuals, but it’s also an opportunity to save money by leveraging deductions. Unfortunately, many people overlook key expenses that could significantly reduce their tax bill. Here’s a quick guide to the top 10 commonly missed tax deductions: Retirement Plan Contributions: Contributions to SEP-IRAs, SIMPLE IRAs, and solo 401(k)s are tax-deductible. Tax-deferred growth helps you build a stronger financial future while reducing your current taxable income. Self-Employment Tax: You pay the full 15.3% Social Security and Medicare tax as a self-employed person. Deducting half of this tax aligns your tax burden closer to that of traditional employees. Home Office Expenses: Deduct a portion of your rent, mortgage, utilities, and insurance if you use a part of your home exclusively for business. Use the simplified method to calculate your deduction or opt for actual expenses if they’re higher. Health Insurance Premiums: Deduct premiums for health, dental, and long-term care insurance for yourself, your spouse, and dependents under 27. This deduction applies even if you don’t itemize your deductions on your tax return. Internet and Phone Bills: Deduct the business portion of your phone and internet expenses. Ensure you separate personal and business use to avoid IRS scrutiny. Meals: Deduct 50% of meals for business purposes, such as client meetings, conferences, or travel. Meals must be reasonable and not considered extravagant to qualify as deductible. Office Supplies: Items like pens, paper, printer ink, and other business essentials are fully deductible. Don’t forget to deduct larger office equipment like desks, chairs, or computers if used solely for business. Marketing and Advertising: Deduct the full cost of promoting your business, such as website hosting, social media ads, and printed materials. Costs related to branding, like logo design or promotional items, are also deductible. Professional Services: Costs for accountants, lawyers, consultants, or other professional services are fully deductible. Fees for tax preparation software or financial advisors can also qualify as deductions. Travel Expenses: Deduct costs like airfare, lodging, car rentals, and meals for business-related travel. Parking fees, tolls, and transportation to and from meetings or the airport can also be deducted.  Why You Should Hire a Bookkeeper: Keeping track of expenses and deductions can be overwhelming. Hiring a bookkeeper provides: Maximized Deductions: Ensures you claim every eligible expense Time Savings: Lets you focus on running your business while they handle the details. Accuracy: Reduces errors and the risk of audits. Financial Insights: Helps you better understand and plan your finances. Bonus Tip: The cost of hiring a bookkeeper is a deductible business expense! . Final Thoughts Navigating taxes as a self-employed individual doesn’t have to be stressful or overwhelming. By staying informed about commonly missed deductions and maintaining accurate records, you can significantly reduce your tax burden and keep more of your hard-earned money. At Keep-On-Booking, I help take the guesswork out of your finances. From payroll management to tax filing and financial reporting, my services are designed to save you time and money while you focus on growing your business. Contact me today for a consultation: https://www.keep-on-booking.com/consultation

Understanding Worker Classification: A Guide for Colorado Business Owners

By Patricia Moore • October 2, 2024
As a Colorado business owner, one of the most important decisions you’ll make is how to classify the people who work for you. Are they employees or independent contractors? Properly classifying your workers in line with Colorado's laws is crucial, as it affects everything from wages and benefits to tax responsibilities. This blog will walk you through the key differences between employees and independent contractors in Colorado, the protections each group is entitled to, and the consequences of misclassification. Whether you’re starting a new venture or managing an established business, getting worker classification right is essential for staying compliant and protecting your business. Employees: Wages and Hours: Colorado employees are entitled to at least the state minimum wage, which adjusts annually. They are also covered by the Fair Labor Standards Act (FLSA), which requires overtime pay at 1.5 times the regular rate for any hours worked over 40 in a week. Benefits and Protections: Employees have access to a range of benefits such as unemployment insurance, workers’ compensation, and health benefits. Additionally, they are protected from workplace discrimination, unsafe working conditions, and wage theft under both federal and state law. Legal Recourse: If their rights are violated, employees can file complaints with the Colorado Division of Labor Standards and Statistics. These violations could include unpaid wages, workplace safety issues, or employment discrimination. Independent Contractors: Flexibility: Independent contractors in Colorado typically enjoy more freedom in choosing their working hours and methods for completing tasks, allowing for greater flexibility in their work-life balance. Limited Protections: Unlike employees, independent contractors aren’t entitled to minimum wage, overtime pay, or benefits such as unemployment insurance and workers' compensation. They also aren’t covered under most employment discrimination laws. Tax Responsibilities: Independent contractors must manage their own taxes, including self-employment tax, and are responsible for covering their own benefits, insurance, and retirement savings. The Importance of Proper Classification In Colorado, workers are generally presumed to be employees unless proven otherwise. If an employer wants to classify someone as an independent contractor, they must demonstrate that the worker is: Free from the employer’s direction and control in performing their work; and Engaged in an independent business or profession related to the work they perform for the employer. Employers cannot rely solely on issuing a 1099 form to classify someone as a contractor. A written contract is required, outlining key elements like the contractor's obligation to handle their own taxes and the fact that they won’t receive unemployment insurance unless they or another entity provide coverage. Key Factors to Determine Worker Classification Colorado uses a variety of factors to assess whether a worker is an employee or an independent contractor. These factors include: Control Over Work: If the employer dictates how, when, and where the work is done, the worker is more likely an employee. Nature of the Work: If the worker performs tasks integral to the employer’s core business, they are probably an employee. Payment Method: Employees are generally paid by the hour or on a salary, while independent contractors are paid per project or job. Tools and Equipment: Employees often use tools and equipment provided by the employer, whereas independent contractors provide their own. Consequences of Misclassification Misclassifying an employee as an independent contractor to avoid paying overtime, unemployment taxes, and other benefits can lead to serious penalties. Businesses found in violation could face: Back pay for unpaid wages and overtime Fines and penalties Back taxes for unemployment insurance and other withheld benefits Proper classification of workers is essential to avoid legal and financial repercussions. Colorado’s Division of Labor Standards and Statistics can investigate claims of misclassification, and violations can be made public under the state’s Wage Theft Transparency Act. Get Professional Help For small business owners, navigating these complex classifications and ensuring compliance can be overwhelming. By hiring professional bookkeeping services, you can ensure accurate worker classification, maintain compliance with employment laws, and avoid costly penalties. Keep-On-Booking's expertise in payroll management, tax filing, and financial reporting allows you to focus on growing your business with confidence and peace of mind. Contact us today to learn more: https://www.keep-on-booking.com/consultation