How to Do Taxes for Business Owners: Tips to Prepare Now and Maximize Your Refund
Filing business taxes doesn’t have to feel overwhelming—especially if you start preparing early. Whether you’re self-employed, an independent contractor, or running a small business, understanding the basics now can help you keep more of what you earn and reduce stress next tax season. From choosing the right business structure to tracking expenses, using tax-advantaged accounts, and getting professional help, this guide breaks it all down.
Knowing how to do taxes for business owners is easy for professionals who have years of experience. However, if you’re just starting out, learning how to file taxes might seem daunting. Keeping as much of your hard-earned income as possible is always of the utmost importance. So, how do you do that?
Consulting with a tax professional is always best to ensure you comply with tax rules and regulations. A knowledgeable JPMorgan Chase Advisor can offer strategies and investment vehicles that provide tax advantages to maximize your refund.
Whether you’re a business owner, independent contractor, or individual, preparing now for the 2026 tax season can also help.
This guide to filing taxes offers tips for keeping records and staying organized, ways to reduce your taxable income, and benefits of starting tax-advantaged accounts.
How to Do Taxes for Business Owners: Important Must-Dos
Businesses, like individual taxpayers, must report their income and expenses to the federal government by filing a tax return with the Internal Revenue Service (IRS), as well as state returns, if applicable.
Doing so determines what tax liability the business must pay to the federal government and state.
Filing timely returns, on or before all filing deadlines, is critical to avoid paying steep penalties and interest for filing late. Plus, the IRS “will assess a failure-to-file penalty when a tax return is not filed by the due date or date of a valid extension to file.”
Businesses must also file returns correctly to avoid any legal consequences due to inaccurate returns.
That’s why it’s best to work with a tax professional to ensure your business complies with all federal and state tax reporting and filing requirements, regulations, and deadlines.
How Much Do I Have to Make to File Taxes?
If you’re a new small business owner, independent contractor, or gig worker, you might wonder, “How much do I have to make to file taxes?”
The answer depends on your business structure.
The IRS states that you must file a federal tax return if you are self-employed and your net income is $400 or more. All businesses must file tax returns. Requirements vary according to your business structure.
The IRS defines them as follows:
- Sole proprietorship – An unincorporated business owned by one person.
- Partnerships – A relationship between two or more people to do trade or business.
- Corporation – A corporation forms when prospective shareholders exchange property, money, or both for the corporation’s capital stock.
- S Corporations – Corporations that choose to pass corporate income, losses, deductions, and credits for federal taxes through to the shareholders.
- Limited Liability Company (LLC) – State statutes allow LLCs, and regulations vary by state. LLC owners are called members.
Recordkeeping Tips
Keeping detailed records all year may seem like a lot of work. But it’s crucial in filing an accurate, timely business tax return.
Accounting journals and ledgers, electronic spreadsheets, or electronic accounting software for businesses are popular recordkeeping systems.
- Gross receipts – Proof of business income, including cash register tapes, invoices, cash and credit sales receipts, and 1099-MISC forms.
- Purchases (items you buy to make products or resell to customers) – Documentation includes canceled checks or electronic funds transfer/proof of payment, credit card receipts and statements, invoices, cash register tapes.
- Expenses – Operational expenses like utilities, rent, and supplies. Proof includes invoices, credit card receipts and statements, canceled checks or ETF, and cash register tapes.
- Travel, transportation, entertainment, and gift expenses – Proof of expenses for these items as it pertains to your business.
- Assets – Records for property you own and use in your business, such as furniture and machinery.
- Employment records – Keep all employment records for the past four years.
Be sure to contact your accountant or tax advisor if you have specific recordkeeping questions.
Other Organizational Tips
Other ways to stay organized during the year include:
- Separate business finances from personal finances with a business checking account and business-only credit card.
- Handle payroll efficiently by using software, taking an online class, or using a third-party payroll service.
- Subscribe to e-news for Small Business from the IRS for information on a variety of topics.
How to Minimize Tax Liability and Maximize Your Tax Refund
Researching tax deductions for small businesses, such as the IRS list of business credits and deductions, can help identify ways to reduce your taxable income.
For example, if you use part of your home for business, you may be able to deduct certain expenses or take a home office deduction.
Other business-related expenses include gas and mileage for business use of a vehicle, office supplies, software, and professional subscriptions, to name a few.
Tax Advantages of HSAs, 401(k)s and IRAs
Health Savings Accounts (HSAs), 401(k), and Individual Retirement Accounts (IRAs) have tax advantages for businesses and individuals.
Health Savings Account (HSA)
A health savings account (HSA) is a tax-advantaged medical savings account available to enrollees in an HSA-eligible health plan, also known as a high-deductible health plan (HDHP). It’s used for saving for and paying eligible medical expenses.
Contributions, growth, and withdrawals on HSAs are tax-free if used on qualified medical expenses.
401(k)-Retirement Plans
An individual retirement account (IRA) is a tax-advantaged plan to save for retirement. Individuals may open a traditional or Roth IRA.
Offering a 401(k) retirement plan boosts your company’s benefit package to attract employees. You may also be eligible to receive business tax credits.
In a traditional 401(k), employee contributions are deducted from gross income, and taxes are deferred until the employee withdraws funds.
In Roth 401(k)s, employee contributions are deducted from after-tax income, and no taxes are due when an employee withdraws funds.
A safe harbor 401(k) requires employers to make annual contributions on behalf of employees, and employees are usually 100% vested in the plan immediately.
SIMPLE IRA and SEP IRA Plans
Small business owners or independent contractors may also open a SIMPLE or SEP IRA.
A SIMPLE IRA stands for Savings Incentive Match Plan for Employees. Small businesses with 100 or fewer employees use this plan. Contributions are tax-deductible (or pre-tax, in the case of employee salary reduction contributions), and withdrawals are taxable income.
A SEP IRA stands for Simplified Employee Pension. Independent contractors, freelancers, and small business owners with few or zero employees use it. Like traditional IRAs, SEP contributions may be tax-deductible, and withdrawals are considered taxable income.
Eligible employers may be able to “claim a tax credit of up to $5,000, for three years, for the ordinary and necessary costs of starting a SEP, SIMPLE IRA or qualified plan, like a 401(k) plan.”
Following these tax tips will help you prepare now for the 2026 tax season, but it can be a lot for business owners to figure out. That’s why the professionals at JPMorgan Chase are here to help you choose the right 401(k) or IRA plan for your small business. Reach out to them to get started.
