Top 10 IRS Tips About Small Business Owner Taxes

If you want to know about your small business owner taxes, what better place to look than the IRS? The tax code is a few thousand pages, but there is an IRS publication that gives you 10 specific areas of attention to stay on the right side of small business owner taxesⁱ. These ten areas give you points of focus and tips on each.

How you file and how you pay small business owner taxes – In these tips, the IRS tells you about the types of taxpayer identification numbers and which you will need for your business. You also learn about filing, some of the forms, and filing electronically as well. There are various types of taxes described and the forms for each.
The ways you account for income and expenses and accounting years – You learn the difference between cash and accrual accounting, which sets out when you report income and expenses. You also get an overview of accounting periods such as calendar year accounting or choosing a fiscal year for your business.
Small business owner taxes when you dispose of business property – Because some property, notably real estate, and expensive equipment, are depreciated for tax purposes, disposing of it before its value has been fully depreciated can trigger tax consequences. This section explains how to treat the disposal of business property. Gains and losses on property are explained as well.
Taking advantage of general business credits – General business credits are incentives granted to business with special tax treatment. There are around 30 of them explained in the document, when each is authorized, and how to report them.
Small business owner taxes from the income side – There are various ways in which a business can make money, and there are different types of business income based on how it is earned. Income can come from selling products, services, charging rents, charging interest, and from other sources.
About cost of goods sold for the business owner – When goods are purchased for resale and sold as-is, it is straight-forward how to deduct the cost of the goods. When there is some process, such as manufacture, modification, or enhancement of the goods before sale, there can be other ways in which the business must treat the costs for deduction purposes.
Calculating gross profit for small business owner taxes – Gross profit is generally defined as the excess of income over direct production or expenses to deliver the products or services of the business and before overhead expenses. So, the cost of goods sold subtracted from the income from the sale is the simplest breakout of gross profit.
Figuring net profit or loss for small business owner taxes – Once gross profit is determined, overhead expenses, expenses of sales, and other management and business expenses are accounted for and subtracted to arrive at net profit or loss from operation of the business.
All about business expenses for tax purposes – Types of expenses in operating a business are explained. Some are deductible in the year incurred while others must be depreciated over time. All types of expenses are explained, such as operation of vehicles, home office, depreciation, etc.
All about your Self Employment taxes – The treatment of income from self-employment and how the Social Security and Medicare taxes are reported and paid are explained.

This is a great overview of small business owner taxes, and it should be your guide for a discussion with a tax professional at Taxhive.com.

i Publication 334 (2020), Tax Guide for Small Business, IRS.gov