The Ultimate Small Business and Freelancer Tax Prep Checklist for 2025

Tax season is here, and there’s a good chance you're staring at weeks' worth of uncategorized expenses. Random invoices are scattered across your desk. That shoebox full of expense records? It hasn't been opened since last April.

Sound familiar? Most small business owners start their tax prep the same way: with a mix of dread and confusion. After all, running a business is hard enough without adding tax season stress.

Whether you made $5,000 or $500,000 last year, you can build from the basics. No fancy accounting jargon. No complex tax theory. Just a straightforward checklist to help you walk away with a clear plan to tackle your 2025 taxes. 

Step 1: Finish Your Bookkeeping

This is where a lot of small business owners get stuck, and that’s why it’s a good place to start. It’s easy to let the regular bookkeeping slide in the day-to-day of running your business. It’s tedious, and it doesn’t feel time-sensitive. But good bookkeeping isn’t just important for when tax season rolls around, it also means you can know your business's financial health year-round. Here’s how to play catch-up:

• Start with bank statements: Open your bank account statements going back to January 2024 (or whenever you fell off the bookkeeping wagon) and start combing through the expenses and deposits. Download your statements as CSV files to speed things up.

• Tackle credit cards: Use a credit card for your business? That’s next. Like your bank statements, download these as spreadsheets when possible. Credit card companies often categorize charges automatically, which can help you sort through months of expenses faster.

• Track down your receipts: Dig through the stack of papers on your desk. Search your email for "receipt," "order," and "invoice." Create a folder just for tax documents and save them in one place.

• Calculate your numbers: Total your business income (all those marked deposits) and subtract your business expenses. This gives you your net income, the number you'll use to calculate your taxes. 

• Add it all to your bookkeeping system: Whether using a cloud accounting software or doing it manually in a spreadsheet, it’s time to get it all in one place. If you’re not sure where to start, work backward. Recent transactions are easier to remember and categorize. Plus, you'll handle the freshest expenses while your memory is clear. 

Tip: Have you been using a spreadsheet to track business expenses? If so, now's the perfect time to switch to accounting software. Found Plus subscribers* can import transactions from another bank account or credit card to track income and expenses all in one place.

Moving forward, make your life easier by opening a business bank account if you haven't already. This dedicated account will make it much easier to keep track of cash flow expenses. Set aside time each week to record and categorize your transactions. This regular habit prevents the year-end scramble and gives you a clearer picture of your business health. 

Step 2: Gather Your Tax Documents

Get your file folder ready because it’s time to track down all your tax documents. Remember: Your tax documents change based on your business structure. Here's a general overview of what you need to find:

Income Documents 

If you're a sole proprietor or single-member LLC:

• Bank statements showing all deposits

• Payment records for income without 1099s

• 1099-NEC forms from clients who paid you $600+

• 1099-K forms from payment processors such as PayPal, Stripe, or Square

If you're an S-corp or partnership:

• Last year's business tax return

• Payroll tax returns and W-2s

• Partnership K-1 forms

• Corporate bank statements

• Sales records and invoices

Expense Documents 

For all business structures:

• Receipts for business expenses

• Bank and credit card statements

• Vehicle mileage logs or car expenses

• Home office expenses

• Equipment purchase records

• Insurance premium statements

• Contributions to retirement plans

Payroll Documents (if you have employees)

• W-2 and W-3 forms

• Quarterly payroll tax returns

• State unemployment tax records

• Worker's compensation insurance records

• Employee benefit payment records

Previous Tax Records

• Last year's tax returns (business and personal)

• Quarterly estimated tax payment receipts

• Any IRS correspondence

• State tax documents

Missing records? Contact vendors, search email archives, or check online banking. Some documents, like payment processor statements, can be downloaded from your account. When in doubt, document your efforts to track down missing records.

Step 3: Calculate Your Business Deductions

Speaking of documentation, you’re going to need it for this next step: Calculating your business deductions. You've probably heard other business owners talk about "writing things off," but what does that mean? A deduction reduces your taxable income, but not everything is deductible, and some deductions are more complicated than others.

While the Internal Revenue Service (IRS) doesn’t have a pre-approved list of expenses that you can definitely deduct, you’ll know that a purchase is deductible if it’s both ordinary and necessary for your business. 

Common Business Deductions You Might Miss

Many business owners leave money on the table by missing these key tax deductions. Here are three commonly overlooked write-offs that could lower your tax bill:

• Home Office Expenses: Beyond just the square footage, you can typically deduct a portion of your utilities, internet, and home repairs based on your office space. Make sure this area is used exclusively for business; your kitchen table won't qualify if you eat dinner there, too.

• Business Insurance: Your small business insurance and self-employed health insurance premiums are typically 100% deductible. Even specialized coverage like cyber security insurance counts, though personal car insurance gets tricky, depending on which method you use.

• Professional Development: Every dollar you spend improving your business skills could potentially cut your tax bill. This includes online courses, industry conferences, professional books, and trade publication subscriptions.

Tricky Deductions to Handle Carefully

Some business deductions need extra attention and detailed records to pass IRS scrutiny. Watch these two areas closely:

• Business Meals: You can write off 50% of your 2024 business meal costs, but documentation matters. Save your receipts and note who attended, what you discussed, and why it was business-related. Your credit card statement alone isn't enough proof here; keep those itemized receipts.

• Travel Expenses: Business trips count as deductions, but mixing business with pleasure requires careful tracking. If you add vacation days to your business travel, mark clear start and end dates for the business portion. Only expenses during business days qualify for deductions.

Your business deductions can save you thousands, but tax rules are ever-changing, and every business is unique. Talk with a tax professional if you're unsure about any deductions. Oftentimes, the money you spend on their expertise pays for itself in tax savings and peace of mind.

Step 4: Know Your Tax Types

A business structure is the legal framework that defines how your business operates. It affects how you're treated for taxes, and different business structures face different tax obligations. The taxes you'll pay—and how you'll pay them—depend on how you set up your business. Here's what you need to know:

Sole Proprietors and Single-Member LLCs 

Most small business owners start here. When your business is just you, your tax picture stays relatively simple. You'll report business income and expenses on your tax return, but you're still responsible for:

• Personal income tax on all business profits, reported on Schedule C

• Self-employment tax covering Social Security and Medicare

• Quarterly estimated tax payments to avoid penalties

S-Corporation Owners 

Many growing businesses choose S-corp status to save on self-employment taxes. This structure creates more paperwork but could lower your tax bill. You'll need to:

• Business profits pass through to your tax return

• Pay yourself a reasonable salary subject to payroll taxes and issue a W-2 form

• Take remaining profits as distributions (avoiding self-employment tax)

• File Form 1120-S for your business

Partnerships and Multi-Member LLCs 

Running a business with partners adds complexity to your taxes. Each owner's share of profits gets taxed on their return, but the business must:

• Business files Form 1065

• Each partner receives a K-1 tax form showing their profit share

• Partners pay self-employment tax on their portion

• Quarterly estimated payments based on expected profits

Your tax obligations grow with your business. A sole proprietor might start with just income and self-employment tax, but add employees or change structure, and your tax requirements shift, too. When in doubt, hire a CPA who knows your industry.

Tip: Which business structure is right for you? Here’s a breakdown of the five common business structures and the pros and cons of each. Learn more →

Step 5: Put Your Tax Deadlines on the Calendar

Missing tax deadlines can mean hefty penalties and unnecessary stress. There are a few important dates you need to know for 2025: 

• March 15, 2025: Deadline for Partnerships and S-corps to file tax returns and send K-1s to all owners

• April 15, 2025: Deadline to file your 2024 personal tax return (or an extension) and your first quarter estimated tax payment

• June 16, 2025: Second quarter estimated tax payment is due

• September 15, 2025: Third quarter estimated tax payment is due

• October 15, 2025: Deadline to file your extended 2024 personal tax return

• January 15, 2026: Fourth quarter estimated tax payment is due

Tip: An extension can be filed to allow an additional six months to file tax returns, but you don’t get an extension to pay. Penalties and interest begin accruing as of the original filing date. In addition, payment plans are available if you file on time but don’t have all of the funds available to pay the amount due.

Step 6: File Your Taxes

You've gathered all your documents and prepared your forms, and now it's time to file. You generally have three ways to file your self-employed taxes:

• E-filing your taxes online using software or a website

• Hiring a CPA to file your taxes for you

• Doing your taxes by hand, using IRS tax forms 

Unless you’re a tax pro who understands the nuances of filing by hand, we’d recommend using one of the first two options. Online tax software, also known as e-filing platforms, has revolutionized how individuals file their taxes. This option is convenient and often more accessible alternative to traditional paper filing and in-person tax preparation services. 

There is a point where DIY taxes stop making sense. If navigating software feels overwhelming or your tax situation feels complicated, you can hire a CPA to prepare and file your taxes for you. 

Disclaimer: The information on this website is not intended to provide, and should not be relied on, for tax advice. Found is not a filing service, Found partners with Turbo Tax and Column Tax for filing. Restrictions may apply, see full terms here and here. 

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