Estimated reading time: 5 minutes
The year’s first quarter (Q1) is busy for business owners like yourself. It’s a time to evaluate last year’s performance, review strategies, set new goals, finalize budgets, and prepare for the challenges ahead. However, amidst this flurry of activity and enthusiasm for the upcoming year, one area that should not be overlooked is first-quarter tax planning. Taking time to prioritize Q1 tax strategies can help you save time and effort when tax season arrives. Plus, it can lead to a more organized and efficient filing process.
This Balboa Capital blog article discusses Q1 business tax strategies to consider. It emphasizes the importance of early tax planning and preparation, reviewing the latest tax laws, paying taxes on time, and more.
Review the latest tax laws.
Business tax laws change yearly, with some years experiencing more changes than others. This makes it challenging to stay on top of the latest federal, state, or local tax updates. One of the most reliable sources for tax information is the Internal Revenue Service (IRS) website, which provides business owners with guidance on new tax rules, deductions, and credits.
In addition to visiting the IRS website, you can consult an accountant to learn about tax updates as they occur. They can provide expert insights into the latest tax changes and help you understand how they may affect your business’s financials. Moreover, an accountant can help your business stay compliant and take advantage of tax-saving opportunities.
Update your financial records.
The first quarter of the year is a perfect time to ensure your business’s financial records are current and accurate. This can make tax filing more manageable and help you identify potential deductions you may not have considered. Of course, well-organized financial records can save you time during the year’s remaining months.
Organize invoices, receipts, and bank statements by date and category. Then, enter this information into your accounting system or spreadsheet. Cloud-based accounting software can simplify business bookkeeping, keeping everything in one secure place. Plus, the cloud can help protect your company’s financial information from unauthorized access.
Note the 2025 tax deadlines.
It is important to be aware of the tax deadlines for the year 2025. Tax deadlines vary based on the business’s type of legal structure (e.g., sole proprietor, partnership, corporation), and some business entities have due dates other than April 15. For a detailed list of due dates, check the IRS website at https://www.irs.gov/faqs/small-business-self-employed-other-business/starting-or-ending-a-business/starting-or-ending-a-business-3.
Mark the important due dates on your calendar to ensure you file your business taxes on time. As the due date(s) approach, give yourself enough time to gather the necessary information and complete your tax filing without last-minute stress. Being proactive can help you avoid penalties or interest charges resulting from late submissions.
Take advantage of eligible business tax deductions.
It’s no secret that tax deductions can reduce your business’s taxable income. However, with so many eligible deductions available, it can be difficult to identify which ones apply to your company. Remember that not all business expenses qualify as tax deductions per the IRS, so speak to an accountant to find out what you can deduct.
Some common tax write-offs available to many businesses include marketing/advertising, business insurance, contract labor, legal/professional fees, office/facility rent, phone/Internet, utility bills, and travel expenses. If you purchased or financed capital equipment last year, check with an accountant to see if it qualifies for the Section 179 tax deduction and/or bonus depreciation.
Schedule an appointment with an accountant.
Unless you file your business’s taxes yourself, it is essential to seek the assistance of a qualified accountant. But remember that accountants are extremely busy during tax season, which typically runs from January to mid-April. Because of this, scheduling an appointment with an accountant well in advance is advisable to ensure you don’t miss the tax filing deadline.
Once you schedule your appointment with an accountant, ask them what may need to be done to streamline the filing process. Inquire about the necessary documents and information you should gather ahead of time or upload to a secure online portal, as well as any organizational tips they recommend.
Create a plan to pay your business taxes.
Gathering your financial paperwork and preparing your taxes in Q1 will help you understand your tax obligations sooner. If you anticipate a tax refund, congratulations! On the other hand, if you might owe taxes, it’s important to consider how to meet that obligation. This could involve setting aside funds or taking out a short-term working capital loan.
If you lack sufficient cash and cannot pay the taxes your business owes, ask your accountant about an IRS payment plan. This enables approved businesses to pay their taxes over a specific period rather than with one lump payment.
Conclusion
The first quarter of the year is a period to gather your company’s financial documents and gain insights into your tax situation. The sooner you know your business’s outlook for the tax year, the better prepared you are to meet your tax obligations without straining your resources.
Balboa Capital is not affiliated with nor endorses the Internal Revenue Service (IRS). The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.