Tax FAQs

Keep records of all business income and expenses, including invoices, receipts, bank and credit-card statements, mileage logs, payroll records, and Forms 1099 or W-2. Your records should make it possible to see where your income came from and support the expenses and deductions you claim.

How long to keep records depends on the type of record and your tax situation. The IRS generally recommends keeping records that support a tax return until the period for that return expires; three years is common, but exceptions apply. 

Read the notice carefully and note any response or payment deadline. Compare it with your tax return and records, and follow the instructions for agreeing, providing information, or disputing the issue. Keep a copy of the notice and anything you send.

If the notice is unclear or you disagree with it, contact us promptly so we can help you understand the issue and prepare a response.

It depends on the child’s income and tax situation. For 2024, a dependent child generally needed to file a federal return if their earned income was more than $14,600. If federal or state taxes were withheld from their pay, they may want to file to claim a refund—even if they weren’t required to file.

Children with self-employment income or investment income, such as interest or dividends, may have to file at lower income levels. The filing rules depend on the type and amount of income, so check the requirements for that tax year or consult a tax professional. 

A child who qualifies to claim “exempt” on Form W‑4 may be able to reduce federal tax withholding, but should only do so if they meet the IRS requirements.

Choosing a business entity can affect your taxes, personal liability, health insurance options, and retirement plans. We can explain the key differences and help you consider which structure may fit your business and goals.  

The right choice depends on your circumstances, so we recommend discussing your options with a qualified tax professional and legal advisor.

A completed Form W‑9 gives you the payee’s legal name, address, and taxpayer identification number—information you may need to prepare an information return, such as Form 1099‑NEC.

Businesses generally must report certain payments for services, but the rules depend on factors such as the type of payment, the amount, and the payee’s tax classification. Collecting a W‑9 before making payments can help you determine what reporting is required and avoid tracking down information later. Penalties may apply if required information returns are filed late or not filed.

We can help you understand your reporting responsibilities and keep your business in compliance.

If your business is consistently profitable, electing S corporation tax treatment may reduce your self-employment taxes. You must pay yourself reasonable compensation for the work you do, and that salary is subject to payroll taxes. Remaining profits may be treated differently for tax purposes.

The potential savings depend on your income, payroll costs, and added accounting and filing responsibilities. We can help you compare the costs and benefits and decide whether an S corporation election may make sense for your business.

Worker classification depends on the details of the working relationship, including how much control you have over the work and how the worker operates their business. A contract or job title alone doesn’t determine a worker’s status. Misclassification can lead to back taxes and penalties, so it’s important to understand the applicable rules.

If you work with independent contractors, you may need to collect a Form W‑9 and file an information return, such as Form 1099‑NEC, for reportable payments. The requirements depend on the circumstances.

We can help you review the factors and understand your tax and reporting responsibilities.

Ask the contractor to complete Form W‑9 before you pay them. You may need their taxpayer identification number (TIN) to file an information return, such as Form 1099‑NEC.

If a contractor refuses or fails to provide a TIN, backup withholding may be required on reportable payments. The current federal backup withholding rate is 24%. You may also have information-return filing obligations and should follow the IRS’s instructions for filing without a TIN.

We can help you understand the reporting and withholding requirements for your situation.

You can generally deduct expenses that are ordinary and necessary for running your business. Common examples include supplies, business insurance, advertising, professional fees, and qualifying vehicle or home-office costs. Personal expenses generally aren’t deductible, and some purchases—such as equipment—may need to be depreciated rather than deducted all at once.

Keep records showing what you paid and how the expense relates to your business.

Refund timing depends on the tax agency, how you filed, and whether your return needs review. The IRS says most refunds are issued within 21 days of receiving an electronically filed return, though some take longer. You can check federal refund status using Where’s My Refund?.

For Missouri individual returns, the Department of Revenue says its Return Inquiry System may show your status within five business days after e-filing or three to four weeks after mailing. Check Missouri Return Status.

A business loss doesn’t automatically mean you can skip filing. For example, a sole proprietor generally reports business income and expenses on Schedule C with their individual return. Whether you must file—and whether you can use the loss to offset other income—depends on your business structure and other tax rules. Limits such as the at-risk, passive activity, or hobby-loss rules may affect whether and when a loss can be deducted.

We can help determine which returns are required and how the loss may be treated.

If you’re self-employed or own a business whose income isn’t subject to enough withholding, you may need to pay taxes during the year instead of waiting until you file. In general, federal estimated payments are required if you expect to owe at least $1,000 after withholding and credits, and your withholding will be less than the IRS’s required amount. Missouri may also require estimated payments.

The amounts and due dates depend on your income and tax situation. We can help estimate your federal and Missouri payments and adjust them as your business changes. 

Changing your business structure—or changing how it’s taxed—can affect which returns you file, how you pay yourself, payroll and self-employment taxes, and how business income or losses are reported. For example, an LLC may have different federal tax treatment depending on its ownership and elections. A tax election can also bring new payroll and filing responsibilities.

The legal structure and tax treatment are related but aren’t the same decision. Before making a change, consider the tax costs, administrative work, liability concerns, and Missouri requirements. We can help explain the tax effects and coordinate with your attorney when legal advice is needed.

A calendar tax year runs from January 1 through December 31. A fiscal tax year covers 12 months ending in a month other than December. Many small businesses use the calendar year because it’s familiar and often simpler to coordinate with the owner’s individual tax return.

Some businesses can use a fiscal year, but eligibility and IRS approval requirements depend on the business and its owners. If you’ve already filed using a calendar year, changing it may require IRS approval.

You generally need to set up payroll as soon as you hire an employee and begin paying wages. Before the first payday, register for any required federal and Missouri employer tax accounts, collect the employee’s Form W‑4 and Missouri Form MO W‑4, and complete Form I‑9. Missouri employers must generally withhold state income tax from wages for work performed in Missouri. 

The distinction depends on the actual working relationship—not just the contract, job title, or how the person is paid. The IRS considers factors such as how much control you have over the work, the worker’s financial independence, and the nature of the relationship. Employees are generally paid through payroll with applicable taxes withheld. Contractors generally handle their own taxes, and reportable payments may need to be reported on Form 1099‑NEC.

Worker classification can be complicated. If you’re unsure, get advice before deciding how to pay someone.

Employers generally withhold federal income tax and the employee’s share of Social Security and Medicare taxes, and pay a matching employer share of Social Security and Medicare. Employers may also owe federal unemployment tax (FUTA). Missouri employers may need to withhold Missouri income tax and pay Missouri unemployment taxes. Which taxes apply depends on your business, employees, and payroll. 

Federal deposit timing depends on your deposit schedule, which is generally based on your past payroll tax liability. Many small or new employers deposit monthly; others deposit semiweekly. A separate next-business-day rule can apply if a large tax liability accumulates. Federal employment tax returns, such as Form 941, are generally filed quarterly, but the filing deadline is separate from the deposit deadlines.

Missouri withholding tax return and payment schedules depend on your account and assigned filing frequency. Check your Missouri Department of Revenue account for the schedule that applies to you.

Most employees must receive Form W‑2 showing their wages and tax withholding. Employers generally must also file Forms W‑2 with the Social Security Administration. If you paid independent contractors, you may need to provide Form 1099‑NEC for reportable payments. The forms and filing requirements depend on the worker’s status and the payments made. 

Correct it as soon as possible. The steps depend on what went wrong and when you discover it. For example, a mistake on a previously filed federal Form 941 may require Form 941‑X; a W‑2 error may require Form W‑2c and a correction with the Social Security Administration. State payroll filings may need correction too.

Keep records of what happened, the correction, and any communication with the employee or tax agency.

It depends on your business’s tax classification. A sole proprietor generally does not pay themselves wages through payroll; owners take draws and report business income on their individual tax return. Partners generally aren’t employees of their partnership for federal tax purposes. By contrast, an owner who works for a corporation—including an S corporation—may need to receive reasonable compensation through payroll.

Because paying yourself incorrectly can affect payroll taxes and tax filings, confirm the rules for your specific structure before setting up owner payroll.

Late payroll tax deposits or filings can lead to penalties and interest. The amount depends on the tax, how late it is, and the circumstances. If you realize a deadline was missed, make the required payment and file the overdue return as soon as possible, then respond promptly to any notice. Some unpaid employee taxes can also create personal liability for responsible individuals.

We can help you identify what’s overdue and determine the steps to bring your payroll filings up to date.

Record transactions regularly—ideally as they happen—and reconcile your bank and credit-card accounts at least monthly. Staying current helps you catch errors, track cash, and see how the business is doing before tax time. 

Bookkeeping is the day-to-day recording and organizing of income, expenses, payroll, and other transactions. Accounting uses those records to prepare reports, interpret results, plan for taxes, and help guide business decisions. 

Consider getting help when bookkeeping is taking time away from running your business, your records are falling behind, you’re hiring employees, or you need clearer financial reports. A bookkeeper can help maintain accurate, up-to-date records. An accountant or tax professional can help with tax filings, financial planning, and more complex questions. Some businesses benefit from both. 

With the cash method, you generally record income when you receive it and expenses when you pay them. With the accrual method, you generally record income when you earn it and expenses when you incur them. The right method depends on your business, and special rules may apply—for example, to businesses with inventory. Once chosen, a method generally needs to be used consistently; changing it may require IRS approval. 

Use a business bank account and credit card for business activity, and pay personal expenses from personal accounts. If you accidentally use personal funds for a business expense, document the purchase and its business purpose. Keeping the accounts separate makes bookkeeping clearer and helps support your tax records. 

Start with these three reports:

• Profit and loss statement: summarizes income and expenses over a period.
• Balance sheet: shows what the business owns and owes at a point in time.
• Cash flow statement or cash summary: helps track money coming in and going out.

Reviewing them regularly can help you spot trends, plan for bills, and make informed decisions.

Compare your revenue with your expenses over a consistent period using your profit and loss statement. If revenue exceeds expenses, the business shows a profit for that period; if expenses exceed revenue, it shows a loss. Also review cash flow and what you owe: a profitable business can still have trouble paying bills if cash is tied up in unpaid invoices or other obligations. 

Keep records that support your income, deductions, and credits for as long as they may be needed for tax purposes. Three years is common for many tax records, but some situations require a longer period. Employment tax records should generally be kept for at least four years. Keep copies of filed returns and ask your tax professional about records tied to property, assets, or special circumstances.