How to Do Business Taxes Yourself (and When It’s Smarter to Call a Pro)

Posted on by Lien Phat Team

Running your own business is already a demanding task—but tax season adds a whole new level of complexity. If you’ve ever wondered how to do business taxes yourself and whether it’s worth your time (and risk), you’re not alone. From understanding the forms and deductions to filing on time and staying compliant with local, state, and federal tax laws, managing your own taxes can be overwhelming. But with the right knowledge and preparation, it’s possible to handle them effectively—up to a point.

Understanding the Basics: What Are Business Taxes?

Business taxes refer to the federal, state, and local taxes that a company must pay based on its income, payroll, property, and sales. The kind of taxes and the amount owed can vary depending on your business structure, location, and industry.

Common business tax types include:

  • Income Tax: Paid on the company’s profits.
  • Self-Employment Tax: Paid by sole proprietors and partners to cover Social Security and Medicare.
  • Payroll Tax: Employers with staff must handle income tax withholding, Social Security, Medicare, and unemployment taxes.
  • Sales Tax: Collected from customers on certain products and services and remitted to the state.
  • Excise Tax: Paid on specific goods like fuel, tobacco, or alcohol.

Step-by-Step: How to Do Business Taxes Yourself

Doing your own business taxes requires diligence, organization, and a solid understanding of accounting. Here are the steps to follow:

1. Determine Your Business Structure

Different business structures are taxed differently:

  • Sole Proprietorships file using Schedule C with your personal Form 1040.
  • Partnerships file Form 1065 and issue K-1s to each partner.
  • LLCs can choose how they’re taxed—either as sole proprietors, partnerships, or corporations.
  • S Corporations file Form 1120S.
  • C Corporations file Form 1120 and are taxed separately from their owners.

Knowing your structure dictates which tax forms you must complete.

2. Keep Accurate and Up-to-Date Records

Maintaining accurate bookkeeping is the foundation of successful tax filing. Use accounting software like QuickBooks, Xero, or Wave to:

  • Record all income and expenses.
  • Track mileage and home office use (if applicable).
  • Save receipts and invoices.
  • Reconcile your bank statements.

Don’t wait until tax season to organize your books—stay on top of it monthly.

3. Know Your Deadlines

Missing a tax deadline can result in penalties and interest. Common deadlines include:

  • March 15: Partnerships and S Corps
  • April 15: Sole proprietors, C Corps, and individuals
  • Quarterly estimated taxes: Usually due in April, June, September, and January

Also, don’t forget payroll tax deposit deadlines and annual filings like W-2s or 1099s.

4. Identify Deductions and Credits

Deductions reduce your taxable income, so it’s crucial to identify all eligible write-offs. These may include:

  • Office rent and utilities
  • Salaries and wages
  • Software and subscriptions
  • Marketing and advertising
  • Meals and travel
  • Depreciation
  • Home office expenses
  • Health insurance premiums

Tax credits, like the R&D credit or Work Opportunity Tax Credit (WOTC), directly reduce the tax you owe. These are more complex and require extra documentation, but can offer huge savings.

5. Calculate and Pay Estimated Taxes

If you expect to owe more than $1,000 in taxes, the IRS generally requires quarterly estimated payments. To calculate these:

  • Estimate your net income for the year.
  • Use IRS Form 1040-ES or your state’s equivalent.
  • Pay by the quarterly deadlines.

Failure to pay estimated taxes can result in penalties at year’s end.

6. File the Correct Forms

Depending on your business structure, you’ll file a different set of tax forms. Here’s a breakdown:

  • Schedule C (Form 1040): Sole proprietors
  • Form 1065: Partnerships
  • Form 1120S: S Corporations
  • Form 1120: C Corporations
  • Schedule SE: For calculating self-employment tax
  • Forms 941, 940, W-2, W-3, 1099-NEC, 1096: Payroll and contractor tax forms

Most forms can be filed electronically via the IRS’s e-File system or tax software.

Common Mistakes to Avoid When Doing It Yourself

Even with the best of intentions, many small business owners make costly errors. Here are some of the most common:

1. Mixing Personal and Business Finances

This is the #1 mistake new business owners make. Always maintain separate bank accounts and credit cards to simplify recordkeeping and ensure accurate deductions.

2. Missing Deductible Expenses

Failing to claim eligible deductions like depreciation, startup costs, or home office expenses means paying more tax than necessary.

3. Misclassifying Workers

Are they an employee or a contractor? Misclassification can result in heavy penalties from the IRS and state labor boards.

4. Failing to Pay Quarterly Estimates

Many self-employed individuals forget to make estimated tax payments and face penalties at year-end.

5. Poor Documentation

Not saving receipts, invoices, or bank records can leave you vulnerable in an audit.

Tools That Can Help You Succeed

Technology can make self-filing more manageable. Here are tools worth considering:

  • Accounting Software: QuickBooks, FreshBooks, or Xero
  • Mileage Trackers: MileIQ or Everlance
  • Receipt Organizers: Expensify or Shoeboxed
  • Tax Filing Software: TurboTax Business, TaxAct, or H&R Block
  • Cloud Storage: Dropbox or Google Drive for archiving tax records

Also, many state departments of revenue offer free calculators, forms, and tutorials.

When It’s Time to Call a Tax Pro

There’s no shame in asking for help—especially when your financial health is on the line. Here are scenarios where working with a tax professional is the smarter move:

1. Your Business Structure is Complex

Partnerships, S Corps, and multi-member LLCs often involve more complicated tax rules, allocations, and required forms. A tax professional ensures everything is filed accurately and on time.

2. You’ve Grown Rapidly

If your income jumped significantly this year, or you’ve added employees or new revenue streams, it’s time to reassess your tax strategy. A tax advisor can help minimize your liabilities.

3. You’re Being Audited

An IRS audit is stressful enough. A tax professional can guide you through the process, represent you, and respond to the IRS on your behalf.

4. You Want to Plan for the Future

Taxes aren’t just a once-a-year event. A tax pro can help you:

  • Create a tax strategy to reduce liabilities year-round
  • Restructure your business for tax efficiency
  • Maximize retirement and investment tax savings
  • Navigate changes in tax law

5. You’re Behind on Taxes

If you missed filing in past years, owe back taxes, or are facing IRS penalties, a pro can help you get back on track. They may also be able to negotiate on your behalf through Offer in Compromise (OIC) or payment plans.

6. You’re Spending Too Much Time on Taxes

Your time is valuable. If you’re spending hours (or days) trying to make sense of tax forms instead of running your business, it may be time to delegate.

The Real Value of Professional Tax Advice

Hiring a professional isn’t just about compliance—it’s about strategy. A seasoned tax advisor doesn’t just file your taxes. They:

  • Identify ways to reduce your tax burden.
  • Uncover deductions and credits you may have missed.
  • Ensure full IRS and state compliance.
  • Help with business forecasting and budgeting.
  • Advise on changing laws and their impact on your operations.

A great tax advisor becomes a strategic partner—one who helps you see the big picture while minimizing your risk.

How Lien Phat & Co Tax Advisory Can Help

At Lien Phat & Co Tax Advisory, our business is helping your business succeed. Whether you’re just starting out and unsure how to do business taxes—or you’ve grown to a point where it’s time to delegate—we’ve got you covered.

Founded by Patrick Huynh in 2001, we bring over 22 years of experience helping entrepreneurs like you optimize tax outcomes, streamline operations, and unlock new growth opportunities. We offer tailored support for:

  • Business tax preparation and filing
  • Back-office bookkeeping and payroll support
  • Strategic tax planning and compliance
  • IRS audit representation
  • Business consulting and growth planning

We work with small businesses, startups, contractors, and established corporations alike. Our team stays on top of the latest federal and state tax law changes so you don’t have to. And more importantly, we speak your language—focusing on clear, actionable advice that makes a difference in your business and personal finances.

Final Thoughts

Doing your business taxes yourself can be empowering and cost-effective—if you have the time, tools, and financial literacy to do it right. For smaller, straightforward operations, DIY may be sufficient. But as your business grows, or your financial situation becomes more complex, it’s not just smarter—but safer—to call in a pro.

Let us help you make sense of your numbers, reduce your tax bill, and move forward with confidence.

Ready to Get Your Business Taxes Right?

Contact us today and schedule your personalized consultation. Let’s build a path to your business’s success—together.

At Lien Phat & Co Tax Advisory, we don’t just do taxes. We help businesses thrive.