What Every Small Business Owner Needs to Know
Paying to Vendors and Nonemployees: Any vendor or nonemployee like an independent contractor, gig worker etc. that you engage to work with and pay for services should be providing you with a form W-9 prior to payment. It is important for small business owners to know that any amounts paid over $600 to someone who is not your employee, must be provided with either a 1099-MISC or 1099-NEC form at year-end. It makes more sense for you the small business owner to receive this when you engage than at year-end when you are trying to wrap up all things business related for the year. You may get some push back, but it is a requirement and the penalties to fix up not reporting can affect both parties. It is also good business practice to do this and honestly, unless you receive the W-9 form prior to the service, I would not engage with them at all. Big red flags for me and should be for you too. Here is a link for more information on what makes an employee vs a nonemployee.
Beneficial Ownership Information (BOI) Reporting Requirement is in full force: If you created your small business prior to January 2024, you have until January 1, 2025 to file this report. If you have started your business in 2024, you will have 90 days to file this report. Also any changes to your business, like change in ownership or address, must be reported within 30 days. You can find BOI information here: BOI
Expenses: As you are recording your income and expense throughout the year, it is a good idea to make sure you are classifying each individual expense, especially if you are using a credit card to make payments. When you pay your monthly credit card bill, it is only the lump sum amount owed and not the individual items. In order to properly report your expenses, they should be categorized. Not only will it give you a better picture, but if you are having a Tax Professional file your business tax return, it helps them out too. Check out the IRS Guide to Business Expenses.
Business Structure: Make sure you know what type of business you are structured as: Sole Prop, Partnership, S Corporation, LLC Single Member, LLC Partnership, LLC S Corporation. This effects what type and when to file your business tax return as well as other requirements depending on the structure. The Small Business Administration has a great resource here: Business Structures.
