How to Prepare for the 2025 Tax Season.
By: Margaux Essick | June 17, 2025
Deductions, Quarterly Payments & New IRS Updates
As 2025 begins, small business owners are facing a tax landscape that continues to evolve. With new IRS regulations, inflation adjustments, and more digital scrutiny, tax preparation is no longer something to leave until the last minute. Getting ahead now can mean fewer headaches, potential savings and avoiding costly penalties.
Here’s a guide to help you navigate the upcoming tax season with confidence.
1. Stay on Top of IRS Updates for 2025
The IRS has introduced several changes that could impact small businesses this year. Notable updates include:
- Mileage rate adjustments – The standard mileage deduction has been slightly increased. If you use a vehicle for work, be sure you’re calculating the correct rate.
- Expand digital reporting – Businesses using third-party payment platforms like Venmo or PayPal for sales over $600 may now face more stringent 1099-K reporting requirements.
- Energy tax credits – If you’ve invested in energy-efficient upgrades, certain incentives and credits have expanded for 2025.
TIP: Regularly check the IRS website or work with a professional to stay informed.
The IRS has already rolled out several proposed charges for the 2025 tax year, In addition there is a greater focus on digital platforms and how income is reported from these channels. Make sure to keep documentation for all online payments and consult with your accountant about any changes that might affect your business.
2. Maximize Your Deductions
Many small business owners miss out on deductions simply because they aren’t tracking expenses properly. Common deduction include:
- Home office expenses
- Software subscriptions and SaaS tools
- Business meals (still subject to 50% rule)
- Travel and mileage
- Professional services (accounting, legal, consulting)
- Employee benefit’s or contractor payments
New for 2025: The threshold for some deductions has changed due to inflation indexing. Be sure to recalculate your eligibility.
If you are working from home make sure your workspace qualifies as exclusive and regular for business use. As more businesses operate digitally, the IRS is offering expanded deductions for business tech and cybersecurity tools. If your company invested in sustainability-like energy-efficient equipment or electric vehicle’s-ask your tax advisor about new energy credit expansions.
Avoid common mistakes like attempting to deduct personal expenses or entertainment costs, which are largely disallowed under current tax law.
3. Make Timely Quarterly Payments
If you expect to owe more than $1,000 in taxes for the year, you’re likely required to make estimated quarterly payments. The IRS is watching this more closely in 2025 with stiffer penalties for underpayment.
Upcoming Estimated Payment Due Dates:
- September 15, 2025
- January 15, 2026
TIP: Missing these dates can trigger penalties, even if you pay the full amount at year-end.
Many small businesses underestimate their quarterly tax obligations and end up facing penalties. For 2025, review your earnings with CPA each quarter to make sure your payments align with your income.
If your business has seen significant growth or changes in structure ( switching from sole proprietorship to LLC or S-Corp), your tax rate and obligations may shift. Adjusting your quarterly payments ensures compliance and better cash flow management.
4. Keep Clean, Digital Records
Gone are the days of shoeboxes full of receipts. In 2025, digital audits are on the rise. Use cloud-based accounting software like QuickBooks, Xero, or FreshBooks to track:
- Income and expenses
- Invoices
- Payroll
- Receipts and documentation
Backups and audit trails are more important than ever.
Keeping your financial records up to date throughout the year is one of the smartest moves you can make. Go beyond just saving receipts-maintain categorized digital records of income, business expenses, payroll documents, and any relevant contracts or leases. Using easy accounting software helps ensure everything is backed up. Reconcile your bank statements to catch any discrepancies-saving you from headaches in April.
5. Review Entity Structure and Tax Strategy
Depending on your business growth, it may be time to evaluate your legal structure. For example:
- Should you switch from a sole proprietorship to an S-Corp for tax advatages?
- Are you taking a reasonable salary as an owner?
- Would a SEP IRA or Solo 401 (k) help you defer taxes while saving for retirement?
A strategy session with a tax professional can save thousands.
6. Prepare for Potential Audits.
While audits are rare, they can be costly and time-consuming. Preparing early can migrate the risk. Store digital and physical records for up to 7 years and be ready to provide clear explanation for all deductions and large purchases.
Also, document all communication with clients and vendors, and ensure that invoice’s match payments in your books. Clean consistent records can make a big difference if you’re ever selected for review.
7. Saving for Taxes: More than just a piggy bank
Saving for taxes isn’t just about stashing 30% of your income in a random savings account and hoping for the best. Strategic tax saving starts with separating your tax savings from your general business funds. Open a high-yield savings account just for taxes—you’ll not only stay organized, but also earn a little extra interest while your money sits.
Here’s a smart trick: Automate weekly or bi-weekly transfers into your tax savings account based on your projected income and expenses. This makes tax time less of a panic and more of a process.
Plus, don’t forget self-employment tax is separate from income tax—plan for both. Many small business owners only prepare for one and end up blindsided. Use IRS Form 1040-ES to estimate and pay quarterly, and always double-check if your state requires its own estimated tax payments (many do!).
Partner With a Tax Expert
Tax planning is a year-round activity, not a last-minute task. Wolcowitz & Associates offers personalized support for small businesses looking to stay compliant and tax-efficient.
Whether its filing, payroll, bookkeeping, or planning-we’re here to help.
Tax laws can be complex and change frequently. Partnering with a qualified tax professional ensures you’re not missing key deductions or filing requirement’s. A seasoned accountant will help you navigate not only federal taxes, but also your state and local obligations. More importantly, having someone who understands your industry and business model can help identify strategic opportunities to lower your tax liability and optimize your year-round financial planning.
Need Help Navigating the 2025 Tax Season?
At Wolcowitz & Associates, we specialize in helping business owners stay compliant, maximize deductions, and plan proactively. Whether you’re looking to clean up your books, prepare for quarterly payments, or simply ask a few tax questions-we’re here to help!
Email: [email protected]
Call: 212-920-6310
Company: Wolcowitz & Associates
Ready to Make This Tax Season Stress-Free?
Tax Planning doesn’t have to be overwhelming. With the right knowledge and the right team behind you, you can navigate 2025 with confidence.
Let’s make 2025 your most organized and financially sound tax season yet.
