2025 Tax Checklist for Small Business Owners
As the late summer sun starts setting earlier over Easton and the Lehigh Valley, a different kind of season is beginning soon for small business owners: tax season. It's the critical period known as Q4, a time that can either set you up for a smooth and profitable tax season or lead to a chaotic scramble next April.
Welcome to the first session of Office Hours, the official resource from Tax Janitors. We believe that proactive financial cleanup is the key to avoiding that year-end panic. For years, we've helped Pennsylvania business owners by tidying up their books, handling everything from a full QuickBooks cleanup to complex payroll and PA sales tax issues.
In this 2025 edition of our Q4 checklist, we're opening our playbook to give you the actionable steps you need to take right now to end the year with confidence and clarity.
1. Review Your Profit & Loss Statement
Before any cleanup project, you have to turn on the lights to see the full extent of the mess. Your Profit & Loss (P&L) statement is the bright light for your business finances. It shows you exactly where your money came from and where it went. Without an accurate P&L, you’re making critical year-end decisions in the dark.
So, the first step in your Q4 cleanup is to pull your P&L for January through today. Don’t just glance at the bottom-line profit number. It’s time to look for the small errors and overlooked details that have been hiding in the corners of your books all year. In QuickBooks Online, you can find your Profit & Loss statement by clicking “Reports” on the left-hand menu. Your financial reports will be easy to find on Xero or other accounting software as well.
Here’s what to look for:
Chart of Accounts: Your “Chart of Accounts” (COA) is the foundation of your accounting system. The COA precisely defines the accounts your company uses to categorize transactions. Give some thought to your COA and add/delete accounts to best suit your business’ unique activities.
For example, an Electrician might have an account for “Materials” where electrical tape and spare light switches are categorized along with the vendor names and transaction dates. On the other hand, a Graphic Designer would have a “Software” account for their Photoshop or Microsoft Office account. Different strokes for different folks, you know?
Miscategorized Expenses: A clean and tailored Chart of Accounts is only the first step. Once you complete the COA, you have to categorize your business activity correctly. On QuickBooks Online, this is done on the “Bank Transactions” page because accounting entries start in your bank & credit card transactions.
When you categorize a transaction, your accounting software will ask first whether it is an income, expense, transfer to an asset/liability, or an owner’s equity transaction. Then, you’ll select the account name from your Chart of Accounts - this is why the COA is important. Once you accept the transaction, it will be categorized within your Profit & Loss Statement we mentioned earlier. Transactions classified improperly will harm your ability to make decisions based on your numbers.
The “Miscellaneous” Black Hole: If you have a large and growing balance in a vague category like “Miscellaneous,” “Ask My Accountant,” or “Uncategorized Expense,” it’s a red flag. Every dollar should have a specific job and a proper home. If you need to make a new category for a transaction, do it - accounting will make much more sense to you if you simply jump in headfirst.
This line-by-line review of your Profit & Loss, Chart of Accounts & transaction detail is what we call a QuickBooks cleanup. It’s the detailed work that ensures the numbers you’re looking at are complete, accurate & valuable for decision-making purposes. Get your systems right, and you’ll always be able to rely on your numbers, giving you a massive leg up on your competition. Trust me, very few business owners think about this until it’s already too late.
2. Reconcile Payroll: Employees & Contractors
Of all the financial messes we clean up with our clients, payroll and contractor payments can be the most difficult to clean up. Getting payroll wrong doesn’t just cause accounting headaches, it can lead to frustrating IRS notices and penalties which can be expensive for small business owners. Q4 is your chance to ensure your "people paperwork" for employees and contractors is ready to go in January 2026.
Payroll is made up of two groups with separate requirements:
Employees: Your main task here is a data audit. For every employee on your small business payroll, confirm that you have their correct legal name, Social Security number, and current mailing address on file. A simple typo can lead to a rejected W-2 filing, causing delays and frustration for everyone.
For Contractors: This is critical. Make a list of every contractor, freelancer, or vendor you’ve paid over $600 this year. Now, ask yourself: Do I have a signed W-9 form from every single one of them? If the answer is no, stop everything and send them a request for one today. You are legally required to have this W-9 for contractors on file to issue them their Form 1099-NEC in January. The 1099-NEC requirements in PA are no different from the federal rule—if you don't have that W-9, you're out of compliance.
A Certified Public Accountant (CPA) firm like at Tax Janitors LLC, or other experienced accounting expert can help you get your system set up so that you can #DIY the payroll process confidently but don’t wait. Disorganized payroll records only compound with time as more pay periods elapse and more contractors are compensated. A good payroll process and clean records allow you to know how many people you can hire, what you can pay them, and other important decisions when hiring.
3. Make Taxes Easy & Maximize Deductions
Now that you’ve turned on the lights and reviewed the numbers, it’s time to do some strategic scrubbing. One of the most powerful ways to clean up your tax bill is by thoughtfully timing your expenses. Many business owners think of deductions as a passive record of what they’ve already spent. The pro move is to spend proactively before the year ends to maximize your small business tax deductions for 2025.
The most significant tool for this is Section 179 of the tax code.
In plain English, the Section 179 deduction often allows you to deduct the full purchase price of qualifying new or used equipment in the current tax year, rather than depreciating it slowly over several years. Think of it as a significant, immediate tax discount on the tools you need to grow your business.
This year-end equipment purchase is a classic answer to the question, "what can I write off?" But there are two critical rules: the purchase must be for a legitimate business purpose (don't buy a big-screen TV just for a deduction), and the equipment must be placed in service before midnight on December 31, 2025. You can't just buy it and leave it in the box.
This isn't just spending; it's a calculated investment in both your business's future and its 2025 bottom line.
Let's talk about the shoebox. Or the glove compartment. Or that dusty corner of your desk piled high with receipts. Every business owner has one. This physical (or digital) clutter is the single biggest source of stress and missed deductions come tax time. An organized system isn't just for neat freaks; it's your primary defense in an audit and the source code for an accurate tax return.
Instead of waiting for a frantic search next spring, use Q4 to create a clean, simple system. You don't need complicated software. A set of digital folders on your computer or a simple accordion file will work wonders.
Pro-Tip to organize receipts for taxes: Make your smartphone do the work. At the end of each day, take two minutes to snap a photo of your receipts. Save them to a dedicated cloud folder (like Google Drive or Dropbox) organized by month. A tiny daily habit now eliminates a week of stressful work later.
A clean paper trail is the ultimate gift to your future self.
4. Quarterly Estimated Taxes
Hopefully you see by this point that taxes aren't a once-a-year event; they're a pay-as-you-go responsibility for a contractor, a real estate agent, a freelance graphic designer, or any small business owner. That sinking feeling of getting a huge, unexpected tax bill in April—often followed by a notice for an e—is completely terrible, but also completely avoidable.
Now that you have a cleaner P&L from the work you did in Step #1, you can more accurately project your total income for 2025. This allows you to properly prepare for quarterly tax payments. Every business has to pay them, and though you may not want to let me tell you that this is the #1 complaint tax preparers get from clients. Didn’t pay taxes all year and then BOOM - big tax bill at Tax Time. Don’t be like all your friends and peers - get prepared, and never have an issue paying your taxes.
Here's a simplified approach to estimate your federal taxes:
Look at your net profit from January through August.
Estimate your expected profit for the final four months of the year.
Apply your estimated tax rate (20% minimum, 30% to be safe) to your total projected profit. You can also use revenue, with deductions just lowering your bill later.
Now, plan to pay that amount by September 15th, 2025 or at the latest January 15, 2026. Aim to be paid-up by January and you won’t have any issues. Paying more is always better than paying less, and the IRS lets you easily make tax payments online.
This single check-in can save you hundreds or even thousands of dollars in penalties and interest.
5. Fund Your Retirement Accounts
What if you could pay your future self instead of the IRS? That’s the power of a small business retirement account. Contributing to a plan like a SEP IRA or a Solo 401(k) is one of the single most effective ways to reduce taxable income for the current year while building long-term personal wealth. It’s a true win-win.
A SEP IRA is often the simplest to set up and allows you to contribute a significant percentage of your income.
A Solo 401(k) for a small business (if you have no employees other than a spouse) allows for even higher contribution limits and can include a loan provision.
While the final SEP IRA contribution deadline is often your tax filing deadline next year, many plans—especially the Solo 401(k)—must be established by December 31, 2025, to count for this year. Q4 is the time to have a conversation about which plan is right for you and to open the account, giving you a powerful tool to lower your 2025 tax bill.
6. Look Before You Leap!
We’ve just walked through a comprehensive cleanup checklist, from reviewing your books to planning for retirement. It can feel like a lot to handle, especially while you're still busy running your business day-to-day. This checklist is the "what," but the real value comes from applying it strategically to your unique situation.
This is where a professional can turn a good year into a great one.
This isn't just about filing taxes; this is about proactive, year-end tax planning. As a small business accountant in Easton, PA, we see a huge difference between clients who meet with us in Q4 and those who wait until the spring. A year-end meeting transforms your tax prep from a reactive chore into a forward-looking strategy session.
Consider us your dedicated tax advisor for the Lehigh Valley. Let's sit down, review your cleaned-up numbers, and build a strategic roadmap to minimize your 2025 tax liability and set you up for a more profitable 2026.
Don't let tax season simply happen to you. End the year with confidence and peace of mind.
The journey through Q4 doesn't have to be a stressful, last-minute sprint. As we've outlined in this checklist, a series of deliberate, proactive steps taken between now and December can completely transform your tax season from a source of anxiety into a moment of confidence. By cleaning up your QuickBooks, organizing your documents, and planning your deductions now, you are taking control of your financial future.
This checklist is your roadmap, but you don't have to do the deep cleaning alone. The doors to our Office Hours are officially open.
Before the holiday rush begins, give yourself the peace of mind that comes from knowing you have a plan. Let's work together to ensure your 2025 ends profitably and peacefully.
Ready to get started? Schedule your complimentary year-end tax planning session with Tax Janitors today and let's turn your financial mess into a sparkling clean slate.
