Tax season does not have to be a scramble. With a clear checklist, you can file accurately, avoid penalties, and move into 2026 with clean books and fewer surprises.
This guide translates IRS rules into plain English for small-business owners filing 2025 returns. It explains the confusing 1099 thresholds, common LLC mistakes that trigger notices, and a simple pre-filing workflow you can complete in a weekend. A short Montana note is included for local readers while staying relevant nationwide.
Intrepid Solutions helps small businesses stay IRS-ready year-round with integrated bookkeeping, tax preparation, payroll, and compliance support. If you prefer to hand this to a team that keeps everything synced, schedule a short call to get started.
The $600 rule, explained without the noise
You will hear different numbers for 1099s, which causes needless stress. Here is the clean version for 2025 filings:
- 1099-NEC, nonemployee compensation: Issue a Form 1099-NEC if you paid an unincorporated contractor or sole proprietor $600 or more for services during 2025. Include payments to single-member LLCs taxed as disregarded entities. Corporations are generally exempt, but legal and medical payments can be reportable even when paid to a corporation.
- 1099-K, third-party networks: The IRS announced plans to phase in a lower threshold for 1099-K forms issued by payment processors. Many businesses confuse this with 1099-NEC. Your duty as a payer to issue 1099-NEC at $600 has not changed because of 1099-K adjustments.
- 1099-MISC: Still used for certain types of payments like rent, prizes, and certain medical and legal payments. The $600 threshold applies to many MISC categories.
Practical takeaway: collect W-9s from every vendor before you pay them, then use that information to determine whether to issue a 1099-NEC or 1099-MISC. Do not rely on assumptions about an LLC’s tax status. The W-9 tells you how to report.
Common LLC tax mistakes to avoid this year
LLCs are flexible, but that flexibility can create traps. The most frequent errors we correct include:
- Mixing personal and business funds: Co-mingling breaks your audit trail and can undermine liability protection. Use separate bank and credit card accounts, and reimburse personal charges documented with receipts rather than booking them as expenses.
- Missing payroll tax deposits: If you pay owners or staff as employees, verify that payroll liabilities for federal income tax, Social Security, and Medicare have been remitted and reconciled to your payroll reports. Penalties for late or missing deposits add up quickly.
- Misclassifying workers: Calling a worker a contractor does not make it true. If you control how, when, and where work is done, they may be an employee. Misclassification can trigger back taxes, penalties, and state-level scrutiny.
- Skipping 1099s: Not issuing required 1099s increases audit risk and can disallow deductions until corrected. Build a quarterly process to collect W-9s and track payments.
- Not reconciling before filing: Filing from unreconciled books leads to wrong taxable income, missed deductions, and amended returns. Reconcile every bank and credit card account through December 31.
- Ignoring depreciation and fixed assets: Larger purchases may need to be capitalized and depreciated or expensed under Section 179 or bonus depreciation. Review your fixed asset list and make clean, documented elections with your return.
Your pre-filing checklist for early 2026
Work through these steps in order. Each one reduces risk and protects deductions.
- Reconcile bank and credit card accounts
- Reconcile every account through the last 2025 statement. Match each transaction to a vendor, category, and receipt where needed. Investigate old uncleared items.
- Tie out payroll liabilities
- Compare your payroll provider’s year-end reports to your general ledger. Verify Form 941 totals, state unemployment, and W-2 wage amounts. Clear any unpaid liabilities or mismatches before you file.
- Verify W-9s and prepare 1099s
- Request a W-9 from every service vendor. Confirm business name, Taxpayer Identification Number (TIN), and entity type. Prepare 1099-NEC or 1099-MISC for each eligible payee by the January deadline and file copies with the IRS. Keep proof of e-file acceptance.
- Review fixed assets and depreciation
- Update your fixed asset register, capture improvements placed in service during 2025, and consider Section 179 or bonus depreciation where appropriate. Align book and tax treatment with a memo documenting your decision.
- Capture home office and mileage
- Home office: measure the dedicated business space; track actual expenses or consider the simplified rate. Keep photos and utility statements.
- Mileage: use a contemporaneous log or app to track business miles. Record odometer readings at year end and retain fuel and maintenance receipts if using actual expenses.
- Confirm sales tax and information returns
- Make sure sales and lodging taxes, if applicable, are filed and paid. Verify that information returns, such as 1099s, were submitted correctly.
- Decide whether an extension is appropriate
- File an extension if books are incomplete, critical documents are missing, or material questions remain. An extension gives more time to file the return, but it does not extend time to pay. Estimate and pay expected taxes with the extension to limit penalties and interest.
Intrepid Solutions aligns bookkeeping, payroll, and tax preparation so each step feeds the next. Clients avoid last-minute rushes because reconciliations and reviews happen year-round.
Montana note for local owners
If you operate in Montana, review state withholding, unemployment insurance, and corporate or pass-through filings alongside federal deadlines. Many Missoula businesses also collect resort or local option taxes depending on activity. If you need a local partner who understands state nuances and can still work across the U.S., explore options for Missoula tax preparation and ongoing compliance support.
- For integrated help with tax returns and year-round readiness, see our Missoula tax preparation overview at Intrepid Solutions.
- If payroll is your pain point, our Missoula payroll processing support integrates deposits, filings, and ledger reconciliations so nothing goes missing.
Is a CPA worth it for a small business?
In many cases, yes. A Certified Public Accountant (CPA) or a seasoned small-business tax team can reduce errors, surface deductions you might miss, and coordinate year-round planning. The value often comes from preventing penalties, aligning payroll and books, and avoiding rework after filing. If your business has employees, inventory, fixed assets, or multi-state questions, professional support typically pays for itself through cleaner compliance and better decisions.
Intrepid provides practical options. Some clients want full-service bookkeeping and tax preparation. Others keep day-to-day entries in-house while we reconcile monthly, process payroll, and prepare returns. If you are comparing Missoula accounting firms, it helps to look for a single team that delivers bookkeeping, payroll, and tax together so classifications stay consistent.
Quick FAQ
What is the $600 tax rule, and how does it apply to my business?
If you paid an unincorporated service provider $600 or more in 2025, you typically must issue Form 1099-NEC. Some 1099-MISC categories also use a $600 threshold. The 1099-K rules for payment processors do not change your duty to issue a 1099-NEC.
What are common LLC tax mistakes?
Mixing personal and business funds, missing payroll deposits, misclassifying workers, skipping required 1099s, filing from unreconciled books, and mishandling depreciation.
Is it worth it to pay a CPA?
Often, yes. Professional support helps you stay compliant, capture deductions, and avoid penalties. It is most valuable when you have employees, equipment, or multi-state exposure.
Is a CPA worth it for a small business specifically?
For many small businesses, the combination of accurate books, reconciled payroll, and coordinated tax filing prevents costly mistakes and saves time, particularly during growth or when cash is tight.
How Intrepid keeps you IRS-ready year-round
Intrepid Solutions delivers integrated bookkeeping, payroll processing, tax preparation, and compliance so your numbers agree across systems and deadlines are met. The team reconciles monthly, ties out payroll liabilities, manages information returns, and prepares returns without last-minute fire drills. For local readers exploring accountants in Missoula and beyond, Intrepid brings Montana expertise with national reach.
- Learn how our team approaches year-round bookkeeping and reporting for Missoula businesses and remote clients.
- If you rely on QuickBooks and need cleaner data flows, see how our Missoula QuickBooks integrations connect banking, payroll, and reporting.
Summary and next step
When you reconcile accounts, tie out payroll, verify 1099s, review depreciation, and document home office and mileage, tax season becomes routine instead of stressful. If you are not ready by March, file an extension, estimate and pay what you owe, and finish strong with clean support.
If you want one team to manage bookkeeping, payroll, and tax so you can focus on operations, Intrepid Solutions is ready to help. Schedule a short call to discuss your 2025 filing plan and a year-round system that keeps you confident and compliant.