When Sarah first opened her coffee shop, all she could think about was making the perfect cup of coffee. She didn’t think much about taxes—until, well, tax season hit. Like many entrepreneurs, she thought she could just “wing it.” Spoiler alert: That didn’t quite work out. Taxes turned out to be a lot more complicated than she expected.

If you’re like Sarah, don’t worry. Navigating business taxes doesn’t have to be as overwhelming as it sounds. In fact, once you understand a few key things, it starts to get a whole lot easier. Trust me.

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Choosing the Right Business Structure

Okay, let’s start here. The way you structure your business is a huge deal. It’s like choosing the foundation for a house—it affects everything going forward, including how you file taxes.

• Sole Proprietorship: This is what Sarah did at first. Simple, right? She reported all her income on her personal tax return. It’s great when you’re just starting out, but the self-employment tax hit her hard. 15.3%—yikes!
• Partnership: A few months in, Sarah’s friend joined her, and they became partners. Now they had to file a Form 1065. That’s where the IRS takes a good look at their profits and losses, and they each report their share on their individual tax returns.
• LLC: Eventually, Sarah realized that switching to an LLC was a better move. It gave her more protection, and she could choose how she wanted to be taxed—either like a sole proprietor or like a corporation. It felt like leveling up.

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Getting an EIN? It’s Easier Than You Think

Before Sarah hired her first barista, she needed to get an Employer Identification Number (EIN). It’s just a quick online form through the IRS. Five minutes, tops. Think of it as your business’s Social Security number—you’ll need it to hire employees, pay taxes, and open business accounts.

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Keep Track of EVERYTHING (Seriously)

Here’s something Sarah wished she’d done earlier: track every. single. expense. Business expenses can really reduce your tax bill, so keep those receipts. Whether it’s buying coffee beans or new mugs, everything counts. And hey, don’t forget to log your miles if you’re driving to meet a supplier.

Some expenses to track:

• Office Supplies: Pens, paper, computers—you name it, it’s deductible.
• Travel and Meals: If you’re traveling for business, even partially deductible meals can make a difference.
• Home Office: Sarah did a lot of her work at home before opening the café, so she deducted a portion of her rent and utilities.

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Big Purchases? Meet Depreciation

Here’s another lesson from Sarah’s tax journey. When she bought her first industrial espresso machine, she thought she could just deduct the full amount on her taxes that year. But nope—her accountant explained that big purchases like that get deducted over time through depreciation.

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Conclusion

Tax season used to be the most stressful time of the year for Sarah, but after learning the ropes (and getting some professional help), it became just another part of running her business. And hey, if you’re feeling as lost as she was, reach out to USATax Solutions—they’ve got your back.