For accountants, this time of year is basically the Super Bowl. (Yes, we know how that sounds. We've made peace with it.)
But here's the thing: even if you can't muster much excitement about tax season, what happens in the next few months could matter more for your business than any championship game.
We're talking real money: thousands of dollars in penalties you could avoid, deductions you might miss, and planning moves that could save you a fortune down the road. So consider this a pep talk from your coach.
Some of what follows is basic. You've heard it before. But "heard it before" and "actually doing it" are different things, and the gap between them costs founders real money every year. Other items are more advanced planning moves most founders don't learn about until it's too late.
1. DON'T: Commingle personal and business finances
You've heard this one. And yet…
We still see founders running business expenses through personal cards because it's "just easier for now." It's not. Commingled accounts create bookkeeping chaos, complicate audits, and can even pierce your LLC's liability protection: meaning your personal assets could be on the hook for any business debts you incur.
If this is you, fix it. Open a business checking account, get a business card, and draw a clear line. Your future self (and your accountant) will thank you.
2. DO: Set aside money for quarterly estimated taxes
If you're profitable, the IRS expects quarterly payments. Miss them and underpayment penalties start compounding. For small, fast-growing businesses, it’s the type of issue that can quickly create a real cash flow headache.
A simple habit that works: every quarter, move 25-30% of your net profit into a separate savings account. Don't touch it until tax time. Boring? Absolutely. But boring beats having to write anunexpectedly large check to the IRS coming April 15.
Really, though, you should be working with an accountant to figure out how much you owe on a quarterly basis (and to help you with tax strategy so you can minimize that number).
3. DON'T: Misclassify workers as contractors
This is one of the most common audit triggers we see, and often one of the most expensive to fix. It can be tempting to classify your workers as contractors – it’s less expensive, not to mention less paperwork.
But the IRS and state agencies have gotten aggressive about worker classification. If you control when, where, and how someone works, they're probably an employee, regardless of what your agreement says. "But they prefer being a 1099" doesn't hold up in an audit.
Get this wrong and you're looking at back taxes, penalties, and interest, potentially going back years. If you're unsure about how your workers are classified, get a professional opinion before it becomes a problem.
4. DO: Track expenses as you go
We get it. You're busy building a company. Logging into accounting software to categorize a $47 Uber receipt feels like a waste of time.
But here's what actually wastes time: reconstructing a year of expenses from bank statements in March so that you can file your taxes. It's tedious, error-prone, and almost always means missed deductions.
Set up a simple system now. Use accounting software. Snap photos of receipts. Spend 10 minutes a week categorizing transactions. That small habit saves hours at tax time, and helps you catch deductions you'd otherwise forget.
5. DON'T: Ignore state tax obligations from remote hires
Hired a developer in California? A sales rep in New York? Congrats on the growth. But you may have also created what’s called nexus, leading to new state filing requirements you didn't know about.
This catches founders off guard constantly, usually after penalties have already started piling up. Each state has different rules about what triggers a filing obligation, and "I didn't know" isn't a defense.
If you have employees or contractors in multiple states, take time to understand where you have obligations. A quick conversation with a tax advisor now is a lot cheaper than back filings and penalties later.
6. DO: Ask your CPA about the R&D tax credit
Most founders assume R&D credits are for pharmaceutical companies and defense contractors. Lab coats and patents. That's not the case.
If you're building software, developing new products, or improving existing processes, you may qualify. The credit can offset payroll taxes for early-stage companies, putting real cash back in your pocket.
It goes without saying that this isn't automatic. You need to document qualifying activities and expenses properly. But if you're building technology, it's a conversation worth having with your accountant.
7. DON'T: File without reviewing last year's return first
Your 2024 return is a roadmap for 2025. Did you miss deductions? Overpay estimates? Forget to claim something you were eligible for?
Before you file this year, spend 15 minutes looking at what you did last time. Patterns repeat, and so do mistakes. A quick review now can prevent you from making the same errors twice – especially if you get a fresh perspective from an accountant who really understands startups.
8. DO: Track QSBS eligibility from day one
This one's for the founders thinking long-term.
If you ever sell your company, Qualified Small Business Stock (QSBS) exclusion could let you exclude up to $15 million in capital gains from federal taxes. That's a life-changing amount of money.
But here's the catch: you can't retroactively qualify. The requirements—entity structure, asset limits, holding periods—must be met from incorporation. If you don't document this stuff from the start, you risk losing the benefit entirely.
Talk to your accountant about QSBS eligibility early. It takes minimal effort now and could save you millions later.
The founders who win at taxes
Tax efficiency isn't about aggressive strategies or sketchy loopholes. It's about building habits; systems that prevent costly mistakes and capture opportunities before they expire.
In our experience, the founders who consistently come out ahead aren't doing anything fancy. They're just disciplined. They ask questions early. They document carefully. And they bring in help before problems get expensive.
If you're getting ready to file your 2025 return and starting to realize you could've done some things differently, that's okay. Start building better habits now. And if you want help thinking through your situation, we're here.
About Iota Finance
Iota Finance provides accounting, tax, and CFO services for startups and small businesses. We got our start in Northeast Ohio, but we serve entrepreneurs across 37 states and 7 countries today.
If you're looking for a tax planning conversation, schedule a call with our team. We'll help you figure out what you missed, what you can still fix, and how to set yourself up better for 2026.