Tax Preparation Guide for Small Businesses in Northern Colorado: Key Insights for 2025

Running a small business in Northern Colorado comes with its share of rewards and challenges. Among the latter, tax preparation often stands out as one of the more daunting tasks. At Yeater & Associates, we understand these challenges and strive to help small businesses simplify their tax preparation process and achieve financial clarity. Running a business is hard enough without adding the complexity of filing taxes each year. 

Here are nine best practices for small businesses when it comes to tax preparation, small business accounting, and working with an accountant or financial professional. With proper planning and a clear understanding of tax obligations, you can turn tax season into an opportunity to optimize your financial health and streamline your operations. This guide outlines key steps and insights to help small business owners prepare for the 2025 tax season with confidence and clarity.

1. Understand Your Tax Obligations

Tax obligations vary depending on the structure of your business. Familiarizing yourself with these requirements is the first step toward compliance.

• Federal Taxes: The type of federal tax forms you need to file depends on your business structure. Sole proprietors typically use Schedule C with Form 1040, while partnerships file Form 1065. Each business type has unique filing requirements, so consult a tax professional to ensure you’re on track.
• State Taxes: In Colorado, businesses are subject to a 2.9% state sales tax, with additional local taxes that differ by jurisdiction. Be sure to register for a sales tax license and keep up with local tax regulations to avoid penalties.

2. Key Tax Deadlines for 2025

Missing tax deadlines can result in fines and unnecessary stress. Stay ahead by marking these critical dates on your calendar:

• January 15, 2025: Fourth quarter estimated tax payment for 2024 due.
• March 15, 2025: Deadline for S corporations and partnerships to file annual returns.
• April 15, 2025: Individual tax returns and C corporation returns due; first quarter estimated tax payment for 2025 due.
• June 16, 2025: Second quarter estimated tax payment due.
• September 15, 2025: Third quarter estimated tax payment due.
• January 15, 2026: Fourth quarter estimated tax payment for 2025 due.

3. Gather Necessary Documentation

Efficient tax preparation hinges on having the right documentation at your fingertips. To streamline the process, gather essential records such as invoices, bank statements, and sales records to track income. Additionally, collect receipts for business expenses like rent, utilities, and supplies, and ensure payroll records are complete with W-2s for employees and 1099s for independent contractors. Keeping organized records not only simplifies filing but also safeguards your business during an audit.

4. Leverage Tax Deductions and Credits

Deductions and credits can significantly reduce your tax burden, so take the time to identify those that apply to your business:

• Common Deductions: These include advertising expenses, office supplies, and business-related travel.
• Tax Credits: Research federal and state tax credits that could benefit your business, such as the Small Employer Health Insurance Premiums Credit or the Work Opportunity Credit.

5. Stay Updated on Tax Law Changes

Tax laws evolve annually, and staying informed is essential to avoid surprises. For 2025, pay attention to:

• Inflation Adjustments: Standard deduction amounts and tax brackets may have shifted.
• State Regulations: Colorado may introduce new tax policies affecting small businesses. Regularly check updates from the Colorado Department of Revenue.

6. Payment App Taxes

Another regulation that has been on small businesses’ radar for several years is taxes on payments via third-party apps like PayPal, Cash App, Venmo, and similar platforms. Traditionally, the threshold to report earnings from third-party apps was $20,000 and 200 transactions. However, the American Rescue Plan Act drastically lowered that to $600 with no transaction minimum. While implementation of the $600 threshold has been delayed, small businesses paying taxes for 2024 will now need to report and pay taxes on anything over $5,000 as part of a phase-in period.

It’s essential to track your app-based payments carefully and consult with a tax professional to ensure you remain compliant with these evolving regulations.

7. Consider Professional Assistance

Tax preparation can be intricate, especially for small business owners juggling multiple responsibilities. From keeping track of changing tax regulations to ensuring accurate financial reporting, the process can quickly become overwhelming. Hiring a tax professional familiar with Colorado laws ensures not only accuracy but also significant time savings and the discovery of potential tax savings through deductions and credits. A knowledgeable accountant can help identify financial blind spots, provide year-round guidance, and ensure you’re prepared for unexpected audits or compliance requirements.

At Yeater & Associates, we understand the unique challenges that small businesses in Northern Colorado face, from navigating complex state tax regulations to maximizing profitability. Our team of experts provides personalized support tailored to your specific needs. Whether you require assistance with tax planning, filing, or ongoing financial strategy, we’re here to ensure your business remains compliant while optimizing its financial health.

Tax preparation doesn’t have to be a stressful experience. By following these steps and staying proactive throughout the year, small business owners in Northern Colorado can approach tax season with confidence. Whether it’s understanding your obligations, leveraging deductions, or meeting deadlines, a little preparation goes a long way. And if you’re feeling overwhelmed, remember that professional assistance is always available to help you navigate the complexities of tax preparation.

Contact Yeater & Associates today and let us help you make 2025 your most financially efficient year yet. Start preparing now to ensure a smooth and successful tax season ahead.