7 Frequently Asked Tax Questions for Small Business Owners
Published Date: June 30, 2025
Published By: Jac Cantos, Upcloud Accounting
New to small business taxes? It can be overwhelming! Upcloud Accounting answers seven common tax questions from small business owners, covering deductions, retirement savings, and more.
Small Business Tax FAQs: Your Questions Answered
Let's dive into these common questions to help you prepare for tax season:
What Small Business Expenses Can I Deduct?
Check out Upcloud Accounting's comprehensive list of small business tax credits and deductions!
Deductible expenses range from startup costs to vehicle expenses.
How Do I Calculate Travel Expenses When Using My Personal Car?
Deduct vehicle expenses only for business use!
Keep detailed records of business-related miles.
Two Methods:
Actual Expense Method: Track all vehicle costs (gas, repairs, tolls).
Standard Mileage Method: Deduct a set amount per business mile. The 2025 rate is 70 cents per mile.
How Do I Know If I Qualify for the Home Office Deduction?
The home office must be usedexclusivelyfor business.
Exceptions: Home daycare facilities, inventory storage.
What's the Best Way to Deduct My Business Assets?
Bonus Depreciation: Fully expense the asset's purchase price in the year it's placed in service.
The One Big Beautiful Bill (OBBB) sets bonus depreciation at 100% for property placed in service after Jan. 19, 2025, and before Jan. 1, 2030.
Section 179 Deduction: Expense a portion of the asset's cost upfront.
Unlike bonus depreciation, Section 179 can't create a tax loss.
How Will Having a Side Gig Affect My Taxes?
You may need to file Schedule C to report business income and expenses.
What's the Best Way to Save for Retirement as a Small Business Owner?
Traditional or Roth IRA: Easy to set up, even for sole proprietors. The 2025 contribution limit is $7,000 (or $8,000 if age 50+).
SEP IRA: Good for self-employed individuals or those with few employees. The contribution limit is up to 25% of net self-employment income (or $70,000 in 2025, whichever is lower).
SIMPLE IRA: Suitable for businesses with under 100 employees.
Solo 401(k) Plan: Ideal for those with no employees (other than a spouse).
How Should I Classify My Employees?
Employees: You control what they do and how they do it.
Independent Contractors: They run their own business and service other clients.
Misclassifying workers can lead to penalties!
Upcloud Accounting: Virtual Outsourced Accounting and Bookkeeping Services in the Philippines
Upcloud Accounting provides reliable, tech-enabled virtual accounting and bookkeeping services designed for startups, freelancers, and growing small businesses across the United States. Our team of experienced accountants and bookkeepers delivers streamlined financial management so you can focus on scaling your business, without worrying about the back-office workload.
We specialize in increasing efficiency, automation, and transparency across your financial operations using modern cloud accounting tools. Whether you're a solo entrepreneur or an expanding company, our flexible and affordable bookkeeping plans ensure you get expert support at every stage of growth. For inquiries, contact our team at [email protected] or visit www.upcloudaccounting.com to learn more.
Disclaimer: This content is for general informational purposes only and should not be considered professional financial or legal advice. For guidance tailored to your specific business needs, please consult with a licensed accountant or tax advisor. For questions, comments, or feedback, feel free to email us at[email protected].
