Closing Out the Year Well, and Starting the New Year with a Bang.

As we approach the New Year, here are some tips to help you finish 2025 strong!

1. Double Check Your Payroll

Make any income adjustments for employees in 2025 before filling out the following forms: W-3's and W-2's must be submitted by 01/31/2026 for the year 2025.

• Provide employees with their copies.

• Send the W3 along with copies of the W2's to the Social Security Administration.

a. Submit the 941 Form for the 4th Quarter by 01/31/2026. A 941 form reports the income taxes, Social Security tax, and Medicare tax withheld from employees' paychecks.

b. Complete the 940 Form by 01/31/2026 (an annual report for the entire year 2025.) to report your yearly Federal Unemployment Tax Act (FUTA) tax. The FUTA tax, along with state unemployment tax systems, supports the provision of funds for offering unemployment benefits.

c. Report wages for the 4th quarter for Unemployment.

d. State Withholding Tax for the 4th quarter should be reported if applicable.

e. Local Withholding Tax for the 4th quarter should be reported if applicable.

2. Make Sure You Have W-9’s, 1099’s, and Other Relevant Forms

1099 NEC (new for 2025) is for individuals who provide services totaling over $600.00 in 2025. The payment amount is recorded in box 1 and can cover services like specialty training sessions, photography, temporary help, and maintenance, among others.

1099 MISC is used for payments for rent (reported in box 1) or legal fees (reported in box 1). W-2 forms are necessary for reporting wages and tax withholdings for employees. Employers need to submit a W-2 for each employee, detailing their earnings, Social Security, Medicare, federal income tax withholdings, and other relevant data, which employees require for their tax filings.

W-9 forms are employed to request the taxpayer identification number (TIN) of a U.S. individual, including a resident alien, and to verify the correctness of the provided number. The details gathered on this form are commonly used to complete 1099 forms and other informational returns.

Employers must understand how to correctly use these forms to adhere to IRS regulations and guarantee a smooth financial process.

Issue a 1099 form to your landlord. This practice aids in ensuring that landlords accurately report rental income on their tax filings. To comply, you will need to request your landlord's Taxpayer Identification Number (TIN) using Form W-9. Once you have this information, you can complete and file Form 1099-MISC by the due date. (Which is typically January 31st.)

Having everything in order will make the filing process smoother and less stressful. Taking these steps early can save you time and help avoid any last-minute scrambling!

3. Adjust Your Sales Tax Return

Adjust any overpayment or underpayment for 2025 on this sales tax return to avoid the need for future amendments. Maintaining accurate bookkeeping is crucial. Reviewing your Sales Tax Payable Liability Account will provide clarity on your current status and assist in identifying any inconsistencies.

Ensure that all necessary documentation is readily accessible. This includes invoices, receipts, and any correspondence related to sales tax transactions. Proper documentation will not only support your financial records but also provide evidence in case of an audit.

Stay informed about any changes in tax laws and regulations that may affect your business. Tax laws can vary significantly by jurisdiction and are subject to change, so regular updates will help you remain compliant and avoid potential penalties.

Use accounting software to automate and streamline your sales tax calculations and filings. Modern accounting tools can reduce errors, save time, and provide real-time insights into your tax obligations, ultimately enhancing the efficiency of your financial management.

4. Conduct a Year-End Inventory Check and Ensure All Financial Records are Reconciled

Conduct a year-end inventory check. This involves a physical count, and the value should reflect the cost paid for the product (wholesale), not the retail price. $____________

Ensure that all your financial records are reconciled up to 12/31/25, including checking accounts, PayPal, credit card accounts, and loans (such as capital loans and lines of credit).

Examine your Profit and Loss Detail as well as your Balance Sheet Detail to confirm the accuracy of all entries. Avoid blindly trusting your own or your bookkeeper's work; it's always beneficial to double-check.

Make sure you review all financial statements and that all transactions are accurately recorded. Reconcile your bank accounts and verify that all outstanding invoices and bills are accounted for. It might also be helpful to set up a meeting with your CPA to go over any last-minute details and ensure compliance with all relevant regulations.

Additionally, take this opportunity to reflect on the past year’s financial performance. Assess what went well and identify areas for improvement. Planning ahead can help you set more informed goals for the next year and develop strategies to achieve them. Organizing your financials now will not only make tax season less stressful but also provide a clearer picture of your business’s health, allowing you to make more strategic decisions moving forward.

Once you have reviewed everything, you can confidently hand over your books to your CPA!

5. Prepare a Checklist for Your CPA to Make the Most of Your Income Tax Return

Submit your final estimated payments for 2025 for Federal and State (if applicable).

Your checklist should look something like this:

Sum of estimated payments made for 2024:
• Federal: _____________
• State: _______________
• Local: _______________

Your checklist should also include:

Mileage – Record the total miles driven for business purposes using your personal vehicles.

Auto Expenses – You have the option to report actual expenses for your vehicles separately for mileage, allowing your CPA to determine the most beneficial write-off method.

Home Office:
• Total square footage of home: ____________
• Square footage of your home used exclusively for business: _____________
• Total utilities for 2024: ___________
• Total internet expenses for 2024: _________