Tax filing is one of the most consequential obligations a small business owner faces — and one of the most time-consuming. According to the U.S. Chamber of Commerce, the IRS estimates business taxpayers will average 24 hours on tax prep for 2024, with recordkeeping consuming the most time of any single task. For business owners in Licking County, that time investment is worth making carefully — because the most common tax mistakes don't surface until you're past the point where they're easy to fix.

Know What Ohio Actually Requires

Before thinking about deductions, get clear on what you owe. According to the U.S. Small Business Administration, a business's structure and location determine which taxes it owes, and some taxes require payment year-round — not just at filing time.

Ohio's tax picture changed for many small businesses in 2024. The state eliminated the Commercial Activity Tax (CAT) annual minimum and raised the exemption threshold from $1 million to $3 million in taxable gross receipts — meaning most Licking County small businesses may now be fully exempt from paying the CAT. If you've been budgeting for it, check your current threshold. At the same time, every Ohio retailer must still obtain a vendor's license, collect sales tax, file returns, and maintain complete records — obligations that don't disappear with size.

Bottom line: Your Ohio tax obligations can shift year to year — verify them at the start of each tax year, not just when you file.

The Quarterly Penalty That Catches People Off Guard

If you assume that getting a refund means you're clear of penalties, you're not alone — and you're wrong.

The IRS states that self-employed individuals and business owners who don't pay enough through estimated quarterly payments may face an underpayment penalty — even when they're owed a refund at filing time. The penalty is calculated on what you should have paid during the year, not your final balance.

The safeguard: pay quarterly, targeting at least 90% of your current-year liability or 100% of last year's tax bill (110% if your prior-year income exceeded $150,000). Add the four due dates to your calendar now — April, June, September, and January.

Keep Records Organized — and Locked Down

Tax preparation is mostly a recordkeeping problem. The more organized your files are going in, the faster and more accurate the process.

Before filing, confirm you have these on hand:

• [ ] Business income records and bank statements

• [ ] Receipts for deductible expenses: equipment, mileage, home office, supplies

• [ ] Payroll records and contractor 1099s

• [ ] Prior-year returns and quarterly payment confirmations

• [ ] Loan and lease agreements affecting deductions

One habit that pays off year-round: keep your business accounts completely separate from your personal finances. Commingling expenses creates confusion at filing time and can cost you legitimate deductions if you can't cleanly attribute spending.

Saving documents as PDFs keeps formatting consistent across devices and makes sharing with your accountant straightforward. To protect sensitive financial files, Adobe Acrobat is a free browser-based tool — give this a try to add password protection so only recipients with the correct password can open your files.

In practice: Build the filing habit year-round — an hour of monthly recordkeeping beats a week of April scramble.

The Problem With Engineering Losses

Here's a tax strategy that backfires more than business owners expect: deliberately keeping reported profit low to minimize taxes. Losses offset taxable income — so less profit on paper means less owed. The logic seems clean.

But the strategy has real consequences. SCORE warns that showing losses year after year raises IRS red flags and can damage your ability to secure business financing — making the deliberate-loss approach counterproductive. When you need a loan or want to lease commercial space in Licking County, lenders and landlords evaluate profitability. A pattern of engineered losses can cost far more in denied financing than you ever saved on taxes.

The right approach: maximize legitimate deductions without restructuring your books to avoid showing profit.

A Deduction Worth Claiming Every Year

One of the most valuable provisions for pass-through business owners is now permanent. According to the IRS's 2025 Tax Guide for Small Business, the 20% Qualified Business Income (QBI) deduction is now permanent for eligible owners — allowing sole proprietors, S corps, and partnerships to deduct up to 20% of qualified business income from their taxable income.

Eligibility has income thresholds and some profession-based limits, but for most Licking County small business owners, this deduction is worth calculating every year. If you haven't claimed it, a conversation with a CPA is the right first step — ideally before your fiscal year closes, not at filing time.

In practice: Pass-through owners who haven't reviewed QBI eligibility recently should confirm with a CPA before December, not April.

Accountant, Software, or Both?

The right tool depends on your situation, not your revenue.

If those 24 hours of prep feel unmanageable alongside running your business, professional help often pays for itself in accuracy — and in hours reclaimed to actually run the operation. The Licking County Chamber member directory connects you with local accountants and financial advisors who know the Newark and Licking County landscape. That's a practical starting point if you need a referral before April.

Frequently Asked Questions

What if I missed a quarterly estimated payment?

The penalty is calculated per quarter, so making your remaining payments on schedule limits your total exposure. Consider increasing the next payment slightly to offset the shortfall. A tax professional can calculate your safest catch-up amount before you file.

As an Ohio LLC, do I automatically owe the Commercial Activity Tax?

Not if your taxable gross receipts are $3 million or less — Ohio's 2024 changes exempted most small businesses from the CAT annual minimum tax. You may still owe other Ohio filings depending on your entity type, so confirm your specific obligations with a local accountant. Don't carry forward CAT assumptions from prior years without checking the current threshold.

Can I deduct home office expenses if I work from home?

Yes, if the space is used regularly and exclusively for business. The IRS allows either a simplified method ($5 per square foot, up to 300 sq. ft.) or a regular method based on proportioned home expenses — the exclusive-use rule is strict, so a space that doubles as a guest room doesn't qualify. If you work from home full-time, run both methods to find the larger deduction.

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