Recommendations

A) Do Not Mail Checks to the IRS
All payments to the IRS, other than through an approved Tax Software Program, need to be paid via IRS.GOV. Why? Because we are starting to see issues when folks mail checks to the IRS with too many hands touching the check payments. IRS is blaming the USPS and the Banks. USPS is blaming the IRS and the Banks. Banks are blaming the IRS and USPS. Plus thieves are sometimes stealing the checks and using the check info to get into folks bank accounts. For a couple of our clients, it has become a big mess.

Bottom line, going forward it is never ever a good idea to mail checks to the IRS or really anyone these days. Paying via IRS.GOV is VERY easy, just like paying Utilities, Credit Card Payments, and others online.

Effective September 30, 2025, the IRS is phasing out paper checks and shifting to electronic payments for both tax refunds and payments.
Changes for payments made after September 30, 2025

• The phase-out of paper checks is required by Executive Order 14247, which aims to improve efficiency, security, and reduce costs for federal financial transactions.
• For tax returns filed in 2026 for the 2025 tax year, taxpayers will need to provide direct deposit information for refunds and use electronic methods to submit tax payments.
• Limited exceptions may be granted by the Treasury Department for individuals without access to banking services, but the process and exact criteria are still being developed.

B) All major Income Sources should have Federal Income Tax Withheld.
I am a firm believer that all major income sources, like your W-2 Income, 1099-R Retirement Income, SSA Retirement Income, Investment Income if substantial, etc. should have Federal Income Tax Withheld.

Too many folks owe the IRS at Tax Time because one or more of their major income sources does not have Federal Income Tax Withheld and/or enough withheld.

Also, if you live and/or work in a State, you should also have State Income Tax Withheld.

C) Set up a separate “Tax Money” Savings Bank Account 
I have seen too many times at tax time that self-employed folks that make and/or are supposed to make IRS estimated tax payments are not prepared to pay taxes at tax time and wind up getting behind with the IRS.

I have also seen too many businesses that collect taxes on behalf of the government are not prepared to pay taxes by the due date and wind up getting behind with the government.

For example, when it is time to pay the sales taxes, they would use sales tax money that does not belong to them for their business operations and are not prepared to pay sales taxes when due and ends up getting behind with the government.

D) Manage your Business Finances and Personal Finances in “Separate” Bank Accounts 
I have seen too many times where self-employed folks that own a small businesses do not keep their business money and their personal money separate by having separate business and personal bank accounts and separate credit card accounts. 

E) Set up a separate “Emergency” Savings Bank Account 
Everyone needs to save for an emergency, some folks refer to it as a rainy day, like with what happened during COVID, individuals in case of unexpected job loss, and possible large expenses like medical, home, vehicles, etc. and businesses in case of unexpected loss of key employee(s), customer(s), vendor(s), etc.

F) Married folks ask me all of the time should they file Married Filing Jointly (MFJ) or Married Filing Separately (MFS) 
There are a couple of exceptions, but 99% of the time, if you are married as of December 31, 20XX, it is always better to file Married Filing Jointly (MFJ) for 20XX.

Some exceptions are: one person has back child support, has a bankruptcy, has some other type of negative financial history, loan repayment to the government like student loans is based on their income, etc.

We can run a report from our tax software after we prepare your Married Filing Jointly (MFJ) Tax Return to go from “99% sure” to “100% sure” based on your actual facts and numbers. 

G) Business Owners and new soon-to-be Business Owners often ask us about Business Entity Selection 

Our disclaimer first, we are NOT attorneys, and we do NOT give any type of legal advice and the below is strictly from a CPA and Tax perspective.

Another disclaimer is that we are located in Tennessee and the below is based on IRS Tax Laws as well as Tennessee State Tax Laws

There are several types of business entities you can set up and operate your “For-Profit” Business under, in alpha order:

• Corporations (commonly referred to as C-Corp)
• General Partnerships (commonly referred to as GP)
• Limited Liability Companies (commonly referred to as an LLC) (either Single Member or Multiple Members)
• Limited Liability Partnerships (commonly referred to as an LLP)
• Limited Partnerships (commonly referred to as an LP)
• Sole Proprietorships (commonly referred to as a Sole Prop)
• Subchapter S (of the Internal Revenue Code) Corporations (commonly referred to as an S-Corp)

The choice of entity depends on many factors like liability protection, tax implications, the number of owners, the desire for a separate legal identity for the business, etc.

Today, the two most common business entities for new business owners and new businesses are to either be a Sole Proprietorship, like our CPA firm and like many other businesses, or an LLC (either a Single Member LLC or a Multiple Members LLC) like many other businesses.

The below is mainly about the most common question and discussion of setting up new entities, LLCs verses S-Corps.

Again, based on Tennessee State Tax Laws, other than being a Sole Proprietorship, S-Corps were the business entity of choice and what you set up in 1958 (the date U.S. Congress created them) and before LLCs were created and available in your state.

Like I heard in a CPE class, setting up an S-Corp these days is like watching movies on film reels with projectors or VCR tapes and/or listening to music on eight-track players or cassette tapes players.
Just like film reels, VCRs, eight-track players, and cassette tape players are basically obsolete, so are new S-Corps.
You used these items in the early 1990s and before, but you would not do use them today.
Just like you should not set up a new S-Corp.

Why deal with the complicated compliance requirements, reasonable compensation and your compensation as determined by the IRS, stockholder basis and/or debt basis calculations and issues, and other major issues and restrictions of an S-Corp and it’s IRS and State Tax Laws when LLCs and their more favorable IRS and State Tax Laws are available and are so much easier to comply with?

Wyoming was the first state to create an LLC in 1977.
Arkansas began allowing the formation of LLCs in 1993.
Tennessee and Mississippi began allowing the formation of LLCs in 1994.
By 1996, every state in the US allowed the formation of LLCs.

Since the mid-1990s, other than being a Sole Proprietorship, LLCs are the entities of choice in Tennessee and in most states.

Yes, I know the sales folks, non-tax folks, and even some tax folks that have never prepared any type of tax return are on social medica (FB / Instagram / Tik Tok, etc.) selling S-Corps as the entity of choice today.
Remember, folks on social medial are dependent on the number-of-views they receive.  
They have a limited amount of time to quickly sell a great idea, like potential tax savings, to get your attention and viewership.
But if they are being honest, then maybe in their state, that is the correct choice.
But more than likely, they are only giving you half or less of the facts, impact, and picture and are not giving you ALL of the facts, impact, and picture.

Plus, some folks on social media are selling you to be an LLC but taxed as an S-Corp.
That is honestly one of the worst recommendations I see in the tax world these days.
Common sense and most actual tax professionals that are not trying to sell you empty promises of potential tax savings, says:
#1) If you are going to be an LLC, then be an LLC 100% from start to finish.
#2) If you are going to mess up your LLC to be taxed as an S-Corp, then mess up you new entity all of the way and be an S-Corp 100% from start to finish.

I have actually refused to take on client prospects as clients that insisted on their new Tennessee entity being an S-Corp and/or wanting their new entity to be an LLC but taxed as an S-Corp.
I figure if they are that misguided and/or do not want to listen to my CPA Professional Tax Advice of thirty-six plus years of actually preparing tax returns, then they are probably not a good fit as a client for our CPA Firm.

For more info on business entities, please visit IRS.GOV for various IRS info and resources and your state’s website for their various info and resources.

H) Business Owners often ask us about Business Vehicle Expenses (BVE).

The following information applies to all vehicles used for business purposes.  
However, it is primarily written for the business owner who only has one vehicle that is used for everything (their business, all of their business and personal errands, their family, personal uses, personal vacations, etc.)

Business owners have two ways to deduct their business vehicle expenses (BVE) and once you pick a method for the vehicle, you must stay with the same exact method until you dispose of the vehicle.

1)“Standard Mileage Rate” Business Vehicle Expense (BVE) Method

• Simplest method to calculate and is used by about 99% or so of our business owner clients, including our CPA Firm, because it is  generally the better method for tax purposes for the entire ownership of the vehicle.
• “Standard Mileage Rate” method covers all of the vehicle expenses (examples, purchase costs, registration and tags, depreciation, fuel, insurance, lease payments, maintenance, repairs, etc.).
• To calculate the Business Vehicle Expense (BVE) Deduction, you take:
  “Standard Mileage Rate” for the year as published by the IRS
  times your business vehicles miles driven for the year
  and this amount equals your Business Vehicle Expense (BVE) deduction for the year.

2) “Actual” Business Vehicle Expense (BVE) Method.

• More complicated method to calculate and is used by only about one percent or so of our business owner clients because it is rarely the better method for tax purposes for the entire ownership of the vehicle.
• To calculate the Business Vehicle Expense (BVE) Deduction:
  A) add up all of the actual vehicle expenses for the year (examples, purchase costs, registration and tags, depreciation, fuel, insurance, lease payments, maintenance, repairs, etc.).
  B) calculate your business vehicle usage ratio (business vehicles miles driven for the year dividend by your total vehicle miles driven for the year).
  C) then A (actual vehicle expenses for the year) times B (your business vehicle usage ratio) and this amount equals your Business Vehicle Expense (BVE) deduction for the year.

In summary:

• In all of my years of preparing taxes plus studies after studies of attorneys, CPAs, and other tax folks smarter than me says 99% of the time to use the “Standard Mileage Rate” Business Vehicle Expense (BVE) Method over your entire ownership of the vehicle.
• So for 99% of business owners that do not buy a different vehicle each and every year, you have to look at what is best for their entire ownership of the vehicle since it involves two or more tax years and NOT just the year of purchase.
• Now if you buy an expensive vehicle each and every year and you never ever skip a year of buying an expensive vehicle, then the “actual math” might say to use the “Actual” Business Vehicle Expenses (BVE) Method.

Other Business Vehicle Expenses (BVE) Items to Consider and Know

• Business Miles include traveling from your office or place of work to another place for business purposes and are generally tax deductible if you are a business owner and/or self-employed (yes, if you are self-employed, then you are a business owner for tax purposes)
• Commuting Miles are the miles you drive between your home and your regular place of work. They are considered personal miles, are not tax deductible, and should not be included in your business mileage calculation.
• Generally, once you select a method for business vehicle expenses (BVE), done in the year you purchase the vehicle, you must stick with it over your entire ownership of the vehicle.
  Yes you can pick the “Standard Mileage Rate” Business Vehicle Expense (BVE) Method when you buy the vehicle and then the following year mistakenly switch to the “Actual” Business Vehicle Expense (BVE) Method. Mathematically that would generally be an absolute horrible thing to do and that is why the IRS allows it.
• Regardless of what business vehicle expense (BVE) method you pick, you can always separately deduct various business expenses such as:
  most advertising and marketing expenses / items that you put on your vehicle, business related portion / ratio of your vehicle loan interest, and business related parking and tolls expenses.
• If your business owns five or more vehicles, the IRS considers this a “Fleet Operation” and you are required to use the “Actual” Business Vehicle Expense (BVE) Method.
• Business Vehicle Expense (BVE) Method chosen is based on each separate vehicle and not the entire business, unless, as mentioned above, the business owns five or more vehicles.

  Our disclaimer first, we are NOT attorneys and/or insurance agents, and we do NOT give any type of insurance and/or legal advice, but if a business / business owner has two or more vehicles but less than five, for example:

  Vehicle one is used for everything (their business, all of their business and personal errands, their family, personal uses, personal vacations, etc.), then generally the “Standard Mileage Rate” Business Vehicle Expense (BVE) Method should be used on this vehicle (unless they replace it each and every year with an expensive vehicle as discussed above).

  Vehicle two is used 100% exclusively for the business (examples, delivery vehicle, funeral hearse, service vehicle with parts / storage / toolboxes / tools, towing / wrecker vehicle, etc.). and/or the business has to title the vehicle in the business name for insurance and/or legal purposes, then generally the “Actual” Business Vehicle Expense (BVE) Method should be used on this vehicle.

• For trailers and/or other types of equipment (examples, concrete mixers, stump grinders, tow dollies, woodchippers, etc.) pulled behind your business vehicle, it does not follow any of the above. They are completely separate pieces of equipment, subject to their separate depreciation, and their expenses are deducted just like any other business equipment purchased.
• For more info on vehicle expenses, please visit  IRS.GOV  and look for:
  Current Years Standard Mileage Rate, IRS Publication 463 (Travel, Entertainment, Gift, and Car Expenses), Publication 334 (Tax Guide for Small Business), Topic Number 510 (Business use of car), and other IRS info / resources.

I) Have a Qualified and Trained Person Manage and take care of your Accounting and Bookkeeping Records, sometimes referred to  “Company’s Books”
Way too many times I have seen where Business Owners without any qualifications, supervision, and/or  training, either do their own Company’s Books and/or they have a nonqualified person (spouse, girlfriend, neighbor, buddy, etc.) do their Company’s Books for them.  Their theory is that is saves them a few dollars in accounting and bookkeeping costs.  From what I sometimes see is that all it does it costs them more in taxes to the IRS and States because of inaccurate Company’s Books.  Sometimes thousand of dollars more in taxes.  I always want to ask, how does that few hundred dollars savings in accounting and bookkeeping costs look now in compared to the thousands of extra taxes having to be paid?   Plus I have seen a two day scheduled IRS Audit get pushed into two or more weeks because of how horrible a Company’s Books were.  

J) Please make sure to include the owner(s) and some info about the owner(s) if you have a website for your Locally Owned Business
Many locally owned business websites miss a critical element: they fail to introduce the owner or provide meaningful ways for potential clients and customers to connect with them. This oversight wastes valuable time, money, and resources for the business, while also leaving customers frustrated. Unfortunately, it’s especially common among newer businesses just starting out—after reviewing their website, you often have no idea who owns the business or how to reach them directly.

This isn’t about large corporations, regional companies, or franchises that rely on brand recognition. Local ownership is different—customers want to know who they are supporting and build a personal connection with the people behind the business.

Owners often ask why their businesses struggle. The answer is simple: give customers a way to connect with you. People prefer to do business with individuals they know, trust, or share a connection with. That connection might come from mutual friends, schools, workplaces, churches, organizations, clubs, or shared hobbies and interests.

When a local business hides its ownership, it raises questions. Why wouldn’t they want to be transparent? A lack of visibility can unintentionally create doubts about legitimacy, honesty, or professionalism.

The takeaway is clear: if you’re a locally owned business, make sure your website tells your story, introduces the owner(s), and provides clear, authentic ways for customers to connect.

K) Boundaries
1) Set your Boundaries
2) Communicate your Boundaries
3) Enforce / Keep your Boundaries