The IRS estimates business taxpayers will spend an average of 24 hours on tax preparation for 2024, with recordkeeping consuming the largest share of that time. For small business owners in Dunn, Lillington, and across Harnett County, that time pressure is real — and mostly avoidable. The difference between a stressful tax season and a manageable one comes down to seven habits practiced throughout the year, not just in the week before the deadline.

Understand What You Actually Owe in Self-Employment Tax

If you file as a sole proprietor, partner, or single-member LLC, you're responsible for self-employment (SE) tax — the Social Security and Medicare contributions that employees split with their employers. You cover the full amount yourself. According to IRS Publication 334, the SE tax rate on net earnings is 15.3%: 12.4% for Social Security and 2.9% for Medicare. That rate applies even if you're already collecting Social Security or Medicare benefits.

This surprises more business owners than you'd expect. Build SE tax into your quarterly estimated payments so you're not writing one large check in April.

Keep Business and Personal Expenses Separate

Open a dedicated business bank account and route every business transaction through it. This single step makes your deductions defensible, your records cleaner, and any audit far less painful. SCORE warns that mixing personal and business costs can trigger IRS scrutiny, since deductions must be directly tied to business activity — and that tax strategies work best when applied year-round, not just at filing time.

Bottom line: Commingled finances are one of the fastest ways to lose legitimate deductions.

Build Your Recordkeeping System Before You Need It

The IRS Taxpayer Advocate Service reports that an estimated 57 million small businesses and self-employed taxpayers nationwide must maintain solid recordkeeping systems to substantiate income and deductions at filing time. Waiting until March to reconstruct a year's worth of transactions is how deductions get missed and errors creep in.

Set a recurring monthly task: reconcile expenses, sort receipts, and note the business purpose of anything that might qualify as a deduction. Twenty minutes a month prevents a ten-hour scramble in spring.

Go Digital — and Protect What You Store

The IRS accepts digital copies of receipts, so there's no need to hold onto paper originals. SCORE recommends keeping organized digital records by category and maintaining separate books for business and personal expenses to streamline tax filing.

When saving tax documents, PDFs are the smart format — they preserve layout across devices and are easy to share with your accountant. Saving files as PDFs also makes it simple to store and send everything from draft returns to contractor agreements without worrying about compatibility. For sensitive documents, use an online tool to password protect PDF files so only authorized recipients can open them.

Plan Deductions and Credits Throughout the Year

Tax deductions reduce your taxable income; tax credits reduce what you owe dollar-for-dollar. Common deductions for small business owners include home office costs, vehicle mileage, business insurance, marketing expenses, and professional service fees. The catch: each one requires documentation showing the expense was ordinary and necessary for your business.

The best time to capture deductions is when you incur the expense. A simple folder system sorted by category — travel, equipment, utilities, professional services — keeps you prepared when it's time to file.

Stay Current on Tax Law Changes

Tax law shifts more often than most business owners track. Changes to depreciation rules, retirement contribution limits, expense thresholds, and deductible categories can affect your liability in ways that aren't obvious until you're already filing. Make it a practice to review IRS updates each fall so you're not learning about changes when it's too late to act on them.

This is one area where local connections pay off. The Lillington Area Chamber of Commerce hosts monthly information and education sessions on current business topics — a practical way to surface questions and connect with local professionals who stay on top of these changes.

Choose: Tax Software, an Accountant, or Both

For a simple Schedule C with clean records, tax software can handle the job efficiently. As your business grows more complex — employees, multiple income streams, depreciation schedules, or North Carolina's franchise tax obligations — a CPA or enrolled agent typically pays for itself quickly through deductions and avoided penalties.

Many business owners find that software handles the filing while an accountant handles the strategy: quarterly estimates, entity structure decisions, and retirement contributions that reduce taxable income year after year. The IRS Small Business and Self-Employed Tax Center offers free, centralized resources for owners filing Schedule C, E, or F — a useful starting point whether you're filing yourself or preparing to bring in a professional.

Know What North Carolina Requires

Federal taxes are one layer; North Carolina adds another. The NC Department of Revenue requires all corporations doing business in the state — including inactive ones — to file an annual franchise and income tax return. The franchise tax applies for the privilege of doing business in North Carolina, even if your activities are otherwise income-tax exempt.

If you're a new business owner, NCDOR also requires you to register through its Online Business Registration system to obtain a state account ID number before you can file or pay state taxes. Getting this right from the start prevents penalties that are easy to avoid.

The tax filing process rewards preparation far more than it rewards last-minute effort. Know what you owe, keep clean records, separate your finances, and don't wait for April to get organized. If you're a Harnett County business owner looking to connect with local expertise, the Lillington Area Chamber of Commerce is a strong first stop — both for the monthly education sessions and for the network of professionals who serve businesses throughout the area.