January 31st is behind us. W-2s and 1099s have landed, and now February becomes the most overlooked—but most critical—phase of tax prep for small businesses. This is your chance to catch missed deductions, reconcile your records, and ensure accuracy before the March and April filing deadlines. Done right, this review can save you money and stress.
At Lightening the Load (LTL), we call this the “tax-wise window.” Here’s how to make the most of it.
Why February Matters
By now, most income documents are in your hands, but the filing deadline hasn’t arrived yet. That means you have time to review your books without the pressure of last-minute scrambling. A thorough reconciliation now prevents costly errors, missed deductions, and IRS notices later. Think of it as your final checkpoint before the finish line.
Key Steps to Maximize Deductions
- Reconcile Income and Expenses
Match your bank statements, invoices, and1099s against your books. Look for discrepancies—especially payments from contractors or vendors. Even small mismatches can trigger IRS attention. - Review Big-Ticket Deductions
Don’t overlook major deductions like depreciation, home office expenses, and business mileage. These often get missed whenyou’re focused on day-to-day operations. - Check Above-the-Line Opportunities
Consider contributions to retirement accounts or HSAs. These can still be made before the filing deadline and reduce taxable income without requiring itemization. - Update Records for Year-End Purchases
Did you buy equipment or software in December? Make sure those expenses are properly recorded. Late-year purchases often slip throughthe cracks. - Verify Vendor and Contractor Info
Ensure that1099s align with your records. Incorrect taxpayer IDs or payment amounts can lead to IRS mismatches and delays.
Avoid Common Pitfalls
Rushing through reconciliation is the biggest mistake. Duplicate entries, missing receipts, and misclassified expenses can cost you deductions—or worse, trigger an audit. Take the time now to review carefully, and if your situation is complex, professional guidance is worth every penny.
The Bottom Line
February isn’t just a quiet month between deadlines—it’s your opportunity to close the books smartly and maximize deductions before filing. LTL is here to help you make this process smooth, accurate, and stress-free.
Let us lighten your load.
