Internal Revenue Code Checklist and FAQs

Use this page once a year, or when the business changes. It follows the Seven-Lantern Tax Trail; the figures come from the rules and numbers page and the entity types from the overview.

The Seven-Lantern Tax Trail

1. Confirm your classification. Note how the business is taxed, by default or by election, and that any Form 8832 or Form 2553 was filed on time.
2. Mark the dates. Partnership and S corporation returns are due on the 15th day of the third month after year end, C corporation returns the fourth; Form 7004 adds 6 months to file.
3. Confirm the accounting method. Use one method in your books; a change needs IRS consent. C corporations check the $32 million (2026) test for the cash method; see cash vs. accrual.
4. Sort the purchases. Decide what is deducted now and what is capitalized, using the right year's Section 179 and bonus depreciation figures.
5. Collect W-9s and review 1099s. For 2026 payments, Form 1099-NEC and most Form 1099-MISC payments start at $2,000; see contractors and Form 1099-NEC.
6. Pay owners and workers correctly. An S corporation owner who works in the business is commonly paid reasonable wages, and payroll taxes are deposited on schedule; see FICA.
7. Keep records for the right period. Three years by default, 6 if over 25 percent of gross income may be omitted, 4 for employment tax; property records until the limitation period for the year of disposal ends.

Common mistakes

• Assuming a state LLC is an S corporation automatically, or missing the Form 2553 window of 2 months and 15 days without checking late-election relief.
• Taking no wages as an S corporation owner who works full time; the IRS says pay must be reasonable.
• Using the older Section 179 limit, or a 40 percent bonus rate for property acquired after Jan. 19, 2025 (unless elected).
• Using $600 as the 1099-NEC threshold for 2026 payments.
• Not collecting Forms W-9, then missing 24 percent backup withholding.
• Discarding records at 3 years when the 6-year or 4-year periods may apply.

When to talk to an attorney

These are legal questions, and a CPA cannot give legal advice on them.

• Choosing or restructuring an entity where ownership, liability, contracts or state-law formalities matter, such as buy-sell terms, divorce or estate plans.
• An IRS civil fraud or criminal inquiry, a summons, or a request to sign a statute-extension agreement.
• A court case over a tax assessment, such as a petition or a refund suit.
• A business sale, merger or liquidation where tax and contract indemnity terms interact.

Frequently asked questions