A client incorporates in January, hires her first worker in March, buys a truck in September, and pays a $14,000 cash deposit in November. Four different filing regimes just attached to one small business.
Advising a business owner means following the business through its life cycle: formation, operation, expansion, and dissolution. Each stage brings its own filing obligations, elections, and deadlines. An election missed at one stage usually cannot be rescued at the next.
Each stage in the life cycle of the business has its own decisions and its own federal filings:
Formation starts with an identifying number. A new entity applies for an employer identification number (EIN) on Form SS-4 (the EIN application) before its first payroll deposit.
Start-up costs are what the owner spends to get the business going before it begins operating. Under §195 the business can deduct $5,000 of them right away. That $5,000 is reduced dollar for dollar by the amount that start-up expenses exceed $50,000, and the remainder is amortized (deducted evenly) over 180 months.
Common mistakes
- Using the 2026 §179 limit. For 2025, the IRC §179 ceiling is $2,500,000 and the phase-out begins at $4,000,000, not the $2,560,000 TY2026 figure. It is also not the $1,250,000 pre-OBBBA number, which OBBBA retroactively superseded.
- Computing the §199A top with the wrong width. The top of the range is this year's threshold plus this year's width: $197,300 + $50,000 = $247,300 single, and $394,600 + $100,000 = $494,600 joint. The figures $291,950, $433,900 and $251,750 come from mixing thresholds and widths from different years.
- Treating a cashier's check over $10,000 as cash for Form 8300. A $12,000 cashier's check is not reportable cash. Only monetary instruments with a face value of $10,000 or less count as cash, along with currency and coin.
Bottom line
- 2025 figures: IRC §179 limit $2,500,000 phasing out over $4,000,000; 100 percent bonus for property acquired after January 19, 2025; Social Security wage base $176,100; standard mileage 70 cents.
- §199A: 20 percent, permanent, threshold $197,300 single and $394,600 joint, fully phased out for specified service business owners at $247,300 and $494,600.
- Form 8300 is due within 15 days for cash over $10,000; cashier's checks count only at $10,000 or less of face value.
- Form 1099-NEC is due January 31 at $600; Form 1099-K for third-party network payments needs over $20,000 and more than 200 transactions, both tests required (payment card payments have no minimum).
Exam shortcut
Read the stem for the trigger word before computing. "Cash" plus a dollar figure over $10,000 in a trade or business is Form 8300 every time, and the distractor is always a cashier's check over $10,000 or a wire transfer.
The full lesson (about 9,256 words, 62 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- 5
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