Tax season confessions: Share your tough tax story

[smithbx]

Hi everyone, we hope your 2026 is off to a great start!

Taxes can be one of the trickiest parts of running a business. Whether it’s your first year or your tenth, there’s always something to learn — and sometimes the hard way.

With quarterly and annual taxes on the horizon, we want to hear from you:

Have you ever experienced a surprise, or ‘Oh shoot,’ tax moment?

Maybe you:

• Missed a key deduction
• Got hit with an unexpected bill from the IRS
• Miscalculated estimated quarterly tax payments 

Tell us:

• What was the situation? 
• How did you handle it? 
• What would you do differently today?

Your experience could help other business owners avoid a similar situation.

We’ll select 3–4 stories to feature in our newsletter, where a small business CPA (certified public accountant) will provide advice and tips specific to your situation. If your story is chosen, someone from our team will contact you directly.

[Shaphan]

I think I'll be your best story ever lol. I'm an example of exactly what you don't want to do. I was a complete scattered disorganized mess and now I'm filing and it's taking two years of back work literally tens of thousands of dollars to catch up. You should have an accounting strategy set up from day one before you even start business. It's only $200/month. Do not be like me. That's the message. I can elaborate. I want to help square out because you guys are so awesome

[Moneymaster]

Oh Snap Helpful 

[TheRealChipA]

Interesting topic....  After over three decades owning various businesses, I can honestly say that we've never had an "oh, shoot" tax moment.  It helps that we have a CPA who has been with us for that entire time -- one that is proactive with us by checking in a few times a year, and who also handles our tax preparations with us.  And it helps that, in a former business life, I was a programmer for a national corporation and specialized in financial systems.  That being said, here's something that has taken up too much of my time recently.  It's a little off topic since it is about property taxes.  But it's still a life lesson to be learned.

We recently had an "OMG" moment due to someone else's negligence.  We are in the process of moving to a new location, having outgrown our current one.  So, for the first time in our ice cream shop's existence, we will be renting from someone else.  Up to now, we have owned the property that we operated our business out of.  Anyway... about two months after we started our renovations on the new space, we received two certified letters -- one to our landlord and one to "Tenant."  Registered letters always make my heart skip a beat.  Ha.

It turns out that our new landlord is somewhat of a scofflaw, and didn't pay his 2024 property taxes.  As usually happens in these cases, the tax authority sold the bill to a third party.  So, besides all of the accruing penalties and interest, he was 45 days from the possibility of having the property sold to the highest bidder.  It has been 30 days since that letter and he still hasn't paid, so we are now working with our attorney so that we can pay the bill and not get kicked out of our new venue.  Hopefully it doesn't come to that but we are prepared if we need to do that.  The landlord will pay it either way -- either directly or through rent offsets.  But we can't take a chance.

Given that I don't need to be taught a lesson twice, I did some research.  Besides the 2024 property tax bill, he is also two months late on his 2025 bill.  Starting in 2026, the property taxes are our responsibility as part of our modified triple-net lease, so thankfully there will be no issue going forward for the term of our lease.  But still....

My lesson here if you are a tenant -- especially if you are a tenant of a private or small landlord.  Do a property records search to look for tax gotchas.  Most of this information is available for free on your state/county/city websites.  If I find myself ever in the position to execute a new lease you can be certain this is something I will check.  As a tenant, if our landlord has delinquent taxes and the property is seized, in most states leases are ignored and most likely terminated with tenants being summarily evicted with no recourse.  That's never fun, eh?

[Getonthebus]

Oh my... have always bitten the bullet and owned our location. Have suffered on many occasions trying to make the mortgage payment and pay property taxes but would hate to have to pay his too. Glad you were able to work it out and not suffer the financial consequences. Wondering if he might be interested in selling to you at a reduced rate to get out of that tax burden.... 

[lsumikot]

In 2024, I used Turbotax to file. I had trouble with my Required Minimum Withdrawal and so I paid for a Turbotax "expert" on  how to correctly file.  The RMW was a donation from my Edward Jones account to a non-profit. It turns out that the brokerage company did not send the entire RMW to the non-profit but used part of it to pay the federal tax on the withdrawal.  There was no way to adjust the RMW in Turbotax so the expert told me to declare the entire sum as the RMW.  I still have not received my 2024 Federal payment balance and it is almost time to file again. I am going to assume that it will never be forthcoming. I did file an updated 2024 which added the donation to my income but have not received any notification from the IRS that it has been accepted.

[HeadHoncho]

I haven't made a substantial amount above the poverty line in over a decade, nor have I needed to file taxes.  What's the best way to stay out of jail and in business, and without losing a leg in the process?

[CareyJo]

Our story actually goes back decades and is no longer an issue, but a very good example.

I had been self-employed up to that point, all of my adult life but had only been a solo-preneur, never a company with more than one owner or a partnership, let alone an LLC.

I had a grandma who worked for the department of revenue and insisted that I learn how to file my own taxes at the age of 18.  I had been doing them, even with SE income, for 20 years.  I thought no biggie, I can learn how to do this too.... 

Ya.

Boy, was I wrong!  There was so much I didn't understand and even after calling the IRS and asking questions, I was not getting straight answers.  I didn't think at the time that I needed a CPA.  I also didn't understand that a partnership is pass through income and we were taking a huge hit.  We only ever took distributions from our first business, never paychecks and never paid taxes throughout the year.  We had no savings and had no idea that we needed to pay attention to our basis and how much we were taking in distributions.  Needless to say, we got hit with a huge bill and it didn't go away.

Our business folded because of the crash in '08.  We lost a lot of business in '09 and then in '10 lost a contract we had at the time and couldn't pay our bills.  We had no choice but to close our doors and go back to work for someone else.

There was a lot learned from this experience and not just about taxes.

1.  Always hire a CPA if you own a business.  Especially if you own multiple businesses.  Make sure it's a good one, too.  See #6.

2.  We specialized at the time in mobile homes and did very little commercial work or true residential work.  We had no idea at the time how much we were slitting our own throats.  People in mobile homes need someone who understands their house, differently than a stick built house.  The need is real.  However, they don't have money and don't pay their bills, usually....

3.  We needed to give ourselves paychecks and pay taxes throughout the year, no matter how much it hurt financially if business was slow.  Nothing worse than owing the IRS for back taxes.

4.  It took YEARS and a huge agreement, to get out of that debt.

5.  We never thought we'd see the other side and we didn't think we'd ever be back in business again.  But we did and we are and we're successful because we did everything different this time.

6.  The first CPA we hired in 2017 was not local, gave me a lot of wrong information and was rarely available to me.  Be sure and check out the one you hire.  I do not recommend hiring an individual.  I recommend hiring a company of partners.  You want to know that they have the manpower to handle your workload in a timely manner and have the professionalism to do so.  Also, make sure they're local.  If you cannot walk in their door on any given day, then you need to find someone else.  If they aren't available to you on the phone throughout the year when you need help or want to ask questions or get advice, find someone else.  Every dollar you pay them is worth it!  We have spoken to our CPA BEFORE we have spoken to the bank, our attorney or any other person on our team, to make important business decisions.  We ask what the tax implications are before we purchase or sell anything.  We need to know how it will work in our favor or against us, before we take action.  We want to make sure we pay the lowest tax possible and she helps us figure out what the best way to handle our assets is, before we make a mistake that she has to fix.

7.  A certified tax preparer is NOT a CPA.  A CPA knows the laws, but doesn't act as an attorney.  A CPA can give you advice, file your taxes, help with bookkeeping and represent you to the IRS and the state.  A tax preparer is not guaranteed to know the laws about deductions, cannot advise you on what you should/shouldn't be doing and cannot represent you.  They are simply instructed on how to prepare the taxes.  It is up to you, as the client, to make sure that they are prepared correctly and file them.  

We currently own and operate four different businesses that are all partnerships.  She not only keeps our businesses straight but files our personal taxes as well, knows what all of our assets are, what has been depreciated and how much I should not exceed if we have to take distributions.  She is on top of it all.  She taught me how to use Quick Books and told me what not to do.  She has educated me so much, more than I thought possible after being a business owner for so long.  It's a good thing that she's two decades younger than me so that she won't retire before we do!  And... she LOVES her job.  I asked her once how/why she got into being a CPA and she straight up said that she loves the work and wouldn't have it any other way!

[CannedFresh]

Hello.  Many of us are a little OCD and sometimes that can be helpful.  It was for me.  From the first year I started an Excel worksheet and categorized it with different headings on the side and the months across the top.  We participate in Farmer's Markets, so every week after the market, I went to my "sales" tab and with Square, put in the totals....and then when I purchased something, even tho I may not have done it immediately, I had the receipt in a pile and did them all at once in each of the categories I needed.  All that doesn't sound too exciting, but then the first tax year came and we decided to use a professional.  Hubby knew what he was doing all these years but now with the business, he felt it better to go pro.  Our CPA showed us a listing of categories that would better define what we were using and how to manage it and even some categories I didn't think important to separate and some that I needed to keep track of.   It was SOOO helpful.   Now it is so much easier to keep tabs of what we are spending $$ on !!  I use the same set up in Excel for yearly end inventory and a full recap of the business.  Works well for us.

[ascoach]

I also had a CPA help me set me up in Excel to keep track of everything.  It has been so helpful and easier for us to manage than learning a new program.

[Twpchair]

My bookkeeper is really good at what he does. I’ve always told him adjust it as needed according to sales. After a year of a rollercoaster ride personally, I received a letter from the state of over payment 😳😳😳 that doesn’t happen, at least not for me! It was gone and then some as out certificate of a business in good standing was due the following week. Moral here, if you can get to where you don’t have to pay in and might only get 45.00 dollars back but remember your not paying in. 

[SVLFever]

My notices from the IRS have involved issues in filing one of the tax forms.  For example, I once filed a 941 with the wrong quarter selected.   Several months later I got a notice that I owed taxes and a penalty.   I contacted the IRS and informed them of the mistake.  I got a hold of an agent that looked at it and said "ah, yeah, I see what happened".    Basically told me to try to avoid making that mistake in the future and waived the charges and fixed the issue.

I also had an issue upon startup, as payrolls of my previous company (an LTD) crossed over the quarter with my Sub-S.   The IRS had some issue figuring that out, but I had the documentation to prove it all.  Once an agent got a hold of it, they fixed the error and got it all cleared up.

My advice is pretty straight forward;

• Take your time when filing taxes.   Slow and steady wins the race.
• Have a certified accountant.   They can assist in dealing with the IRS.
• The Golden Rule - treat people the way you want to be treated.   The IRS agent is just doing their job and if you treat them with respect, they will do their best to help.

I do recall being extremely anxious the first couple times I got a notice, but regardless, don't delay in responding.   Ignoring the IRS is not something you should ever do.

[YelenaGuraMoore]

I learned the hard way that massage is taxable in my state, and that filing late comes with very high penalties. I didn’t collect sales tax at all my first year, then had to file four missed quarters at once, which meant paying not just the sales tax but also late filing penalties and interest. To really drive the lesson home, I later filed one quarterly return late and was hit with another hefty penalty. It was a tough and expensive lesson.

And to help me not spend that money, since it isn’t income and belongs to the state, I started using Square Savings to automatically set aside the sales tax from every client payment so I can pay it on time every quarter and avoid another painful lesson.

[BrianaJo]

I was an accounts payable analyst subject matter expert for a fortune 100 company before starting my own business so I already understood the importance of tracking numbers and bookkeeping. But I am not a CPA or a fan of taxes, so while I was struggling with learning a new-to-me program Quickbooks Online, I hired out someone to do all my tax stuff for me.

That was a mistake because once our first tax time came I discovered very quickly that everything they did was wrong. It took me a little over a year to fix their ~4 months of "work". I found another CPA to help fix it and do my taxes going forward. And while that's worked out now for 2 years, they are very hard to get a hold of, don't offer any support or advise for random decisions or talk us through understanding our numbers, and they submit our taxes last minute which is wildly uncomfortable. So this will be the last tax year we use this CPA, and going forward we'll be working with someone closer that we can meet in person on a whim as needed. Open communication is so important.

For my QBO disasters, I consulted with several people who claimed to be Quickbooks experts able to help me, but none of them seemed to understand how Square transactions integrated. It was very bizarre how much I would have to explain to them how the program worked. Each time it ultimately came down to needing support tickets. And for a time it was working fine, until this last November when we moved our shop location at the same time the app integration changed over from the old one to the new one. So I was forced to update which didn't connect properly leading to another QBO support ticket, but the Intuit developers still haven't figured out what's wrong 3 months later. So now I'm in the middle of setting up Xero quickly before taxes season really kicks off, hoping that it works better, hoping that I can learn it fast enough to get caught up, hoping that I can enter all my historical data so I can be free of QBO.

A recent 'oh shoot' moment for me - Another thing I didn't have any experience with was payroll so I hired that out to a staffing agency that also handles payroll & hr services. I only use their payroll services where they claim to handle all the filing, payroll taxes, w2s, etc etc. all the stuff I know nothing about they said they'd do for me. I felt very safe trusting they knew what they were doing since they are fairly popular around here. I thought everything for the past ~2-3 years was going smoothly until (yet again this was last November, stressful month for me) they input our barista's tips as overtime hours. Our accounts went negative, everything started bouncing. It was messy but they fixed it, but I started looking into Square Payroll. Well guess what, from going through Square Payroll's setup questions I've discovered I don't have an employer number. I immediately ran over to my new CPA person to ask a ton of questions, which just led me to more questions. I'm still in the middle of investigating how messy this situation is. But it looks like I have a LOT of clean up work to do, all while figuring out how payroll works. Square inadvertently saved my butt.

If I could go back and give myself hindsight advice: if you don't know something and think you're saving yourself time by hiring out specialists for it, nope, you still have to learn the process inside and out. Otherwise when things start going sideways it will cost you more time, more energy, more money to fix it in post. And if it's not working don't waste your time hoping it's going to get better. There's other people, other software - find the combination that works for you.

[RoyRowe]

I would say determination.

[Vanilla]

I started my business completely from scratch at home almost 5 years ago (it’ll be 6 this year). What originally began as a side hustle quickly turned into something much bigger as I became more passionate day by day. Over time, that passion translated into real growth, I now serve 500+ clients, generate a solid income, and understand how serious the consequences can be if taxes and finances aren’t handled correctly.

In the beginning, I was fully self-taught, learning everything on my own. Two years in, I decided to do things “the right way” and went to esthetics school, where I graduated head of my class. While the technical education was strong, there was no guidance on business management. I remember asking basic questions like how to form an LLC and being told to “just Google it.”

As a small, home-based business, I couldn’t afford accountants or CPAs, so I did the best I could with the information available. I formed my LLC, obtained an EIN, and opened a Square business account, but I made a major mistake early on by not separating business and personal finances. I used one account for both, purchased supplies on my personal card, and over time my finances became extremely difficult to untangle.

My biggest “oh shoot” moment came when I attempted to start paying myself and accidentally paid myself as both a W-2 employee and a contractor 🫠  not out of negligence, but a lack of clear guidance.

How I handled it:

I paused, cleaned things up, and committed to learning. I fully separated my personal and business accounts, corrected my payroll structure, and now track every business expense carefully.

What I would do differently today:

I would prioritize financial separation from day one and invest earlier in education around bookkeeping and payroll, even if it meant growing more slowly at first.

Today, as I search for spaces to open my first storefront and prepare to hire my first employees, I realize how important it is to have everything structured properly, especially with taxes! I share this because many small businesses start as side hustles and grow faster than expected, and without guidance, it’s easy to make costly mistakes early on.

[Bronze_Palms]

My first year selling retail I didn't realize I had to configure sales tax on my products. And... if customers don't pay sales tax, the business owner does LOL lesson learned! I chalk that one up to an "education expense".

[Bagelman1028]

I want to share something I learned the hard way.

A few years ago, we were working on establishing a development project. We invested a few hundred thousand dollars into it. Then COVID hit. Costs went up, delays happened, and ultimately the project never got built.

At the time, we hired someone to handle our taxes. They were referred to us and seemed knowledgeable. I don’t want to badmouth anyone, but they were not a CPA. We were advised that since the business never officially launched, we didn’t need to file taxes for those years.

That advice turned out to be very costly.

Not only should we have filed, but we also could have taken legitimate deductions for the money we invested. Instead, nothing was filed — and now we’re working through late filings and potential penalties. The settlement we’re dealing with is somewhere between $30,000 and $50,000… on a business that never even took off.

That’s a painful lesson.

What I learned is this: don’t try to save money on professional advice. A qualified CPA doesn’t just file forms — they protect you, educate you, and help you understand deductions and strategies you may not even know exist.

Pay the professional. Pay them well. A few thousand dollars in proper guidance can save you tens of thousands later.

Lesson learned. Still learning. Just hoping someone else can avoid the same mistake.

[Moneymaster]

Thanks for sharing.  

I think a CPA is like a good hair stylist.  

Need a professional for both.