Small business tax preparation in Dallas: a complete guide for 2027.

Running a small business in Dallas means wearing every hat, and taxes are the one that most owners would happily hand to someone else. This guide explains what a small business owner in Texas actually has to file, when, and how to keep the tax bill as low as the law allows. It is written for sole proprietors, single-member LLCs, partnerships and small S corporations: the kinds of businesses we work with every season at our East Dallas office.

Start with your business structure

How your business is taxed depends on how it is set up, not on what it does. Two businesses with the same profit can file completely different returns.

Partnerships and S corporations do not usually pay federal income tax themselves. The profit passes through to the owners, who report it on their personal returns. That is why their deadline is a month earlier: owners need their K-1s to finish their own returns. Missing the March deadline triggers a penalty for each owner, for each month the return is late, so it is worth putting in your calendar now. Our 2027 tax calendar lists every date.

What you pay as a self-employed owner

If you are a sole proprietor, an LLC owner or a partner, you pay two kinds of federal tax on your business profit:

• Income tax, at your normal bracket rate after deductions.
• Self-employment tax of 15.3% on most of your net earnings. This is your Social Security and Medicare, the same contributions an employer and employee split on a paycheck. You pay both halves.

Self-employment tax is the one that surprises new owners. It applies even when your income tax is low, which is why a business that made $30,000 in profit can owe several thousand dollars even if the owner has children and qualifies for credits. Half of the self-employment tax is deductible, which softens the blow a little.

Many owners also qualify for the qualified business income deduction, which can deduct up to 20% of qualified business profit. The 2025 tax law made it permanent. It has income limits and special rules for some service businesses, so it is something we calculate case by case.

Estimated taxes: paying as you go

Nobody withholds tax from a business owner's profit, so the IRS expects you to pay during the year through quarterly estimated payments. If you expect to owe $1,000 or more when you file, you generally need to make them.

A safe approach is to set aside 25 to 30% of each payment you receive in a separate savings account, then pay from it each quarter at IRS.gov/payments. Our guide to estimated tax payments explains the safe harbor rules that protect you from underpayment penalties.

Deductions most small businesses can claim

A business expense is deductible if it is ordinary and necessary for your kind of business. In practice, these are the ones we see most often:

• Vehicle costs: either the standard mileage rate (72.5 cents a mile for 2026) or the actual costs of the business share of the vehicle. Either way you need a mileage log.
• Phone and internet, for the business share.
• Rent for a shop or office, or the home office deduction if part of your home is used regularly and only for the business.
• Supplies, tools, inventory and materials.
• Equipment, computers and furniture. Many can be deducted in full in the year you buy them rather than spread over several years.
• Advertising, website, business cards and software subscriptions.
• Insurance for the business, and health insurance premiums for self-employed owners who qualify.
• Contract labor and employee wages.
• Bank fees, card processing fees and app service fees.
• Professional fees, including bookkeeping and tax preparation for the business.
• Business meals, generally 50% deductible when business is discussed.

What you cannot deduct matters just as much: personal expenses run through the business account, clothing you could wear anywhere, commuting from home to a regular workplace, and fines. Mixing personal and business spending is the single biggest problem we see in small business records, so open a separate business account if you do not have one.

Hiring help: 1099s and payroll

If you pay an independent contractor $2,000 or more during 2026 for services, you must send them a Form 1099-NEC and file a copy with the IRS by January 31, 2027. The threshold was $600 for many years; it rose for payments made from 2026. Collect a Form W-9 from every contractor before you pay them, so you have their tax ID ready in January. Read what the $2,000 threshold changes.

Employees are different. When you have employees, you withhold income tax and payroll taxes from each paycheck, pay the employer share, file quarterly Form 941 returns, and issue W-2s by January 31. In Texas you also register with the Texas Workforce Commission for state unemployment tax. Treating a worker as a contractor when the law says they are an employee can lead to back taxes and penalties, so ask before you decide. Our payroll and bookkeeping service handles these filings for small businesses.

Texas taxes: no income tax, but not nothing

Texas has no personal income tax, which is good news for owners of pass-through businesses. But Texas does have business taxes, and the forms still arrive:

• Franchise tax: most LLCs, partnerships and corporations formed or doing business in Texas are subject to the Texas franchise tax, with reports due to the Comptroller each year. Businesses under the Comptroller's revenue threshold owe no tax, but still have information reports to file. Sole proprietors are generally not subject to it. Check your obligations on the Comptroller's franchise tax page.
• Sales tax: if you sell taxable goods or certain services in Texas, you need a sales tax permit and must file returns monthly, quarterly or yearly.
• Property tax: business personal property such as equipment and inventory may need to be rendered with the county appraisal district.

Our article Texas has no state income tax: what you still file covers this in more detail.

Keeping records that hold up

Good records are not about being perfect. They are about being able to show, if asked, where a number came from. For a small business that means:

• One bank account and one card used only for the business.
• Income recorded as it comes in, including cash and app payments.
• Receipts or invoices for every expense, stored digitally as photos or PDFs.
• A mileage log kept as you drive, not rebuilt in April.
• A monthly ten-minute check that the books match the bank statement.

If you prefer a spreadsheet to software, our small business bookkeeping template and business organizer are built for exactly this. Keep records for at least three years after filing, and longer for property and equipment; see how long to keep tax records.

Should you become an S corporation?

Many owners hear that an S corporation saves tax. It can, because owners who work in the business are paid a reasonable salary through payroll, and the rest of the profit is not subject to self-employment tax. But it adds costs: payroll, a separate return, and stricter bookkeeping. For a business with modest profit, the savings often do not cover the extra work. It is a decision worth running the numbers on with your preparer, ideally before the year starts.

What to bring to your business tax appointment

• Your profit and loss summary, or bank and card statements for the whole year.
• Every 1099-NEC, 1099-K and 1099-MISC you received.
• Records of equipment and vehicles bought or sold, with dates.
• Your mileage log and home office measurements.
• Payroll reports and the 1099s and W-2s you issued.
• Estimated tax payments made, with dates.
• Last year's business and personal returns, if we did not prepare them.
• For partnerships and S corporations: the ownership percentages and any money owners put in or took out.

The complete list is in our tax documents checklist.

Common questions

Ready to get your business tax-ready? See our small business tax services, book a free consultation, or call 972-686-1005. For the IRS's own guide, see Publication 334, Tax Guide for Small Business. This article is general information, not tax advice for your situation.