Small Business Taxes and Bookkeeping: What Changed for 2026

Good bookkeeping is the difference between a calm tax season and a panicked one. It also tells you, month by month, whether your business is actually making money. Here’s what every small business owner should set up, and what changed in 2026.

The 2026 changes to 1099 forms

The One Big Beautiful Bill Act, signed in July 2025, changed two information-reporting rules.

Form 1099-NEC and most 1099-MISC: the threshold rose from $600 to $2,000. For payments you make to a contractor or freelancer during 2026, you only need to issue a 1099-NEC if you paid them $2,000 or more in the year. For payments made in 2025, the old $600 rule still applied. From 2027, the $2,000 figure will be adjusted for inflation each year.

Form 1099-K: back to $20,000 and 200 transactions. Payment apps and card processors only issue a 1099-K if you received more than $20,000 across more than 200 transactions in a year.

Two cautions. First, all income is still taxable, whether or not you receive a form. Second, some states set their own, lower reporting thresholds. Keep collecting a Form W-9 from every contractor before you pay them.

Taxes self-employed owners pay

• Income tax on your business profit.
• Self-employment tax of 15.3% (Social Security and Medicare) on most of your net earnings, if you’re a sole proprietor, single-member LLC or partner.
• Quarterly estimated taxes. If you don’t have taxes withheld from a paycheck, you’re expected to pay during the year, usually by April 15, June 15, September 15 and January 15. Missing them can mean penalties.

A simple habit: move a fixed percentage of every payment you receive, often 25% to 30%, into a separate savings account for taxes. Ask an accountant for the right figure for you.

Six bookkeeping habits that save you money

1. Keep business and personal money separate, with a dedicated bank account and card.
2. Use accounting software connected to your bank, and categorize transactions every week.
3. Save every receipt digitally, especially for meals, travel, equipment and home office costs.
4. Track vehicle mileage as you go, not from memory at year end.
5. Reconcile monthly: check your books match your bank statements.
6. Review a profit and loss report each month. It shows whether prices and costs are on track.

When to hire an accountant

Bring in a professional when you form an LLC or corporation, hire employees, buy major equipment, or once your profit is steady enough to consider an S corporation election. Tax law changed significantly in 2025, including rules on deductions and equipment write-offs, and a good accountant will usually save more than they cost.

This guide is general information, not tax advice.

More on running and growing your business: Grow.

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Sources

1. Patriot Software, 1099 reporting threshold increases to $2,000 for tax year 2026
2. CPA Practice Advisor, One Big Beautiful Bill Act changes 1099 thresholds
3. IRS, Estimated taxes
4. IRS, Self-employment tax

Last reviewed October 17, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.