Small business owners receive refunds when their estimated tax payments and withholdings exceed their total tax liability. Since most small businesses are pass-through entities, the refund comes on the owner's personal tax return (Form 1040), not a separate business return.

Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare) applied to 92.35% of net self-employment income. For 2024, the Social Security portion applies only to the first $168,600 of income. An additional 0.9% Medicare tax applies above $200,000 (single) or $250,000 (MFJ).

The Section 199A Qualified Business Income deduction allows eligible pass-through business owners to deduct up to 20% of their qualified business income. Phase-outs apply for specified service businesses (law, health, consulting) when taxable income exceeds $182,100 (single) or $364,200 (MFJ).

If you expect to owe $1,000+ in taxes, you must make quarterly payments: April 15, June 15, September 15, and January 15. Use Form 1040-ES and pay via IRS Direct Pay or EFTPS. Missing payments incurs underpayment penalties.

Key deductions include: home office ($5/sq ft simplified method), vehicle expenses (67¢/mile for 2024), health insurance premiums, retirement contributions (SEP-IRA, Solo 401(k)), supplies, software, professional services, advertising, and Section 179 equipment expensing up to $1,160,000.

Sole proprietorship is simplest (Schedule C). LLCs provide liability protection without changing taxation. S-Corp election (Form 2553) can save SE tax if profits exceed ~$40K, but requires reasonable salary and payroll administration. Consult a tax professional for your situation.

Yes, business losses generally offset other income on your personal return, subject to at-risk rules, passive activity limitations, and excess business loss limits ($289,000 single / $578,000 MFJ for 2024). Unused losses may carry forward to future years.

Options include: SEP-IRA (contribute up to 25% of net SE income, max $69,000), Solo 401(k) (up to $69,000 + $7,500 catch-up if 50+), SIMPLE IRA ($16,000 + match). Contributions reduce taxable income and grow tax-deferred. See Publication 560.

Common credits include: Small Business Health Care Tax Credit, Research & Development Credit, Work Opportunity Tax Credit (WOTC), Disabled Access Credit, and employer credits for paid family leave. Credits directly reduce tax liability dollar-for-dollar.

Keep records for at least 3-7 years: income documentation, expense receipts, bank statements, mileage logs, asset purchase records, payroll files, prior tax returns, and 1099 forms. Digital records are acceptable if properly organized and backed up.