Year-End Tax Checklist for Chicago Small Business Owners (2025 Edition)
- Dec 3, 2025
- 4 min read
As 2025 comes to an end, Chicago small business owners are entering one of the most important financial periods of the year. The actions you take now will directly affect how smoothly you file your 2025 tax return, how accurate your financial reporting will be, and how much you may owe in federal, Illinois, and Chicago taxes.
Whether you are an LLC, S Corporation, partnership, sole proprietor, or small corporation, proper year-end preparation is essential. This guide provides a complete, Chicago-focused year-end tax checklist designed to help you stay compliant, minimize risk, and prepare confidently for the 2026 Tax Season.
This Chicago small business tax checklist is designed to help owners stay compliant, organized, and fully prepared to file their 2025 tax return with confidence.
Why Year-End Tax Preparation Matters for Chicago Businesses
Proper year-end planning helps businesses:
Reduce 2025 tax liability
Avoid IRS notices and penalties
Strengthen accounting accuracy
Improve year-end financial statements
Minimize the need for bookkeeping cleanup
Strengthen cash flow planning for 2026
Having organized financials allows your CPA to prepare your return accurately and identify tax-saving opportunities.
Chicago Specific Tax Factors for 2025
Businesses in Chicago face unique local and state requirements, such as:
Illinois replacement tax for pass-through entities
Chicago municipal taxes depending on business activity
Greater enforcement of contractor reporting
Strict sales tax reconciliation rules
IRS focus on S Corporation reasonable compensation
Getting organized now keeps your business compliant.
The Complete 2025 Year-End Tax Checklist for Chicago Small Business Owners
Use the steps below to prepare for filing your 2025 tax return efficiently and accurately.
1. Reconcile All Bank, Credit Card, and Cash Accounts
Accurate reconciliation is the foundation of clean bookkeeping. Reconcile:
Business checking accounts
Credit card accounts
Stripe, Square, PayPal, Venmo, Cash App, and Zelle
Business loans
Cash transactions
Unreconciled books lead to incorrect income reporting and miss expenses and increase audit risk.
If you are behind, request a bookkeeping cleanup through our Bookkeeping and Accounting Services.
2. Review Income for Accuracy
Ensure all business income has been recorded correctly. Confirm that:
Payments match invoices
Merchant processor deposits match your books
Cash and electronic payments are categorized properly
No income is duplicated or missing
Chicago service businesses often miss income that flows through multiple payment platforms.
3. Categorize All 2025 Business Expenses
Proper expense categorization directly affects your deductions. Review:
Office expenses
Software and subscriptions
Travel and transportation
Meals and entertainment
Professional fees
Marketing
Rent and utilities
Vehicle expenses
Insurance
Incorrect categorization reduces your deductions and may attract unwanted IRS attention.
4. Update Your Fixed Asset and Depreciation Schedule
If you purchased equipment, vehicles, computers, or furniture in 2025, update your depreciation schedule. Determine whether you qualify for:
Section 179
Bonus depreciation
Standard depreciation
Record any disposals or changes in useful life to ensure accuracy.
5. Review Payroll for Year-End Accuracy
Payroll must be reviewed carefully at year-end. Check:
Year-to-date payroll summaries
Wage reconciliation
S Corporation owner payroll adjustments
Final payroll runs
W-2 preparation
S Corporation owners must receive reasonable compensation before taking distributions.
If you need support with payroll compliance, visit Payroll Services.
6. Issue All Required 1099 Forms
If you paid contractors $600 dollars or more during 2025 by cash, check, Zelle, Venmo, or electronic transfer, you must issue a 1099 NEC by January 31, 2026.
Steps include:
Collect W-9 forms
Verify legal names and EINs
Review payment totals
Prepare and file 1099s
This is one of the most common areas where small businesses face IRS penalties.
7. Verify Sales Tax Compliance
Chicago businesses must ensure that sales tax is accurate. Review:
Monthly or quarterly filings
POS and marketplace facilitator statements
Out-of-state sales that may create nexus
Illinois is particularly strict about sales tax compliance, and year-end reconciliation protects your business.
8. Review Loan and Interest Activity
Update loan balances and verify interest and principal separation. Many lenders offer year-end summaries that help ensure accurate reporting.
9. Prepare Updated Financial Statements
Your Profit and Loss Statement and Balance Sheet must be complete and accurate. Review:
Reconciled accounts
Accurate categorizations
No incorrect balances
No uncategorized transactions
These statements are essential for both tax filing and strategic planning. For support preparing accurate year-end financials, explore Business Advisory and CFO Services.
10. Review Estimated Quarterly Taxes
If you pay quarterly taxes, confirm whether your 2025 estimated payments match your actual income. This helps you avoid underpayment penalties and plan more effectively for 2026.
Additional Chicago Year-End Considerations
Chicago businesses may need to review:
Personal Property Lease Transaction Tax
Amusement tax
Parking tax
Chicago soft drink tax
Local licensing and renewal deadlines
This is especially important for gyms, salons, cafés, retail businesses, and food-related service providers.
When You Should Hire a CPA for Year-End Preparation
You should hire a CPA if:
Your bookkeeping is not current
You file as an S Corporation or partnership
You paid multiple contractors
You earned significant profit in 2025
You want to reduce taxes legally
You received IRS notices in the past
You want clean financials before filing
A CPA ensures accuracy and helps maximize deductions while avoiding penalties.
How Hyman Financial Solutions Supports Chicago Small Businesses
Hyman Financial Solutions offers comprehensive, CPA-led support, including:
Bookkeeping cleanup and monthly bookkeeping
Payroll processing and year-end adjustments
S Corporation reasonable compensation review
1099 preparation
Business and individual tax preparation
Tax planning and financial advisory
Entity setup and compliance
IRS and state tax resolution
Learn more about our services:
Preparing early helps you file your 2025 tax return accurately and reduces the risk of errors or penalties. Whether you operate an LLC, S Corporation, partnership, or service-based business in Chicago, following this year-end checklist will help you stay organized and compliant.
If you need help with bookkeeping cleanup, payroll preparation, tax filing, or advisory support, our team is ready to assist.
Schedule your year-end consultation today and get fully prepared to file your 2025 tax return with confidence.
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