Small-business money admin

• What does payroll software do when you hire your first employee?

  Full-service payroll software figures each paycheck, withholds and pays payroll taxes, and files the forms; Gusto, for example, says it files W-2s and reports new hires for you. But the IRS says you, the employer, are still ultimately responsible for federal payroll tax deposits and payments, even when a payroll company does the work. You also still decide if your helper is really an employee, get an EIN, collect Form W-4, complete Form I-9 and check that deposits were made. For 2026 wages, W-2s are due to employees and the Social Security Administration by February 1, 2027.

• How do I turn a shoebox of receipts into a clean spreadsheet?

  Give each receipt its own spreadsheet row with the date, who you paid, the amount, how you paid, a category and the business purpose, then check each month's totals against your bank and card statements. The IRS lets you use any recordkeeping system that clearly shows your income and expenses. In most cases, keep records for 3 years from when you file; some, like employment tax records, need to be kept longer. Digital copies can replace paper if your system makes accurate, complete, easy-to-read copies you can find and print, and you test it before you throw out the originals.

• How do I turn a voice memo into a professional invoice?

  Record a short voice memo right after the job, turn it into a text transcript, and ask an AI assistant to make line items with a description, quantity, unit, rate and amount, using only the numbers you said. Before you send it, check every quantity, rate and total yourself, and add an invoice number, a due date and the ways you accept payment. Save a copy with your business records, because the IRS lists invoices among the documents that show your business income.

• Is the 1099-NEC threshold now $2,000 instead of $600?

  Yes, for payments made after December 31, 2025, you generally file Form 1099-NEC for a non-employee when you pay them $2,000 or more during the year for services in your trade or business; the old $600 threshold still applies to payments made in 2025 and earlier. The law (Public Law 119-21, section 70433) adjusts the $2,000 for inflation for calendar years after 2026. Forms 1099-NEC for 2026 payments are due to the worker and to the IRS by February 1, 2027, because January 31, 2027 is a Sunday. Payments you make by credit card, debit card or through a payment app are reported on Form 1099-K by the payment company, not on your 1099-NEC.

• Which 2026 IRS mileage rate do I use: 72.5 or 76 cents?

  You use both, because the IRS did change the 2026 business standard mileage rate mid-year: it is 72.5 cents per mile for business driving from January 1 through June 30, 2026, and 76 cents per mile for driving on or after July 1, 2026. The change came in IRS Announcement 2026-11, which modified Notice 2026-10 because of higher fuel prices. Multiply your business miles from each period by that period's rate and add the two results. The charity rate stays at 14 cents per mile, and the medical and military moving rate rose from 20.5 to 23.5 cents.

• Is an EIN free, and how do I get one from the IRS?

  Yes, an Employer Identification Number (EIN) is free when you apply directly with the IRS; the IRS says you never have to pay a fee for one, so a website that charges you is not the IRS's application. You need an EIN if you have employees, and that includes a sole proprietor hiring a first employee. Most U.S. businesses can apply online at IRS.gov/EIN and get the number right away; the tool is open Monday to Friday 6 a.m. to 1 a.m. (next day), Saturday 6 a.m. to 9 p.m., and Sunday 6 p.m. to midnight, Eastern Time. The IRS issues only 1 EIN per responsible party per day.