January ushers in a fresh start for many pet businesses, and in the U.S., it also signals the beginning of tax filing season. While your focus may be on new clients, full calendars, and setting goals for the year ahead, now is also the time when last year’s financial decisions come into sharp focus.
For new pet-care business owners, tax season can feel overwhelming. Between tracking income, understanding deductions, and preparing the right forms, it’s easy to feel unsure about what matters most. The good news? A little awareness and organization can go a long way toward reducing stress, avoiding surprises, and setting your business up for long-term success.
Below, we’ll walk through key tax considerations every new pet business owner should keep in mind as tax season gets underway.
Quick note: This is general info, not tax advice. Tax rules vary by country/state and by your exact setup, so if you’re unsure, a CPA or enrolled agent is absolutely worth it!
The IRS generally treats your activity as a business if you’re operating with a profit motive and keeping proper records (versus a hobby). Their small business guide (Publication 334) is a solid starting point for how business income/expenses work for Schedule C filers.
If you’re brand new, IRS Publication 583 is also helpful for understanding recordkeeping and early-stage business setup.
Pet businesses often have “messier” revenue than people expect, because you might collect money from multiple places:
The simplest tax-season win: Reconcile monthly so your income records match deposits and reports. If you’re using software for scheduling and payments, make sure you can export reports that clearly show:
That makes your bookkeeping (and your tax preparer’s life) dramatically easier.
Most legitimate business deductions fall under the “ordinary and necessary” umbrella for running your business. The IRS has a guide that maps business expense topics to current resources.
Common pet-business deductions often include:
Rent/lease payments (facility or office)
Utilities (electricity, water — especially relevant for grooming/cleaning)
Repairs and maintenance
Cleaning supplies and sanitation products
Leashes, slip leads, muzzles, grooming supplies
Treats used for training/daycare (client-related use)
Waste bags, paper towels, disinfectants
Bedding or crates used for boarding/daycare
General liability/care, custody & control insurance
Professional licensing fees (where applicable)
Legal/accounting/bookkeeping services
Website hosting, domain, email tools
Ads, printing, signage, business cards
Software subscriptions (booking, CRM, payroll, accounting)
Continuing education, certifications, workshops tied to your services
Pro tip: Separate “personal pet expenses” from “business pet expenses.” It’s a super common problem area, and clean separation helps you stay audit-resistant.
If you’re a sole proprietor/independent contractor (common early on), you may owe self-employment tax in addition to income tax. The IRS notes that if your net earnings from self-employment are $400+ you’ll generally need Schedule SE.
This is why new businesses can feel like they’re doing great… then get smacked at tax time. A good rule of thumb is to set aside money from each payout into a dedicated “tax savings” account.
Because you don’t have an employer withholding taxes, many pet business owners need to pay quarterly estimated taxes. The IRS explains how estimated taxes work and notes you can owe penalties if you underpay during the year—even if you’re due a refund later.
If you want a calendar-style view of major deadlines (especially useful once you have staff), IRS Publication 509 lays out tax calendars.
If you run admin from home (even if services happen elsewhere), you may qualify for the home office deduction—but the space usually must be used regularly and exclusively for business. IRS Publication 587 covers the details.
Examples that often qualify:
A dedicated office used for scheduling, client communication, invoicing, marketing
A room used exclusively for administrative work
Examples that usually don’t:
Your kitchen table “sometimes”
A shared family room corner
If you drive between clients, pickups, supply runs, or to the facility, those business miles can be deductible with proper documentation. IRS Publication 463 explains what you need to track (and it includes the standard mileage rate info by tax year).
What to do now (not later):
Track mileage contemporaneously (app, spreadsheet, logbook)
Note date, destination, purpose, and miles
Many pet businesses bring on help quickly, from weekend coverage to, specialized groomers, extra walkers, trainers, or reception support.
If you pay non-employees (contractors) you may have a 1099 filing requirement. IRS instructions state Form 1099-NEC is generally due by Jan. 31. Also, the IRS emphasizes keeping good records overall, and employment tax records have special retention rules.
Important: Worker classification (contractor vs employee) has real legal/tax consequences. If you’re unsure, talk to a pro before you scale.
Kennels, grooming tables, dryers, tubs, washers/dryers, POS systems, laptops, security cameras... those can be “capital assets,” meaning you may recover the cost over time through depreciation (or other available methods depending on the asset and current rules). IRS Publication 946 is the main reference.
Even if you don’t want to nerd out on depreciation, track purchase date, cost, and business use %. Your tax person will thank you.
Many small business owners (sole proprietors, partnerships, S corps) may be eligible for the Qualified Business Income (QBI) deduction, up to 20% of qualified income, depending on circumstances.
This one gets complicated fast (income thresholds, business type, etc.), but it’s worth asking your tax pro about, especially once you become consistently profitable.
✅ Separate business banking/credit card (clean boundaries)
✅ Monthly bookkeeping (don’t batch it once a year)
✅ Save receipts + note the business purpose
✅ Track mileage (if you drive for business)
✅ Set aside money for taxes from every payout
✅ Review contractor payments + 1099 needs before year-end
✅ Export and save annual reports from your booking/payment tools
Tax season doesn’t have to be stressful, but it rewards preparation. If you treat your finances like part of the care you provide (consistent, proactive, organized), you’ll spend less time untangling spreadsheets in March and more time doing what you actually started this business for: taking care of pets and building something you’re proud of.
Adopting digital tools to keep track of payments, sales, and integrating with your finance and accounting systems will make tax season (and your day-to-day) much less stressful. Try Revelation Pets software for pet-care businesses free for 14 days!