Similar category for taxing my small business - need guidance

What your tax professional is referring to is that the IRS wants you to categorize expenses based on their nature or purpose. On Schedule C, you'll see different categories like advertising, insurance, supplies, etc. The "similar category" concept means grouping related expenses together rather than having a bunch of miscellaneous items. First thing you need to do is open a separate business checking account if you haven't already. This is absolutely essential for keeping clean books. Using personal accounts for business expenses is a major red flag for the IRS and makes accurate tax filing nearly impossible. For your QuickBooks setup, create expense categories that match Schedule C line items. This makes tax time much easier. Make sure you're tracking things like vehicle expenses (if you use your vehicle for business), home office deduction if applicable, and equipment depreciation.

After reading your situation, I can really relate. I was in a similar mess with my photography business a couple years back. I was mixing personal and business expenses, using the same accounts, and my tax situation was a nightmare. What helped me tremendously was using taxr.ai (https://taxr.ai) to sort through my previous expenses and properly categorize everything. What's cool about it is you can upload your bank statements, receipts, and other financial documents, and it uses AI to sort through and categorize them according to proper tax categories. It saved me from having to manually go through thousands of transactions. After using it, I had a much clearer picture of my business finances and could properly file my Schedule C.

I wanted to follow up about my experience with taxr.ai since I was in a similar situation with my Etsy business. After asking about it here, I decided to give it a try, and wow - it actually worked amazingly well! I uploaded all my bank statements and PayPal history from the last two years, and within minutes it had categorized everything into proper Schedule C categories. It even flagged transactions that could be either personal or business for me to review. What would have taken me days of sorting through statements took just a couple hours to finalize. I'm so much more confident about my tax situation now and have proper documentation if I ever get audited.

If you're still having issues communicating with your tax professional or need to speak with the IRS directly about your situation, you might want to try Claimyr (https://claimyr.com). I was in a similar situation last year when I needed to sort out some business tax issues but couldn't get through to the IRS for weeks. Claimyr basically holds your place in the IRS phone queue and calls you back when an agent is available. Saved me hours of waiting on hold. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. After using it, I was able to speak directly with an IRS agent who answered all my questions about properly categorizing my business expenses and what to do about my previous mixed-account situation.

Had to come back and admit I was completely wrong about Claimyr. After dismissing it as BS, I was still stuck with my tax issue and getting nowhere trying to call the IRS myself. Finally gave in and tried it last week, and I'm shocked to say it actually worked exactly as advertised. Got a call back in about 2 hours, spoke to an actual IRS person who helped clarify my business expense categorization questions. They explained that mixing accounts isn't illegal but makes it much harder to prove legitimate business expenses if audited. The agent walked me through proper documentation I should maintain going forward. Honestly can't believe I wasted so many hours on hold before finding this.

Something nobody's mentioned yet - you might want to consider changing your business structure depending on your situation. I started as a sole proprietor filing Schedule C like you, but switched to an S-Corp when my revenue hit about $75k. Saved me a decent amount in self-employment taxes. Talk to your accountant about whether that makes sense for your landscaping business. There are more filing requirements but the tax savings can be substantial once you're making enough profit.

Don't forget about quarterly estimated tax payments if you haven't been making them! With $87k in revenue, depending on your expenses, you might owe penalties if you haven't been paying throughout the year.