Taxes are confusing, and business taxes are even more confusing. Take a deep breath, and use this information to gather and work on the business tax forms you'll need to prepare your business taxes this tax season.
Tax Forms for Small Businesses
Since most businesses are small businesses with one owner, we'll focus on the business tax forms for these one-person businesses.
A small one-person business (a sole proprietor) is what's called a "pass-through business," because the income taxes of the business pass through and are included with the personal tax due by the owner. The business tax is calculated on a Schedule C.
The other solo owner business type is a single-member (-owner) limited liability company (SMLLC). The tax forms for this business type are the same as for the sole proprietor business.
Here are the business tax forms you'll need for a sole proprietor or single-member LLC:
Schedule C for Business Income Tax
Schedule C is the form that records your business income and expenses to get a net income amount. This schedule includes information on cost of goods sold if your business has an inventory of products, business expenses for a vehicle, and the calculation of a deduction for use of your home business.
The calculation of your business net income is transferred to your personal tax return on Form 1040.
Schedule SE for Self-Employment Taxes
All business owners who are not employees must pay self-employment taxes (Social Security and Medicare taxes) based on the net income of the business (from Schedule C). (If your business has no income or a loss for a tax year, you don't need to pay self-employment taxes that year.)
The form you'll need for this is Schedule SE, which uses the net income of the business and the self-employment tax rate of 15.3% of your business net income.
The calculation of self-employment tax includes a deduction for half of the amount of the tax, on the business owner's personal tax return; this deduction results in a lower adjusted gross income for the owner.
Self-employment taxes are included on your personal income tax return.
Estimated Tax Payment Forms
Owners of small businesses don't pay income taxes and self-employment taxes throughout the year, because they aren't employees—no taxes are withheld from the money they receive from the business.
You can't wait until tax time to pay these taxes unless you have additional withholding to reduce what you owe. If you have a large amount to pay on April 15, you will have to pay a penalty for underpayment of your taxes.
In this case, you must submit estimated tax forms each quarter (April 15, June 15, September 15, and January 15 of the following year).
If your business is in Texas or another area where FEMA issued a disaster declaration due to winter storms in 2021, the IRS has extended the filing and payment deadlines for taxes due on March 15 and April 15, 2021. Any business taxes due on these days must now be paid by June 15, 2021, including first-quarter estimated tax payments. Taxpayers in other areas must still file estimates taxes by April 15, 2021.
How do you know the amount of estimated tax to pay? You will need to run an estimated tax calculation that includes:
- Total income from all sources
- Total deductions and credits, including the standard deduction
- Any tax payments you have already made, through withholding or other ways
The tax still owed is the amount you must pay using estimated tax payment forms.
Can I Complete These Forms Myself?
If you have a simple business, you might be able to complete this form on your own. If your business is more complicated, with a home office deduction depreciation, or inventory, you may need help with Schedule C.
If you use tax filing software, such as TurboTax or H&R Block, the small business version can likely walk you through filling out these forms.
Where Do I Get These Forms?
If you want to do your business taxes yourself, you can get most tax forms including the business tax forms above, directly from the IRS. You can also use tax preparation software (business version) to do your business and personal taxes.
What About Business Tax Forms for Other Business Types?
If your business is an LLC with more than one member or a partnership, you will need to file the business taxes as a partnership on Form 1065 and then create a Schedule K-1 for each partner, showing their share of the business income for the year, included in their personal tax return.
If your business is an S corporation, you will need to file an S corporation tax return on Form 1120 S and file a Schedule K-1 for each owner, included in their personal tax return.
In these situations, you and other owners will need to calculate and pay self-employment taxes and you may need to pay estimated taxes.
If your business is a corporation, you pay tax on any dividends you receive.