What Business Tax Forms Do I Need for Tax Season?
Tax Forms for Small Business Income Tax and Self-employment Tax
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 (either Schedule C or Schedule C-EZ), based on the net income of the business (think income minus expenses).
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 or Schedule C-EZ 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, on business expenses for a vehicle, and the calculation of a deduction for use of your home business.
If you have a very small business (sole proprietor or SMLLC) you may be able to use Schedule C-EZ. It's a simple one-page form you can use instead of Schedule C if your business meets some requirements:
- Your business expenses must be $5,000 or less for the year
- You can't have a net loss for the year
- You didn't depreciate any assets (like a car or equipment)
- You must use the cash method of accounting
- You aren't deducting expenses for a home office
- You don't have any inventory or employees.
The calculation of your business net income is transferred to your personal tax return on Form 1040. (You can't file your income taxes using Form 1040A or 1040EZ if you have business income.)
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 or Schedule C-EZ). (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 percent 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. See how this works in this article that includes details of how to calculate self-employment tax and this article on how to include self-employment tax on your personal tax return.
Self-employment taxes are included on your personal income tax return.
Estimated Tax Payment Forms
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 you receive from the business.
You can't wait until tax time to pay these taxes unless you have additional withholding to reduce your tax. 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). 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
- And any tax payments you have already made, through withholding or other ways.
The tax still unpaid is the amount you must pay using estimated tax payment forms.
Can I Complete These Forms Myself?
If you have a simple business, and you file using Schedule C-EZ, 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.
You might be able to complete Schedule SE yourself if you can use the short form, but the long form version is more complicated.
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.