DeFreitas & Minsky Accounting Blog

What Business Owners Need to Know about Tax Return Forms

Posted by thallissey on Jun 16, 2017 10:00:00 AM

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If you run a business, you know taxes can be tricky. With profits to tally and W-2s to distribute, it’s hard to know where to begin. A good first step is to learn which tax return forms you will need based on your business type.

Tax Return Forms Vary According to Business Structure

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Sole Proprietorships

Paperwork and tax filing requirements for those who own their own business are easier than most other types of companies.

What you Need:

  • Schedule C (Profit or Loss From Business), which is part of the Form 1040 (U.S. Individual Income Tax Return) in order to report all your business’ net profit and loss
  • Schedule SE (Self-Employment Tax)

Corporations

Taxes for corporations are a little more complex. You will need to produce balance sheets and answer more questions.

What you Need:

  • Form 1120 (U.S. Corporation Income Tax Return)
  • Corporations must also report dividends and other tax information on the Form 1099

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Partnerships

A partnership does not pay taxes in the same way as a corporation. Instead, it passes net income, income tax credits, and other tax items through its partners. Each partner reports their share of items to report on their tax return.

What you Need:

  • Form 1065 (U.S. Return of Partnership Income) for reporting income and loss to the IRS
  • The partnership must deliver copies of Schedule K-1 (Partner’s Share of Income, Credits, Deductions) to the partners or LLC members
  • Partners report taxes on Schedule E, Part II of their Form 1040 individual tax return form

S Corporations

S Corporation shareholders report income and loss on their personal tax returns, using their individual income tax rates.

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What you Need:

  • Form 1120S (U.S. Income Tax Return for an S Corporation)
  • Form 1065
  • Shareholders must receive a copy of Schedule K-1

Limited Liability Companies

Limited liability companies have the option to file as a partnership, C Corporation or an S Corporation.

Tips for Choosing a Tax Year

Businesses may choose to file their taxes according to the calendar or fiscal years.

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Calendar Year: 12 consecutive months beginning January 1 and ending December 31.

Fiscal Year: 12 consecutive months ending on the last day of any month except December.

But, business owners must adopt the calendar year, if:

  • They don’t maintain books or records
  • They don’t have an annual accounting period
  • Their current tax year does not qualify as a fiscal year
  • The Internal Revenue Code or the Income Tax Regulations requires the company to do so

Choose wisely. Once you settle on a calendar year, you may have to get IRS approval to change it.

Deadlines for Business Tax Return Forms

March 15th: Forms 1120, 1120A and 1120S

April 15th: Form 1065, Form 1040 Schedule C

If you have any additional questions about business tax planning and preparation, consult a local tax accountant.

Speak to one of our accountants today

Topics: Business Accounting