Small business tax help website

Filing Business Taxes

Filing business taxes is necessary if you are running a business. Different business legal structures are required to use different tax forms for filing business taxes. You need to choose the right IRS tax form for filing your business taxes.

Filing business taxes based on the legal structure

Every business has a legal structure. If you are incorporated, then the default legal structure of your business may be sole proprietorship. Most home based and small businesses operating in the US are sole proprietary businesses. Below are the legal structures and requirements for filing business taxes.

Filing business taxes for a Sole proprietorship

A sole proprietorship is a one owner business. If someone owns a business with his or her spouse, he or she can still operate as a sole proprietorship but not if he or she co-owns a business with a non- spousal person. Filing business taxes for a sole proprietorship is the easiest out all businesses. A sole proprietor does not need a separate form to file for his or her business tax. Use personal tax forms with a Schedule C attached if you are claiming tax deductions for your business.

Filing business taxes for a Partnership

If you (and your spouse) are not the only owner of your business, then your business can be classified as a partnership. Unless you incorporate your business or form an LLC, your business is a partnership. A lot of people think that to form a partnership, you need a legal document just like forming an LLC. This is not the case, although most partnerships have partnership agreements in order to clarify how to divide profits the business makes.

Filing business taxes for a Corporation

Forming a corporation is a lot more complicated than forming a partnership or just starting a business as a sole proprietor. You need to file an article of incorporation with the state of your incorporation. For tax purposes, the IRS recognizes two types of corporations; S corporation (small business corporation), and C corporation (regular corporation). An S corporation pays no taxes itself. An S corporation is taxes similar to a partnership. A C corporation must file its own business taxes and pay the taxes separately from the owners.

Filing business taxes for a Limited Liability Company (LLC)

The LLC is probably the most popular business entity right now. We will deal with filing business taxes for an LLC in another section.