What Tax Forms Do I Need for My Small Business?

by Solomon Poretsky

Running a business is complicated, and filing business taxes adds another level of challenge. Even the simplest one-person businesses typically need to file three additional forms with their federal returns, and typical small businesses will frequently have to generate even more paperwork, just to comply with the federal government's requirements.

1040 Schedule C

The basic reporting form for sole proprietorships and LLCs that are run by a sole proprietor is the "Profit or Loss From Business" form known as Schedule C to the Form 1040 individual income tax return. Schedule C allows you to report your business' sales and expenses, break down your cost of goods sold and provide basic vehicle information, which could save you from having to additionally file Form 4562.

1040 Schedule SE

If your business is profitable and operating as a pass-through entity, such as a sole proprietorship, S corporation, LLC or partnership, you will have to pay self-employment tax. Self-employment tax is the combination of your share and the employer's share of FICA -- tax for Social Security and Medicare. You compute and report this tax on Schedule SE to your 1040.

Form 4562

Form 4562 allows you to detail depreciation for your business' capital items. This can include tools, computer equipment, automobiles and other vehicles. Form 4562 also allows you, if your business is small enough, to opt to use Section 179 to fully expense, instead of depreciating, certain capital items. This can save you a great deal of money on your taxes.

Corporate and Partnership Returns

If your company is set up as a partnership, it will need to file Form 1065, which is the equivalent of a 1040, but for a partnership. The partnership will also generate Schedule K-1 forms for each of its partners to report their share of its income or loss on their personal taxes. Companies which are organized as full-fledged corporations file the 1120 form, or 1120-S if they are organized as S-corporations.

Employment Returns

Businesses that have employees have to file a separate set of employment returns. These include such forms as the 940 "Employer's Annual Federal Unemployment Tax Return" and 941 "Employer's Quarterly Federal Tax Return," as well as forms 944 and 945. In addition to this, employers need to hold on to the forms necessary to track an employee's identity and Social Security number as well as provide annual W-2 forms to their employees.

About the Author

Solomon Poretsky has been writing since 1996 and has been published in a number of trade publications including the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." He holds a Bachelor of Arts, cum laude, from Columbia University and has extensive experience in the fields of financial services, real estate and technology.

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