Filing Your Business Tax
Filing Your Business Tax Return with Federal and State Government on a timely basis will avoid costly penalties and interest.
As a business owner, it’s important to understand your federal, state, and local tax requirements. This will help you file your taxes accurately and make payments on time. The business structure you choose when starting a business will determine what taxes you’ll pay and how you pay them.
Filing Your Business Tax Federal Return
Key Takeaways. There are many types of taxes and Filing Your Business Tax on time is crucial. A tax return is a documentation filed with a tax authority that reports income, expenses, and other relevant financial information. On tax returns, taxpayers calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes.
What is the federal business tax?
Filing Your Business Tax, the United States imposes a tax on the profits of US resident corporations at a rate of 21 percent (reduced from 35 percent by the 2017 Tax Cuts and Jobs Act). The corporate income tax raised $230.2 billion in fiscal 2019, accounting for 6.6 percent of total federal revenue, down from 9 percent in 2017.
According to the Accountants in Miami, Biden’s corporate tax changes—the proposed increase of the corporate rate from 21 percent to 28 percent plus the 15 percent minimum book-tax—would reduce economic output by 1.3 percent.
How does Filing Your Business Tax Work?
When it is time to file a federal income tax return for your small business, there are various ways you can do it, depending on whether you run the business as a sole proprietorship or use a legal entity such as an LLC or corporation.
Each type of entity requires a different tax form on which you report your business income and expenses. Regardless of the form you use, you generally calculate your taxable business income in similar ways.
There is many tax return preparation software on the market for Filing Your Business Tax. Business owners can prepare the taxes themselves or hire an accountant. TurboTax is popular and designed for sole proprietors and 1099 contractors, but you have to know what you are doing.
Step 1—Collect your Records
Gather all business records before starting the Filing Your Business Tax Return. Before filling out any tax form to report your business income, you should have all records in front of you that report your business earnings and expenses.
If you use a computer program or a spreadsheet to organize and keep track of all transactions during the year, calculating your income and deductions is much easier than trying to remember every sale and expenditure that occurred during the year.
Step 2— Filing Your Business Tax Return on The Right Form
Determine the correct IRS tax form. You always need to report your business earnings to the IRS and pay tax on them but choosing the right tax form to report earnings on depends on how you operate your business.
Many small business owners use a sole proprietorship which allows them to report all their business income and expenses on a Schedule C attachment to their personal income tax return. If you run the business as an LLC and you are the sole owner, the IRS also allows you to use the Schedule C attachment. However, if you use a corporation or elect to treat your LLC as one, then you must always prepare a separate corporate tax return on Form 1120 (or Form 1120S if you are an S-Corp).
Filing Your Business Tax Return when you own a corporation, LLC or partnerships), Accountants highly advise against the DTI approach. They are very complex and errors can lead to audits, penalties, and interest.
Step 3— Filing Your Business Tax Return – Pay Attention to Deadlines
Be aware of different filing deadlines. When you use a Schedule C, it becomes part of your Form 1040 and therefore, no separate filing deadlines apply. It is generally subject to the same April 15 deadline.
Filing Your Business Tax Return if you are taxed as a C-Corp, you need to file a Form 1120, you must file it by the 15th day of the fourth month following the close of the tax year, which for most taxpayers is April 15. If you are taxed as an S-Corp, you need to file a Form 1120S, you must file it by the 15th day of the third month following the close of the tax year, which for most taxpayers is March 15. You cannot send this form to the IRS with your personal income tax return.
Is Filing Your Business Tax Return Require if There is No Income?
Yes. All corporations are required to file a corporate tax return, even if they do not have any income. If an LLC has elected to be treated as a corporation for tax purposes, it must file a federal income tax return even if the LLC did not engage in any business during the year.
If this is your final year in business, make sure you click on the appropriate box to stop your filing requirements for subsequent years.