IRS Business Tax Filings

Business Tax

Jan 4

The type of taxes that are required would depend on the type of business you are in. The service-based industry is different than the types of businesses that sell products.

Running a business is no small task, whether you are self-employed or if you are in charge of a Multi-Million Dollar LLC. As a business owner, you are tasked with the responsibility of earning revenue in your type of business, to accounting for all expenses that occurred in your line of work. The IRS ( as the code is written) does not care if you do not understand the taxes and types that need to be filed & paid.

As if running your business couldn’t get any more complicated, the IRS penalizes for late filings or late payments on taxes, therefore compliance is an extremely important issue that shouldn’t be overlooked. This guide provides a basic snapshot of the types of business taxes to be filed.

What are the types of business taxes?

The first thing to consider for an IRS Business tax is the legal structure of your business. Although some business entities do not pay an income tax, they still have to file taxes. In addition, there might be additional tax reporting. The 5 most common business types are:

Sole Proprietorship
Single Member LLC
Parnership LLC
C Corporation
S Corporation

Business Entity Types & Tax

The Self Employed

These Business are owned by an individual. The individual owner would be responsible for filing the Profit & Loss on a schedule C attached to the 1040.

Partnerships

A partnership is a business that is owned by by two or more persons. The Partnership then Files the Tax Return on Form 1065, where the net profit or loss “ Flows through” to the Individual owners personal tax return.

Business Owned By Both Spouses

These Types of Business would be categorized depending on the State you live in. Generally, these businesses are Partnerships, and Filing of Form 1065 is warranted.

Exception to Filing A partnership return is for Residents of Community Property States ( LA, AZ, CA, TX, WA, ID, NV, MN & WI). In Community Property States the business can be filed under a Schedule C attached to the 1040 or a 1065 - Partnership return.

C - Corporations

Corporations are formed when shareholders exchange money and or property for the corporation's capital stock. The Corporation files Form 1120 is taxed for the earned income, and the shareholders are taxed upon the distribution of dividends.

S- Corporations

These Corporations are Formed as Corporations above, except are treated as an S Corp if it meets certain guidelines are met. The S Corp Tax Return is filed on Form 1120S, however no income tax is owed. The net income or loss “Flows through” to the shareholders personal tax return.

Limited Liability Company (LLC)

An LLC is formed through the Secretary of State, and is owned by the members. The members are not personally liable for the LLC Debt. An LLC for federal income tax purposes as either a partnership, a corporation, or an entity disregarded as separate from its owner (Single Member LLC)