What Tax Return Do I Need To File For My Business?

Navigating which tax return to file for your business can seem daunting, but as an experienced business CPA firm, Bearden Stroup & Associates CPA is here to simplify the process with our experienced business consultants!

When deciding on the appropriate business tax form, consider the following:

Bearden, Stroup & Associates, CPAs - Business tax
  1. Your business entity (e.g., LLC, partnership, corporation).
  2. The number of owners.
  3. Are there any specific elections you’ve made?

Here’s a quick guide to help you:

  1. Sole Proprietorship: Use Schedule C (Form 1040)

If you run a one-person show and haven’t officially registered your business as an LLC or corporation, you’re likely a sole proprietor. In this case, you’ll use Schedule C, which is a part of the Form 1040 (your individual tax return). You mainly are telling the government about the money your business made and the expenses it had. Simple, right?

  1. Single Member LLC: Use Schedule C 

LLCs file business tax returns based on how many owners they have. If your LLC is a single-member LLC, you can use the Schedule C of Form 1040 just like a sole proprietor. If your business is owning rental properties then you would report it on Schedule E of Form 1040. This is because the IRS considers a single member LLC to be a disregarded entity unless you make an election as part of your tax planning strategy. 

  1. Partnership: File Form 1065

Now, if you’ve teamed up with someone to run your business, you’re in a partnership. For partnerships, the go-to form is the Form 1065. A partnership can never have just one owner! This form helps the government understand how the money flows between the partners and the business itself. The profits, losses, and other tax attributes “pass through” to the individual members. Teamwork makes the dream work, even when it comes to taxes!

  1. Multi-Member (LLC): File Form 1065

When an LLC has more than one member, the Internal Revenue Service (IRS) automatically considers it a partnership for tax purposes. This means that the LLC itself doesn’t pay income taxes. The business profits will pass through to each owner’s personal tax returns. A multi-member LLC will typically need to file form 1065. But not always…Here’s where it gets a bit interesting. If your LLC wants to be taxed like a corporation, you can choose to file Form 1120 or you can elect to file as an S Corporation for tax purposes. You can see why people get degrees in this stuff!

  1. Corporation: Form 1120

If your business is a full-fledged corporation, then Form 1120 is your buddy. This form helps corporations report their income, expenses, and pay its own taxes. The downside of having a corporation is that it often creates double taxation. If your small business is a corporation, talk to a business CPA right now to make sure that you aren’t paying more taxes than you should be!

  1. S Corporation: Form 1120-S

For businesses that have employees, the most common business tax return is actually Form 1120S. This tax return is filed by businesses that have chosen to be taxed as an S Corporation. Like a partnership, S Corporations don’t pay income tax themselves; instead, the profits and losses are passed on to the shareholders. How do you know if your company is taxed as an S Corporation? Well, it’s not always obvious. You can start by asking your accountant or the legal service who set up your LLC or Corporation. If for some reason you can’t get your records from there, you can get tax help from a CPA who can get this information from the IRS with your signed authorization. 

Bearden, Stroup & Associates, CPAs - Business tax

Remember, choosing the incorrect form can lead to significant issues with the IRS. If you need more certainty or are overwhelmed, consulting with business consultants or a specialized business accounting firm can provide clarity and assurance. At our business accounting firm, we specialize in business consulting. We can ensure that your business meets its tax obligations correctly and efficiently. Don’t hesitate to seek expert advice tailored to your business needs! Contact us at (256) 533-0806 to learn more about our business consulting services

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