Complete Guide to Small Business Taxes
Everything small business owners need to know about taxes. Deductions, entity selection, quarterly estimated taxes, filing requirements, bookkeeping, payroll, and common mistakes to avoid.
Choosing the Right Business Entity
Your business entity type determines how you are taxed, what forms you file, and your personal liability exposure. The most common structures include:
Sole Proprietorship
Simplest structure. Report income on Schedule C. Self-employment tax applies to all net income.
Single-Member LLC
Disregarded entity for tax purposes. Reports on Schedule C. Provides legal liability protection.
Multi-Member LLC
Files Form 1065. Issues K-1 to members. Pass-through taxation.
S-Corporation
Files Form 1120-S. Owner-employees receive salary + distributions. Can reduce self-employment tax.
C-Corporation
Files Form 1120. Corporate tax rate applies. Double taxation on dividends.
Partnership
Files Form 1065. Partners report share of income on personal returns.
Related resources: LLC vs S-Corp Taxes | LLC Tax Preparation | S-Corp Tax Preparation
Small Business Tax Deductions
Maximizing deductions is one of the most effective ways to reduce your small business tax liability. Common deductions include:
Related resource: Complete Guide to Small Business Tax Deductions
Quarterly Estimated Taxes
If your business expects to owe $1,000 or more in taxes, you generally need to make quarterly estimated tax payments. Estimated taxes cover income tax and self-employment tax.
Q1 (January-March)
April 15
Q2 (April-May)
June 15
Q3 (June-August)
September 15
Q4 (September-December)
January 15 (next year)
Related resources: Guide to Quarterly Estimated Taxes | Tax Planning Service
Bookkeeping & Payroll
Good bookkeeping is the foundation of tax compliance. Clean books make tax preparation faster, more accurate, and less expensive. Payroll tax compliance is equally critical.
Missed payroll tax deposits are one of the fastest ways to get into trouble with the IRS. Trust fund recovery penalties can be assessed personally against responsible parties.
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