Taxes
According to Benjamin Franklin, nothing in life is certain except death and taxes. Incorrectly filed taxes can be the death of your business. The answers to these common business tax questions could help keep your business alive.
1. What forms do I need to use?
It depends on your business and if you pay business taxes through your personal taxes.
- Sole proprietor and single member LLCs need to include a completed Schedule C with their tax returns.
- Partnerships and multi-member LLCs need to include both a completed a Schedule K-1 for each LLC member or partner and a completed Form 1065 with their tax returns.
- S Corporations need to file a completed Form 1120-S with their tax returns.
- Corporations need to file a completed Form 1120 with their tax returns.
- Taxes paid through personal tax returns must include a competed Schedule SE.
2. How are a form W-2 and a Form 1099-misc different?
They are information returns that serve different purposes.
- Businesses use Form W-2 to report employee income, withholdings and any state and local taxes.
- Businesses use Form 1099-MISC to report payments made to non-employees, such as independent contractors.
3. When are my business taxes due?
Business taxes can be paid over a calendar year or a fiscal year. Due dates can vary, but the IRS lists these common tax due dates.
- Businesses that use a calendar year have to pay taxes by April 15th (the fourth month following the end of the tax year). This includes Schedule C for sole proprietors and Schedule F for farmers.
- S Corporations and Partnerships that operate on a calendar year must pay taxes by the 15th day of the third month (March 15th).
- Corporations that use a fiscal year for tax purposes must pay taxes by the 15th day of the fourth month following the end of their fiscal year(for example tax years ending on July 1st must pay taxes by October 15th).
4. How do I know if my workers are employees or independent contractors?
Designating a worker as an employee or an independent contractor boils down to who has the most control. You have to consider who controls what the worker does, who controls what the business does and how the worker and the business understand the relationship.
A worker is usually considered an employee if the business owner controls how often they get paid, how they perform their job and if they are full-time or part-time. You can also submit a Form SS-8 to the IRS and they will decide for you.
