Filing Your Business Taxes in the US for Entrepreneurs & Small Businesses

As a business owner in the United States, having a comprehensive understanding of federal, state, and local taxes is crucial. Knowing when and how to file taxes is essential to ensure the overall legitimacy and success of the business.

In this guide, we will break down every aspect that you must know about business entity tax filing in the United States.

What is an Employer Identification Number (EIN)?

An Employer Identification Number is a federal tax ID number for your business. Most businesses are mandated to have an EIN to file their taxes. As per the regulatory framework set by the IRS, you must apply for the EIN if any of the following items are suitable for your business.

• The business has employees.
• The business is either a corporation or a partnership.
• The business has a Keogh (also known as the tax-deferred pension) plan.
• The business withheld the taxes on the income of a non-resident alien.
• The business files tax returns for tobacco, alcohol, employment, excise, and firearms.
• The business is involved in various sectors, including real estate, trusts, investments, farms, cooperatives, and plan administration, among others.

If you need an EIN, you can apply for it on the Internal Revenue Service (IRS) website.

What are the Types of Business Taxes?

The type of business tax a business is required to pay depends entirely on two factors: the type of business the taxpayer owns and the state in which the business is established.

According to the IRS, the following are the different types of business taxes.

Income Taxes

Apart from partnerships, all business entities are required to file tax returns reporting the income received by the business throughout the entire year. Almost every state in the US imposes corporate income tax or business income tax; however, the tax laws might vary from state to state.

Therefore, when an individual prepares for business taxes for the relevant year, they must understand the required income tax at both the local and state levels.

Estimated Taxes

Self-employed individuals, S corporation shareholders, partners, and freelancers must make a tax payment if they expect to have $1,000 or more in taxable income by the time they file their return.

It is crucial to get your tax prediction or estimation right, as the taxpayer may receive a penalty for underpaying taxes.

Self-Employment Taxes

The SE tax, or the self-employment tax, is a social security and Medicare tax that contributes to your coverage under the Social Security system.

The coverage that Social Security provides includes multiple benefits related to disability, survivors, Medicare, retirement, and more. Contractors who work independently, as well as self-employed Sole proprietors, must file Schedule SE, which is attached to Form 1040 or Form 1040-SR, to compute and pay their taxes.

Employment Taxes

If the business has W-2 employees, then you should file and pay the specific federal taxes, which include Medicare taxes, Social Security taxes, federal income tax withholdings, and the federal unemployment tax.

Additionally, every state needs specific state employment taxes, such as workers' compensation insurance and unemployment insurance. Ensure that you gather all the required information from your state's taxation department.

Excise Taxes

The business entity must ensure that excise taxes are paid on the purchase of a specific good, such as gasoline. However, this tax is generally included in the price paid for the goods.

Many different types of businesses pay excise taxes, but fuel is a significant component of this tax. In addition to the fuel, excise taxes are also collected on airline tickets, tobacco products, health-related goods and services, alcoholic beverages, and other items.

Filing The Tax Form

As a business owner, you must have an understanding of the business entity taxes you need to file or are required to pay. Familiarizing yourself with the correct schedules and forms is essential; however, many taxation firms or software provide you with the proper and accurate forms. Nevertheless, it is always best to be prepared on your own so you can fill them out accurately and quickly. 

In cases where you are not sure, it is advisable to consult a certified professional tax expert or a certified public accountant (CPA).

In the case where you run your business as a single-member limited liability company or a sole proprietor, then you must file Schedule C (Form 1040) to report the annual profit or loss of the business.

You may also need to submit a Schedule SE or the self-employment tax form, along with Schedule C. Schedule C is a specific business tax form that is only two pages long. To complete this form, you must list all the expenses that you claim and then subtract the expenses from your earnings, and the resulting figure will be your net profit or loss.

If your business is either a corporation or you treat it as an LLC, you must file a separate corporate tax return, such as Form 1120 or Form 1120-S for S corporations.

Form 1120 is similar to Schedule C, as you similarly calculate your business income. However, this form is somewhat complicated because it requires a lot of details, and it is filed separately from the personal income tax return.

Below is a List of Such Common Taxation Forms That a Business is Required to File, Depending on the Type of Business You Own:

Annual Return of Income (Partnerships)

• 1065 US Return of Partnership Income

Income Tax

• 1040, US Individual Income Tax Return
• Schedule C (Form 1040), Profit or Loss From Business
• Schedule E ( Form 1040), Supplemental Income and Loss (partnerships)
• 1120, US Corporation Income Tax Return (C Corporations)
• 1120-S, US Income Tax Return for an S corporation
• Schedule K-1 (Form 1120-S) (S corporations)

Estimated Tax

• 1040-ES, Estimated Tax for Individuals

Employment Tax

• 941, Employer's Quarterly Federal Tax Return
• 943, Employee's Annual Federal Tax Return for Agricultural Employees. 
• 944, Employer's ANNUAL Federal Tax Return

Social Security, Medicare taxes, and income tax withholding

• W-2, Wage and Tax statements (to employee)
• W-3, Transmittal of Wage and Tax Statements (to the Social Security Administration)

Federal Unemployment (FUTA) Tax

• 940, Employer's Annual Federal Unemployment (FUTA) Tax Return

There is a list of all the business tax forms. Either consult a business tax expert or visit the IRS's tax forms and instructions page for clear instructions on which and how to file. 

File your Business Taxes With a Business Tax Expert In the USA

Juggling between the never-ending tax forms, analyzing which one to file, investing time in preparing account books, computing, and planning taxes can be overwhelming and confusing if you lack the basic knowledge of US taxation. And one wrong move, and boom, the IRS chases you with hefty penalties and back taxes.

However, it is generally advisable to seek the help of a professional business expert who can handle everything for you, right from analyzing your account books to which IRS form you must file. And such a tax expert is Savetaxs.

Savetaxs is a leading tax firm that helps US citizens and NRIs file their taxes online. Whether it's your business entity tax filing or personal taxes, we help you with both, ensuring that your deductions and exemptions are maximized.

We have been serving U.S. citizens for over a decade with tax services, and our satisfied client base of thousands of taxpayers, like you, is a testament to the quality of service we offer.

Savetaxs serves its clients 24/7 across all time zones; connect with us today and file your business entity taxes in the USA.