Updated for tax year 2023.
Starting a new business and keeping it going through its first year is an impressive accomplishment.
When you file a federalincome tax return for your business, the paperwork and forms you will use depend on how your business is organized.
Here’s how you’ll file your business return, based on your business type:
Sole proprietor
If you decided to keep it simple and structure your business as a sole proprietorship, you’re in luck. The paperwork and tax filing requirements are far easier as a sole proprietor than for any other type of business.
As a sole proprietor, you are the business. You can report all of your business income and expenses on aSchedule C, which you file with your personal income tax return (Form 1040). The business itself is not taxed separately.
You don’t have to worry about the net worth of your Schedule C business from year to year, because you and the business are the same.
If you have more than one business, report each business activity on a separate Schedule C. If you have a farm that you run as a sole proprietor, file Schedule F with your 1040 individual income tax return.
C corporation
If you’ve incorporated as a C corporation (C corp), you will fileForm 1120for your business return. Form 1120 is a little more involved than a Schedule C. It asks more questions, and you must provide balance sheet information for the beginning and end of the tax period.
Form 1120 is not filed as part of your personal income tax return. The corporation reports any dividends or other tax information that applies to you on the applicable Form 1099.
C corps must pay tax on their earnings, if applicable. Their shareholders also pay tax on dividends and other returns. This is called double taxation because the same income is taxed twice.
Partnership
If your business is structured as a partnership, you will useForm 1065to file your return. A partnership, unlike a corporation, does not pay tax. Instead, it passes net income, income tax credits, and other tax items through to each of the partners — those people who have a beneficial interest in the business.
Each partner receives a Schedule K-1 that reports their share of items to report on their tax return. When you receive a Schedule K-1 from your partnership return, you report partnership tax items on Schedule E, Part II, of yourForm 1040 individual tax return.
S corporation
S corporations (S corps) are structured like C corporations but have a limited number of shareholders. Like a corporation, an S corp sells shares but the income passes directly through to its shareholders.
S corp profits and losses are reported on Form 1120-S. The shareholders report the associated income and loss on their personal tax returns, using their individual income tax rates. This enables the S corp to avoid double taxation on its income.
Nonprofit organization
Nonprofit organizations, such as ministries, charities, and many educational organizations, file Form 990 to report information including income, expenses, and balance sheet information.
If you run a nonprofit organization, you must also provide information about the officers of the organization and your sources of funding.
If your nonprofit organization pays you — for example, if you are an employee of your nonprofit organization — you’ll receive aForm W-2or another similar form so you can report earnings on your individual income tax return.
Limited liability company (LLC)
If your business is organized as a limited liability company and you own 100% of it, you can still fileSchedule Cwith your individual income tax return, just as you would with a sole proprietorship.
However, you have additional filing choices with a multi-member LLC. Depending on whether you want to be treated as a C corporation or an S corporation, you can choose to file Form 1120 or 1120-S, respectively. Alternatively, you can file as a partnership, using Form 1065.
What are the deadlines for filing my business taxes?
Due March 15:
- Form 1120-S (S corps, LLCs taxed as S corps)
- Form 1065 (partnerships, LLCs taxed as partnerships)
Due April 15:
- Form 1120 (C corps, LLCs taxed as C corps)
- Form 1040 Schedule C (sole proprietors)
If you filed for a business extension, the following due dates apply:
Due Sept. 15:
- Form 1120-S (S corps, LLCs taxed as S corps)
- Form 1065 (partnerships, LLCs taxed as partnerships)
Due April 15:
- Form 1120 (C corps, LLCs taxed as C corps)
- Form 1040 Schedule C (sole proprietors)
Note: If any of the above dates fall on a weekend or federal holiday, the payment deadline falls on the next business day instead.
