Small business owners need to check their profit and the losses they did incur in a year to pay taxes. There are certain forms that you must use when filing taxes. Here’s the guide for small business income tax that will assist you in every step. You will have to include all this information with your personal information before filing the taxes.
If you are planning to submit your tax returns on Schedule C along with your personal taxes (Form 1040), this guide is for you! Single-member LLC owners and sole proprietors can use this guide when filing their taxes.
The Due Date
Since small business owners need to file their tax returns along with their personal returns, the due date to do the same is April 15. In case the due date falls on a weekend or a holiday, the next business day will automatically become the due date. Sometimes, the IRS is going to extend the deadlines. You must take some time to check if you are looking for some time out to file your tax returns if there are any extensions.
Forms For Your Information
Here are the documents that you need to have in hand if you are planning to file your taxes:
1. Schedule C
2. Instruction to fill Schedule C
3. Self-employment tax — Schedule SE
4. Instruction to fill Schedule SE form
Note: The policies keep changing every year. You must take some time to find information related to the year when you are filing the taxes.
Self Employment Taxes
Small business owners must pay self-employment taxes. In other words, they must pay for Medicare and Social Security taxes using the profit or net income they get from their business. If you are making less than $400 in a year, you do not have to pay self-employment taxes.
Here’s how you calculate the self-employment tax:
1. Take the net income of your business
2. Multiply that amount with 92.35% or 0.9235
3. After you get a figure, multiply it with 15.3%
4. 15.3% is the self-employment tax rate
5. If you use this method, you will quickly find the self-employment tax liability amount
Using this amount, you can then calculate the benefits you get from Social Security or Medicare. You can also use tax software that helps you to calculate this amount.
Request for Extension to File Your Taxes
Yes, you can request an extension on your taxes, which includes small business taxes. This automatic extension will be for six months, which means the day you need to submit your tax returns will be October 15. If this date falls on a weekend or a holiday, the next working day will be the due date.
Professional Tax PlannersOnly a few businesses may benefit from using tax software. Most companies need to use a professional tax preparer to assist them with small business income tax. An experienced tax preparer or a CPA will take care of all the complicated matters related to tax returns. This way, you can focus on the most crucial aspects of your business.