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TAS Tax Tip: Small Business Filing and Recordkeeping Requirements


Published: February 24, 2023 Last Updated: March 16, 2023

There are about 57 million small businesses and self-employed taxpayers in the United States, including:

· Corporations and partnerships with assets less than $10 million

· Sole proprietors

· Independent contractors

· Members of a partnership that carries on a trade or business

· Others in business for themselves, even if the business is part-time

· Gig workers (i.e., Uber/Lyft drivers, owners of Airbnb rentals, delivery services, etc.)

The Taxpayer Advocate Service is sharing the following information with small business taxpayers to:

· Help you meet their filing requirements

· Share resources for information and tax return preparation

· Help you file accurate returns

Small Business Filing Requirements

Generally, the federal tax forms you will need to file vary depending on the type of business:

Business Entity - Type of Tax - Tax Forms

Sole Proprietor

Income Tax-Form 1040/1040SR Schedule C or F

Self-Employment Tax-Form 1040/1040SR Schedule SE

Estimated Ta-Form 1040-ES

Employment Taxes-Forms 940 and 941, 944 or 943

Partnership

Annual return of Income-Form 1065

Employment Taxes-Forms 940 and 941, 944 or 943

Partner in Partnership (Individual)

Income Tax-Form 1040/1040SR Schedule E

Employment Taxes-Form 1040/1040SR Schedule SE

Estimated Tax-Form 1040-ES

Corporation (C or S)

Income Tax – C Corporation-Form 1120

Income Tax – S Corporation-Form 1120-S

Estimated Tax-Form 1120-W (C-Corp Only)

Employment Taxes-Forms 940 and 941, 944 or 943

S Corporation Shareholder

Income Tax-Form 1040/1040SR Schedule E

Estimated Tax-Form 1040-ES

Recordkeeping

As a small business, you may have many different types of returns that are due, and many different types of deductions. As a busy small business owner, it’s important to put a user-friendly recordkeeping system in place.

You may need to substantiate income and deductions. Good records can assist you in preparing financial records, keeping track of property and deductions and so much more. Good records can also assist you in knowing exactly where to target funding and reducing expenditures to optimize profit. Your recordkeeping should keep track of:

· Gross Receipts

· Inventory, including any merchandise withdrawn from sale for personal use

· Expenses

For more helpful information for small businesses, see Tax Tip: Small business tax highlights, which addresses key components of small business ownership including:

· The general types of business taxes;

· The importance of making estimated tax payments if required;

· Payment options; and

· Ten Federal Tax Tips to help small business owners:

1. Know your limitations and know when you need to ask a professional for help

2. Keep adequate records

3. Separate your personal and business finances

4. Correctly classify your business

5. Manage payroll

6. Subscribe to e-News for Small Businesses

7. Research small business tax deductions

8. Self-employment tax deduction

9. Make your tax payments timely

10. For faster processing, file your returns electronically

TAS resources

o Publication 5341,The Taxpayer Roadmap

o Publication 5341 (SP), The Taxpayer Roadmap (Spanish)

IRS resources

· Publication 334, Tax Guide for Small Business

· Publication 583, Starting a Business and Keeping Records

· Publication 4591, Small Business Federal Tax Responsibilities

· Publication 4689, Your Rights as a Small Business Owner (under the Small Business Regulatory Enforcement Fairness Act (SBREFA)

· Publication 535, Business Expenses

· Publication 463, Travel, Gift and Car Expenses

· Publication 505, Tax Withholding and Estimated Tax

o Notice 931, Deposit Requirements for Employment Taxes

· Publication 3151, The ABCs of Federal Tax Deposits

· Publication 542, Corporations

· Publication 225, Farmer’s Tax Guide

· Gig economy:

o Publication 5369, Gig Economy and Your Taxes: Things to Know

· Choosing a tax preparer

Visit the Taxpayer Advocate Service’s Get Help center for a list of tax topics to assist you with resolving many tax related issues.

For more updates from the Taxpayer Advocate Service, visit the news and information center to read the latest tax tips, blogs, alerts and more.



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