Income Tax: Depending on your business structure, income tax can be filed as a sole proprietor, partnership, corporation, or S corporation.
Self-Employment Tax: This covers Social Security and Medicare taxes for self-employed individuals.
Employment Taxes: If you have employees, you need to withhold federal income tax, Social Security, and Medicare taxes.
Excise Taxes: These apply to certain types of businesses, such as those that sell specific goods or services (e.g., fuel, tobacco).
Sole Proprietors: Report income on Schedule C (Form 1040).
Partnerships: File an annual information return (Form 1065).
Corporations: Use Form 1120 for C corporations or Form 1120S for S corporations.
Home Office Deduction: If you use part of your home exclusively for business.
Business Expenses: Costs that are ordinary and necessary for your business, including supplies, rent, and utilities.
Vehicle Expenses: If you use your vehicle for business purposes, you can deduct actual expenses or use the standard mileage rate.
Employee Salaries and Benefits: Wages, benefits, and bonuses paid to your employees are deductible.
Receipts and invoices
Bank and credit card statements
Payroll records
Tax returns and related documents
Keeping these records organized can help in case of an IRS audit and make tax filing easier.
When Are Tax Payments Due?
Estimated tax payments are usually required if you expect to owe $1,000 or more when your return is filed. These payments are generally made quarterly:
First Quarter: April 15
Second Quarter: June 15
Third Quarter: September 15
Fourth Quarter: January 15 of the following year
Failing to separate personal and business expenses
Not keeping adequate records
Missing tax deadlines
Incorrectly classifying workers as independent contractors or employees
Understanding and adhering to IRS guidelines is essential for the success and longevity of your entrepreneurial venture. Staying informed and compliant can help you avoid legal issues and focus on growing your business.