Accounting may not be your favorite topic, but it’s a necessary part of running a legal and functional business. You must report your business’s income and expenses, report payments to workers, and more.
You might be wondering, What tax forms do I need for a small business? To get the ball rolling, here are a few basic accounting forms you should know about. Please note that this is not an all-inclusive list of small business tax forms.
Forms for filing business taxes
Every business must file its income taxes to report how much it earned and spent. The business accounting forms you file are based on your company’s business structure: sole proprietorship, partnership, corporation, or LLC.
The IRS business tax forms required for federal income tax returns are:
Schedule K-1 (Form 1065), U.S. Return of Partnership Income: If you own a partnership or multi-member LLC, report your income and expenses on Schedule K-1; then attach your Schedule K-1 to Form 1065. Each partner must do this to report their share of the business’s income and expenses.
Form 1120, U.S. Corporation Income Tax Return: Use this form to report your income and expenses if you own a corporation or C Corp. Also use this form if your LLC is classified as a corporation.
Form 1120-S, U.S. Income Tax Return for an S Corporation: If you operate as an S Corp, you must report your business’s income and expenses on Form 1120-S. If your LLC is classified as an S corporation, use this form.
If you are self-employed, you also need to file Schedule SE (1040), Self-Employment Tax. Self-employed individuals do not receive salaries, so Social Security and Medicare taxes (FICA tax) are not withheld from a self-employed person’s wages. However, if you are self-employed, you are required to pay self-employment taxes. Report your self-employment liability on Schedule SE.
Forms for filing estimated taxes
You are required to pay estimated taxes on income not subject to withholding. The form you file varies based on whether you are self-employed or not:
Form 1040-ES, Estimated Tax for Individuals: File Form 1040-ES to report estimated taxes if you are self-employed.
Form 1120-W, Estimated Taxes for Corporations: Corporations file Form 1120-W to report estimated taxes.
Forms for claiming deductions
You can claim deductions for many expenses you have, including your home office, business use of a car, travel, charitable contributions, supplies, and more. In most cases, you must deduct certain business expenses on your tax form, but to claim a home office deduction, you will need to use a separate form. If you are self-employed and using the regular method of deduction, you can use Form 8829, Expenses for Business Use of Your Home, to claim a home office deduction. This form allows you to deduct the part of your home that you use for business.
Forms for reporting 1099 payments
If you hired independent contractors to perform work for your business, you’ll need to report their wages as 1099 payments. Independent contractors aren’t employees, but they are temporary workers you hire. You are required to report non-employee compensation of $600 or more to the IRS.
You need to know about the following forms to accurately report 1099 payments: Form W-9, Request for Taxpayer Identification Number: Anytime you hire an independent contractor, they will need to fill out Form W-9 so you can report their payments to the IRS. Although you will not send Form W-9 to the IRS, you’ll need to keep it in your records.
Form 1099-MISC, Miscellaneous Income: Use this form to report 1099 payments to the IRS; also you must send it to your independent contractors, the IRS, and the state tax department (if applicable). You will also need to keep a copy of Form 1099-MISC for your records.
Form 1096, Annual Summary and Transmittal of U.S. Information Returns: When you file Form 1099-MISC, you will also need to submit Form 1096. This form summarizes your 1099 payments. Note: Do not file this form if you file Form 1099-MISC electronically.
Wages paid to independent contractors are the most common type of 1099 payments. Other 1099 payments include rent, royalties, prizes and awards, medical and health-care payments, crop insurance proceeds, cash payments for fish (per the IRS—I couldn’t make this stuff up!), payments made to an attorney, and more.