A small business owner calculates profit and loss for the business for income tax purposes, then includes the details on their tax returns. The guide below can help you determine the forms to use and how to use them.
Due Dates
Small businesses often file business tax returns with their returns. This means the due date is the same, which is April 15th. However, should the due date be on a weekend or holiday, then the next business day is considered the due date?
Schedule C Income Tax Forms
The forms you need for single-member LLCs and sole proprietors, including forms for calculating self-employment tax, include:
2020 Instructions for Schedule SE
Schedule C, Profit or Loss from Business
Schedule SE, Self-Employment Tax
2020 Instructions for Schedule C
Tax Details Required To Complete Schedule C
To complete this form, here is the information you will need:
Information on the cost of purchasing business assets
Inventory records for calculating the cost of goods sold
Information on the business use of your home.
Information on business expenses like business travel
Self-Employment Taxes
Small business owners must pay self-employment taxes such as Medicare and social security on the net income from their companies. However, if in that year you do not have any income from the business or it is less than $400, then you do not have to pay this type of tax.
Filing Your Tax Returns
Your business tax returns can be filed either by mail or through e-file. You will get instructions on the last page of form 1040, on which addresses you can use. For e-filing, the fee is included in your cost when using tax preparation software.
Filing an Application for an Extension
You can apply for a time extension to file your taxes, including business tax. This extension is usually six months.
If you make a mistake while filing tax returns, you will need to file an amended return. The form used depends on the type of business. To amend the personal return, use Form 1040X Amended Return.
Any entrepreneur needs to pay business tax as required by law. This is because most lenders will require your tax details. If you are looking for funding and your tax details are in order, contact us at Spearing Capital & Consulting, Inc. We can offer you various financing solutions to ensure your business does not stagnate.