March 25, 2019 | Last Updated on: June 30, 2023
Submitting personal and business taxes requires you to understand all of the corresponding small business tax forms that you need to account for. As a small business owner, your main goal and priority is to make profit, and that means you can’t do anything that will put your company in jeopardy. Failing to file your taxes, and missing the respective deadline, is one example of an erroneous mistake that can wreak havoc on you and your organization’s wellbeing. Every single day there are a wide range of expenses that you must account for as a business owner, whether it’s commercial loans, future company acquisition and much more. Once you learn the ropes of tax returns, you will have a better understanding of the different deductibles that you can get money back from. The bigger solution, then, requires you to understand the specific small business tax forms that are required from you as a business owner. The ones explained in greater detail here will be 1040, W-4, W-2 and 1120 W. Of course, keep in mind that different tax rates may apply depending on the state that you are currently located in. This article will help you understand some of the tax forms you must fill out and submit.
First and foremost, different business structures fall under different tax rules, meaning the forms you must file will differ if you are a C corporation versus a partnership based organization, and so on. Regardless of this difference in business operations and set-up, the respective tax due date remains the same, which in this case is April 15th, 2019. In the event that you require an extension, you must fill out form 4868.
The IRS defines form 1040 as follows:
Why wouldn’t you want to receive a part of your tax funds back, especially as a small business? Every single expense counts, especially if you had to get business loans throughout the year in order to help build yourself up. Remember, whether you are established as a C-corporation, sole proprietor, LLC and so on, as an owner, you must still account for your personal income taxes. The 1040 form, then, allows you to account for your income as well as list deductions, as these will further determine how much money you will receive back.
Form W-4 is known as the Employee’s Withholding Allowance certificate. An employer can know how much federal income tax they should withhold from your paycheck through this specific form. In other words, your paycheck size will be impacted. It’s only natural that business owners must account for every single employee working in their organization, and thus how much they will be paid. A W-4 can, therefore, help employees from having to pay a large amount of taxes when they are required to file and submit their respective forms to the IRS.
Form W-2 is known as the Wage and Tax Statement, and it demonstrates how much you have earned to date, and thus the corresponding taxes on your income as well. Employers must fill out form W-2 for each and every single one of their employees that is working for them and that they paid a wage or salary for the work that they do. All in all, this is yet another form that business owners must account for.
Companies, and in specific corporations, use form 1120-W in order to account for their tax liability, and thus the estimated tax number that they must submit. Remember how different company structures must sometimes submit different forms? C-corporations must thus fill out this specific tax form, and it will allow them to list their deductions, credits, income, the money they have gained and so on. This specific form is known as the Corporate Income Tax Return.
In addition to tax forms, you can’t underestimate the importance of understanding the tax rate that you are accountable for. In particular, you think about the fact that it is:
It should not come as a surprise that certain states have higher tax rates than others. Some of the highest rates come from California, Tennessee, Louisiana, Arkansas, and Washington, whereas the lower tax rate states are Alaska, South Dakota, among others. So, as a business owner, you may want to consider a location that is more profitable in terms of taxation.
There is a difference between personal income taxes and business taxes, and as the owner, you need to ensure that you understand this difference, as the forms you submit will be impacted. You can notice this distinction between tax form 1040 and 1120-W. While the first is used by U.S taxpayers in order to account for their tax returns, the latter is used by C-corporations. Considering that C-corporations are accountable for double taxation, both forms are necessary and must be submitted. The best advice here, then, is to once again be mindful about your company’s structure and what this means in terms of specific form submissions. The forms mentioned here is by no means an exhaustive list, and as a small business, you will need to determine what else you will be expected to fill out and pay by the April 15th deadline. Making sure to check the IRS website ahead of time is always a worthwhile endeavor, and keep in mind that certain financial experts, including those working in your accounting department, can assist with all necessary submissions. As a business owner, there is no need to pressure yourself into thinking that you must be knowledgeable in all tax regulations. Of course, this does not mean that you should not have a general awareness about what forms are necessary, but you will always benefit from getting help. At the end of the day, you want to find a way to receive a hefty tax return or account for deductibles, such as your interest rates on business loans, as this will allow you to get more money back, and increase your profitability as a business.
