Gaizer.com Tips for Business Start-ups

Your earnings will be taxed according to your company’s business structure and income amount.

If your business is a sole proprietorship, you will report your business gains or losses on your personal income taxes. The form that you will need is your usual IRS Form 1040 with a Schedule C, Profit or Loss from Business, attached (available at http://www.irs.gov).

For partnerships, you will also report the business earnings on your personal income tax return. The partnership must file an IRS form 1065, U.S. Return of Partnership Income, which defines each partner’s share of the profit or loss in the business, along with your return each year. Furthermore, each partner must make quarterly estimated tax payments each year.

If you incorporated your business as an S corporation, any business earnings are passed to you; therefore, you need to declare these earnings on your personal income taxes. If you set up is a Corporation, then you will have to file a separate return for your business.

For a single-owner LLC, you just need to submit a schedule C with your tax returns. A multi-owned LLC will need to file form 1065, U.S. Return of Partnership Income (http://www.irs.gov/pub/irs-pdf/i1065.pdf).

Furthermore, the LLC members need to file IRS Schedule K-1, which breaks down each member’s shares of the business’s profits and losses. The LLC members must report their profit and loss information on their 1040, adding Schedule E (http://www.irs.gov/pub/irs-pdf/i1040se.pdf).

Property Taxes

Naturally, you will pay taxes on any real estate that your business owns. However, if you lease commercial property instead, you may still be required to pay the property taxes. If the lessor pays the taxes (named base-year taxes), then the lessor will pay an amount based on the amount paid the year before the lease agreement is signed, and the lessee will be responsible for any increment on those taxes going forward.

Other Taxes

Other taxes may be applicable to your business, such as inventory tax, personal property tax, and industry-specific taxes. Check with a tax professional for more information.