Understanding Tax Forms in the US for Small Business Owners
Overwhelmed by all the different tax forms and trying to understand which you need to file?
Let's discuss four of the main forms you need to be aware of:
W9
1099
Schedule C
Schedule E
K1
With every episode of Linda Tuttle Adventuring Accountant TV, I like to equip you with a free resource that goes with the episode for the week.
This week's episode is all about different entity types, but some of the more basic tax deductions apply to most entities.
After going through this guide, you will have a better idea of what deductions are available to you as a small business owner.
You can download the FREE resource by clicking the orange button above.
Understanding Tax Forms in the US for Small Business Owners
This week I want to touch briefly on some of the main tax forms you need to be aware of as a small business owner.
The first is a W9. If you have subcontractors working for you to help you with different aspects of your business you need to have them fill out Form W9 and return it to you. You will need this form in order to issue them a 1099 in January. The best policy is to have a subcontractor sign this form and give it back to you BEFORE you pay them so you aren't trying to track them down in January when you are trying to file your 1099s.
The next form is a 1099. You may need to issue these as well as receive them. You may need to issue a 1099 to subcontractors who are working for you. These are filed in January for anyone who provides services for your company for more than $600. If it is a corporation performing the services for you, then you do not need to issue a 1099.
In addition to filing 1099s, you may also be asked to fill out a W9 form and you will be issued one (or multiple) 1099s. This form reports the income you have earned to the IRS, so you always need to make sure the income you are reporting on your tax return is AT LEAST the amount issued to you on your 1099s. You may receive 1099-INT if you have earned interest, 1099-NEC if you have performed services or are an affiliate for a company, 1099-K if you are using a payment processor, 1099-Misc for rental or royalty income. You may receive multiple 1099s.
Schedule C is the form you file on your personal tax return to show your income and expenses from your business if you are a sole proprietor or a single member LLC.
Schedule E is the form you file on your personal tax return if you have rental properties in your personal name.
If you have a multi member LLC or hold your properties in an LLC or have an S Corp, that means that entity will file a separate tax return and you as an owner will be issued a K1. The K1 form is what gets reported on your personal tax return and shows the income (or loss) that flows through to you personally.
This is a high level overview of some of the most important tax forms for you to be aware of as a small business owner in the US.
Resources Mentioned
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