So you started your own business. Cool move. Now the tax man’s knocking, and things can get real confusing, real fast. Don’t worry, you’re not the only one stuck staring at a stack of receipts, wondering where to even start. First things first: yes, most businesses need to file taxes—whether you made money or not.
The IRS doesn’t care how new you are to the game, or if you just made a few bucks on the side. If you earned income, they expect paperwork. But don’t panic. Filing isn’t about drowning in forms; it’s about being organized and knowing what applies to you.
One thing new business owners mess up? Mixing personal and business expenses. Keep things separate from day one. Use a separate bank account, and track your sales, costs, and invoices. Even if you’re just using a spreadsheet, staying tidy from the beginning saves you hours (and possibly headaches) when tax season rolls in.
- Figuring Out If You Need to File
- What Records You Actually Need
- Which Forms Apply to Your Business
- Deductions and Credits You Can Grab
- When to Get Help (and When You Can DIY)
Figuring Out If You Need to File
This is where most people get stuck: do you actually have to file business taxes this year? In almost every case, the answer is yes. If your business brought in any money, the IRS wants you to file. Doesn’t matter if you made $200 or $20,000—income is income. The only real exception is if your business didn’t earn a cent or was just an idea with no transactions at all. But as soon as money changes hands, the tax game begins.
Your filing duties depend a lot on how your business is set up. Here’s a quick rundown:
- Sole proprietors or self-employed folks: File if you made just $400 in net earnings—yep, just 400 bucks.
- Partnerships: The business has to file, even if it didn’t actually make money. Each partner also reports their share on their personal taxes.
- Corporations (C-corps or S-corps): Always file, even with no activity.
- LLCs: Depends how your LLC is taxed. Single-owner LLCs file like sole proprietors. Multi-member LLCs act like partnerships by default, but you could also choose to be taxed as a corporation.
Now, here’s a look at the basic IRS filing triggers for new businesses:
| Business Type | Minimum Income to File | Must File If No Income? |
|---|---|---|
| Sole Proprietor / Self-Employed | $400 net earnings | No |
| Partnership | Any | Yes |
| C-Corp / S-Corp | Any | Yes |
| LLC | Varies | Varies |
One thing lots of people miss: even if your business is brand new and you only did a few gigs, you might owe self-employment tax on top of regular income tax. The tax filing deadline for most is April 15th, but if you’re late to the party, you can usually get an extension—just make sure you actually ask for it, because there are penalties if you don’t file on time.
If you’re lost in the IRS maze about your filing status, their Interactive Tax Assistant online can walk you through the basics. Or just call a tax pro to double-check; sometimes a five-minute chat can save you from a year’s worth of stress.
What Records You Actually Need
If you’re filing taxes for your new gig, don’t just shove receipts in a shoebox and call it a day. The IRS wants to see clean records that back up every number you put on your forms. Messy or missing records make audits way more likely, and no one wants that headache.
Here’s what you absolutely need to keep organized:
- Income Records: Every dollar in, from sales, services, and even tiny side jobs related to your business. Bank statements, payment app summaries, invoices, and 1099 forms are your best friends here.
- Expense Receipts: Every business expense counts. Office supplies, subscriptions, advertising, gas for business trips — keep all these receipts. Digital or paper, just be consistent.
- Bank and Credit Card Statements: These help you cross-check transactions and spot anything you might’ve missed. If you’ve got a separate business account, you’re already a step ahead.
- Contracts and Legal Documents: Stuff like partnership agreements, leases, and formation papers for LLCs or corporations. You won’t use them every year, but when you need one, you’ll be glad it’s handy.
- Payroll Records: If you have employees, keep all payroll documents and related tax forms (like W-2s or 1099s).
Let’s talk retention. Most folks should hang on to tax records for at least three years, but if you underreport income by more than 25%, the IRS can come knocking for six years. Here’s a quick chart to make it clearer:
| Record Type | Keep For |
|---|---|
| Income and Expense Receipts | 3 years |
| Tax Returns | 3-7 years (7 is safest) |
| Payroll Records | 4 years |
| Business Formation Docs | Forever |
One more tip: check out digital apps. Tools like QuickBooks, Wave, or even Google Sheets make it way easier to track your finances than juggling piles of paper. Staying organized is the simple, un-glamorous trick that keeps tax filing from becoming a total nightmare.
Which Forms Apply to Your Business
Here’s where people usually get tripped up: picking the right tax form. It totally depends on your business setup. The tax filing forms you use will make or break how smooth the whole process feels. Mess this up and you could trigger an IRS letter or leave cash on the table. Let’s break down which forms go with which business types, so you’re not just guessing.
- Sole Proprietorship: Most first-timers tick this box. You’ll report business earnings and expenses on Schedule C (goes with your personal Form 1040). It’s as simple as tax filing gets for a business, but still don’t just wing it—double check that everything adds up.
- Single-Member LLC: The IRS treats you as a sole proprietor by default, so still use Schedule C. But if you picked a different tax treatment (like S corp), forms change—check your setup!
- Partnerships: Running the show with a buddy? You’ll file the partnership’s return with Form 1065. Don’t forget, the business itself doesn’t pay income tax. Instead, you split profits or losses using a Schedule K-1 (from the 1065), then both partners report their share on personal returns.
- Multi-Member LLC: Same drill as a partnership. Form 1065 for the LLC itself, then each member uses a Schedule K-1.
- S Corporations: File the business return with Form 1120-S. Each shareholder gets a Schedule K-1 for their piece of the income. The S corp doesn’t usually pay income tax itself, but double check because state rules can get funky.
- C Corporations: More structure, more paperwork. Corporate taxes live on Form 1120. This is a whole different animal, so talk to a tax pro if you’re here.
Just to make things clearer, here’s a table with a quick cheat sheet for the most common setups:
| Business Type | Main Tax Form | Extra Forms | Who Pays Tax |
|---|---|---|---|
| Sole Proprietor | Schedule C (with 1040) | Schedule SE if self-employed tax | Owner |
| Single-Member LLC | Schedule C (or 1120S/1120 if elected) | Depends on election | Owner or entity |
| Partnership/Multi-Member LLC | Form 1065 | Schedule K-1 for each partner | Partners |
| S Corporation | Form 1120-S | Schedule K-1 for each shareholder | Shareholders |
| C Corporation | Form 1120 | Various, if dividends issued | Corporation |
Also, if you paid freelancers or contractors and shelled out $600 or more to any of them, you need to send a 1099-NEC by February. Get used to tracking that stuff—it’s the little forms that most folks forget, and the IRS does notice.
If you’re still lost (or the IRS jargon makes your head spin), check the interactive assistant on the IRS website. They walk you through which form fits your business like a quiz. It’s not a replacement for an accountant, but it’s free and way better than guessing.
Deductions and Credits You Can Grab
This is where starting a business actually gets pretty cool: there are loads of tax deductions and credits waiting for you. These aren’t loopholes or dodgy tricks—they’re legit tax breaks designed to help small businesses get a fair shake. The trick is to know what counts, and not leave money on the table.
For most people filing business taxes, the first stop is listing every expense tied to running your business. Typical stuff you can deduct:
- Home office deduction: If you work out of a dedicated space at home, you might get to write off a chunk of your rent or mortgage, utilities, and even internet. The space has to be used only for business, though.
- Equipment and supplies: Laptops, chairs, pens, business software, web hosting—anything you need to run things. Save the receipts.
- Business travel and meals: Headed out to meet a client or attend a legit work event? You can often deduct part of those travel and meal costs. Keep records—receipts, dates, who you met, and why.
- Phone and internet: If you use your phone or Wi-Fi for work, write off that portion. If you use it half the time for business, you can only deduct half.
- Insurance premiums: Health insurance is tax-deductible if you’re self-employed and paying for your own plan (not through a spouse).
Don’t forget about tax credits. These aren’t just deductions—they actually lower the taxes you owe, dollar for dollar. Some business owners qualify for credits like:
- Self-employed tax credit: If you pay self-employment tax, you can deduct half of it.
- Qualified business income deduction (QBI): Many pass-through businesses (sole proprietors, LLCs, S-corps) can knock off up to 20% of their income, no paperwork gymnastics needed.
- Sick and family leave credits: If you paid yourself for sick or family leave under the rules that came out during COVID-19, there might still be money left to claim.
Always keep proof for every deduction—receipts, bank statements, even screenshots. The IRS wants evidence, not guesses. If you’re ever unsure, a tax pro can spot hidden savings or steer you clear of mistakes. The bottom line? Every legit business expense is a chance to cut your tax bill, so don’t ignore anything you spent for your business.
When to Get Help (and When You Can DIY)
Here’s the truth: not every business owner needs an accountant or tax pro right out of the gate. Some filings are totally manageable solo, especially if you’re running something small as a sole proprietor or single-member LLC. If your business is simple—say, selling crafts, freelance gigs, or running a one-person shop—you can handle most tasks with tax software or even free IRS tools.
But things get hairy fast if you have employees, tons of expenses, inventory, or started an S-corp or partnership. Once you’re juggling payroll taxes, special city or state taxes, or complicated deductions, it’s smart to talk to someone who’s handled it before. Did you know the IRS reported over 20% of small business tax returns had errors that cost the owner money or led to audits? That’s a headache nobody wants.
Ask for help if you:
- Formed anything more complex than a sole proprietorship (like an S-corp or multi-member LLC)
- Have employees or pay contractors and need to deal with payroll taxes
- Sell in multiple states or countries where taxes get complicated
- Want to claim tricky deductions or credits (like the home office deduction, vehicle use, or R&D credits)
- Are facing an IRS letter, audit, or owe back taxes
If none of those apply, and your records are solid, DIY tax filing is totally doable. There are good online tools made for small business owners. The real key? Stay organized and read instructions closely. Miss a line or skip a form, and it could mean paying more than you should—or getting a notice from the IRS. So, if you’re just getting started and your numbers are simple, feel free to file solo. But when your tax filing goes beyond basic, it’s worth the fee to call in a pro and save yourself a pile of stress.
