Running a business is complicated, and filing business taxes adds another level of challenge. Even the simplest one-person businesses typically need to file three additional forms with their federal returns, and typical small businesses will frequently have to generate even more paperwork, just to comply with the federal government’s requirements.
1040 Schedule C
- The basic reporting form for sole proprietorships and LLCs that are run by a sole proprietor is the “Profit or Loss From Business” form known as Schedule C to the Form 1040 individual income tax return. Schedule C allows you to report your business’ sales and expenses, break down your cost of goods sold and provide basic vehicle information, which could save you from having to additionally file Form 4562.
1040 Schedule SE
- If your business is profitable and operating as a pass-through entity, such as a sole proprietorship, S corporation, LLC or partnership, you will have to pay self-employment tax. Self-employment tax is the combination of your share and the employer’s share of FICA — tax for Social Security and Medicare. You compute and report this tax on Schedule SE to your 1040.