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Owning a small business in the United States can be intense, especially during tax season. Despite the predictability of the taxes, dealing with them remains a challenge. It involves filing dozens of numbered paperwork, complex accounting software, and unfamiliar tax terminology. However, the tension doesn’t just come from the filing of the taxes; it also comes from the nationally imposed dates for paying these taxes, which attract penalties when they are paid late. In other words, Tax season is a very stressful time, to say the least – and it’s even more stressful if you’re unfamiliar with the tax forms you need to fill – hence, here’s a comprehensive look at nine tax forms young business owners need to know about:Are you a young business owner? Here are the nine most important tax forms you need to know about! Click To Tweet
1099 NEC form
Corporations use the 1099 NEC form to indicate how much they paid their independent contractors, freelancers, sole proprietors, and self-employed individuals within a financial year.
This form which was initially replaced, was resurrected to correct the filling issues of form 1099-MISC. To clarify, it addressed the flaws of form 1099-MISC, which was used to perpetrate fraud by some young business owners.
The Federal Unemployment Tax Act (FUTA) tax is reported on Form 940.
Employers only pay this tax. In conjunction with state unemployment tax systems, the FUTA tax helps to pay for unemployment benefits for people who lost their jobs because of something they couldn’t control.
Each employer’s contribution to this initiative is determined by Form 940. As an employer, you are only expected to file Form 940 once a year, but you pay your FUTA taxes every quarter of a financial year.
Employees file this form to instruct their employers on how much tax they should withhold from their paycheck.
The Form W-4 determines the amount withheld by the employer. If you have employees, it is crucial that you strictly obey and follow the form’s instructions.
This form is also known as schedule C. It records the amount of money your business made and lost within a financial year.
The type of business enterprise you run will determine how frequently you must fill Form 1040. For example, a sole proprietorship files the form once a year.
The IRS uses this tax form to calculate the social security and medicare tax of self-employed individuals.
This tax form is also known as the Expenses for Business Use of Your Home. It is filed by business owners or self-employed individuals who use their homes as their workspace.
Form 8829 has specific rules for filing laid down by the IRS, so before you file one of these forms, make sure you consult a tax professional to see if you’re eligible.
New business owners or self-employed individuals use this form to apply for an EIN (employer identification number).
The EIN is the number the IRS allocates to young business owners, sole proprietors, and partnerships for tax filing and paying purposes. In short, this unique nine-digit number is what the government uses to identify your business.
This tax form is also known as the U.S. Corporation Income Tax Return. It is filed by businesses that have been classified as regular corporations.
Form 1120 must be filed annually.
This form is also called the U.S. Return of Partnership Income.
It applies only to businesses registered as partnerships or LLCs (limited liability companies). These young business owners use it to file their profits, losses, deductions, and credits for a financial year.
Final Thoughts Tax Forms for Young Business Owners
As a young business owner, it’s important to be aware of the different tax forms you may encounter throughout the year. Knowing about these forms and what they entail can save you time and money when filing your taxes. We hope this article has been helpful in outlining some of the most common tax forms for young entrepreneurs.
Do you know how to file taxes for a small business owner?
Krystle Cook – the creator of Home Jobs by MOM – put her psychology degree on a shelf and dived into a pile of diapers and dishes instead. She is a wife and mother to two rambunctious boys, sweating it out in her Texas hometown. She loves cooking, DIY home projects, and family fun activities.