The Most Common Tax Forms For Small Business Owners

2020 was a very different year for most of us—so much so that the IRS has officially pushed back the deadline for filing your 2020 taxes from the traditional April 15th to May 17th. 

However, some things, like the forms business owners need to file their taxes, haven’t changed. If you’re doing basic accounting for a small business, trying to juggle all those tax forms in the spring can be a full-time job. But it gets a whole lot easier if you know what you’re looking for and what you need to do with each form. 

With that in mind, here’s a guide to some of the most important tax forms you’ll need to keep an eye out for, whether you’re a sole proprietor or have dozens of people on your payroll. 

Tax Forms For Small Business Owners

Form W-2
  • The official name of the W-2 form is the Wage and Tax Statement, and if you pay any employee more than $600 in a given year, then you owe them a W-2 form by January 31st of the following year, at the latest. The IRS requires employers to submit these forms for each employee, and they report on both wages and withholdings, making them extremely important for both you and your employees. 
Form W-3
  • If you sent out W-2s at the end of the year, you’ll also need a W-3 form. This form lists the total wages, tips, commissions, and any other compensation you gave to your W-2 employees throughout the year. 
Form 940
  • If you own a business with employees, then you also need to pay unemployment taxes. And the Employer’s Annual Federal Unemployment Tax Return, also known as Form 940, is the form you’ll use to calculate those taxes. You’ll be required to file this form if you paid one or more employees for 20 or more weeks over the course of the year, or if you paid out more than $1,500 in wages during the same year. So, for most business owners with employees, this form is a must. 

Tax Forms for the Self-Employed

Schedule C
  • If you’re a freelancer, independent contractor, or consultant, this form is where you report your profits or losses from the tax year you’re filing. You’ll also be able to use this form to deduct business-related expenses, like work-related travel, advertising, home office expenses, or insurance. 
Form 8829
  • Work from home? Form 8829 is the Expenses for Business Use of Your Home form, and if you’re doing the accounting for your small business this is the form you’ll use to find home office-related expenses that you can then report on your Schedule C. 
Schedule SE
  • If you’re employed, your employer will pay half of what’s known as the FICA tax, which includes your Medicare and Social Security taxes. However, if you’re self-employed, then you have to pay both halves of this tax, and you’ll use the Schedule SE form to figure out how much you owe. 
  • If you’re a salaried employee, you don’t really have to think about paying taxes throughout the year because they’re withheld from your paycheck. However, self-employed individuals don’t have the luxury of automatic withholding, and the IRS would still like them to pay taxes throughout the year. Form 1040-ES is used by self-employed individuals to estimate their yearly taxes at the beginning of each year. Then, throughout the year, the IRS expects you to make quarterly payments, essentially the self-employed version of withholding. 

Tax Forms for Both Business Owners and the Self-Employed

1099 forms

There are a few different types of 1099 forms, but they’re all used for the same thing. If a person or entity who is not your employer paid you money last year, they owe you 1099, and you should have received it by February at the latest.

So, if you worked as a freelancer or an independent contractor last year, you may have received a 1099-MISC or a 1099-NEC from your clients. Even if you were issued a W-2 as a full-time employee elsewhere, if you did any freelance work on the side, you can still expect to receive a 1099 form for that income. 

Keep in mind, if you’ve received one of these forms, the IRS knows you were paid that money from your client and expects to see it reported on your tax return. 

On the other hand, if you operate a business and paid independent contractors for work throughout the year, you’ll need to send these forms to your contractors. 

Tax time doesn’t have to be stressful. If you need help with accounting for a small business, then contact AG FinTax today and let our tax pros handle everything. 

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