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Starting or Ending a Business

Question: I just started a small business and want to know if I have to file my income taxes quarterly or at the end of the year?

Answer:

The federal income tax return is filed annually, but the federal income tax system is a pay-as-you-go system.

If your business is a sole proprietorship or an unincorporated single member LLC with you as the sole owner, the income is attributable to you personally.  If your business is a partnership, an unincorporated multi-member LLC, or an S corporation; the ordinary business income passes through to members and is attributable to him or her on their personal return.

After deducting any withholding and refundable credits, if you expect to owe more than the amount allowed by law at the end of the year:

  • You should make estimated tax payments on a quarterly basis.
  • Form 1040-ES (PDF), Estimated Tax for Individuals, will assist you in determining if estimated tax payments are due and how they are paid.

When you file your income tax return at the end of the year:

  • Include the income from the business on your Form 1040 (PDF), U.S. Individual Income Tax Return, Schedule C (Form 1040) (PDF), Profit or Loss from Business, Schedule E (Form 1040) (PDF), Supplemental Income and Loss, and Schedule SE (Form 1040) (PDF), Self-Employment Tax.
  • If you made estimated tax payments during the year, claim them on your individual income tax return as a payment.

Generally, all other corporations must make installment payments if they expect their estimated tax for the year to be $500 or more. All corporations, except for most S corporations, will use Form 1120-W (PDF), Estimated Tax for Corporations, as a worksheet to figure each required installment of estimated tax.

Additional Information:


Category: Small Business, Self Employed, Other Business
Subcategory: Starting or Ending a Business

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224