Starting or Ending a Business

When you’re running a business, you don’t need to be a tax expert, but you do need some tax basics. We give you the information you need to stay tax compliant, so your business can thrive. Put our knowledge to work for you:

• A good place to begin is the Starting a Business page.
• The Small Business and Self-Employed Tax Center has information on taxes, recordkeeping, accounting practices, completing federal business and employment tax returns, and meeting other federal tax obligations.
• The Small Business Tax Workshop offers a series of virtual lessons to help you learn about your tax rights and responsibilities.
• Subscribe to e-News for Small Businesses for our free electronic mail service to provide timely tax information to small business owners and self-employed individuals.
• Bookmark our Online Learning and Educational Products page. Choose products such as the customizable Online Tax Calendar and the IRS Video Portal for video and audio presentations on a variety of topics to help you learn even more about business taxes on your own time and at your own pace.

Your question is a state tax question. Your state revenue department should provide information regarding sales tax to you. See State Government Websites for more information.

Certain businesses may have to collect particular federal excise taxes, and then report the tax on Form 720, Quarterly Federal Excise Tax Return and deposit the amounts collected. See Publication 510, Excise Taxes.

You file a federal income tax return annually, but the federal income tax system is a pay-as-you-go system. There are two methods for paying-as-you-go: withholding and estimated tax. Refer to Publication 505, Tax Withholding and Estimated Tax.

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 and must be reported on your individual income tax return. If your business is a partnership, an unincorporated multi-member LLC, or an S corporation, the ordinary business income passes through to the partners, members or shareholder(s) and is attributable to them and must be reported on their personal income tax returns.

If you owe more tax at the end of the year after taking into account any withholding on other income, deductions, and credits, you may have to pay an underpayment penalty. You should make quarterly estimated tax payments and/or increase the withholding on other income subject to withholding.

Form 1040-ES, Estimated Tax for Individuals includes instructions to assist you in determining if you need to make estimated tax payments, provides their due dates and explains how to pay them. You can also use our online tool, Am I Required to Make Estimated Tax Payments?

When you file your individual income tax return each year:

• Include the income from the business on your Form 1040, U.S. Individual Income Tax Return and the appropriate schedule(s): Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship); Schedule E (Form 1040), Supplemental Income and Loss; and/or Schedule SE (Form 1040), Self-Employment Tax.
• If you made estimated tax payments during the year, report 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.

Entities which do not pay estimated tax installments when they are due may be subject to an underpayment penalty (estimated tax penalty). For more information, see the related instructions for the income tax form filed.

• Publication 542, Corporations
• Publication 583, Starting a Business and Keeping Records
• Publication 541, Partnerships
• Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C)
• Small Business and Self-Employed Tax Center

Some business entities' income tax returns have due dates other than April 15. The instructions for each type of form note the appropriate due date:

• A sole proprietor's Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) and an individual farmer's Schedule F (Form 1040), Profit or Loss From Farming are attached to Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors. Therefore, the due date is the 15th day of the fourth month following the end of the tax year. This date is April 15 for calendar year taxpayers.
• Most partnerships use the calendar year, but other tax years are permitted. The partnership tax return is generally due by the 15th day of the third month following the end of the tax year. See the Instructions for Form 1065, U.S. Return of Partnership Income.
• Most S corporations use the calendar year, but other tax years are permitted. The due date is the 15th day of the third month following the end of the tax year. See the Instructions for Form 1120-S, U.S. Income Tax Return for an S Corporation.
• A corporation that's not an S corporation may use either the calendar year or a fiscal tax year. The corporate tax return is generally due by the 15th day of the fourth month following the end of the corporation's tax year. However, a corporation with a fiscal tax year ending June 30 must file by the 15th day of the third month after the end of its tax year. See the Instructions for Form 1120, U.S. Corporation Income Tax Return for due dates and exceptions to due dates.

Note: For any due date that falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. The term “legal holiday” means any legal holiday in the District of Columbia. Refer to Publication 15 (Circular E), Employer’s Tax Guide, Section 11, Depositing Taxes – Deposits Due on Business Days Only.

• Publication 542, Corporations
• Publication 541, Partnerships
• Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C)
• Small Business and Self-Employed Tax Center

Yes, see Closing a Business.

• Small Business and Self-Employed Tax Center