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Common Questions about Small Business Taxes
If you're facing an audit or filing taxes for the first time, complete our free Small Business Tax Worksheet that guides you to help and resources that you might need.
Most likely, yes. If you are self-employed and you earned more than $400 in net income, then you are required to file a tax return. This is true for anyone who is fully or partially self-employed, regardless of whether you received a 1099 form for your work. In some cases, you still have to file even if you made less than $400. A tax professional can provide guidance specific to your situation.
The payment amount and schedule will depend on how your business is legally structured (e.g. LLC, S- or C-Corporation, LLP, etc.) and how much net income the business earned. If you have not consistently filed tax returns for an existing business or if you have received an IRS notice, it may be wise to talk to a lawyer.
If you expect to owe more than $1,000 in self-employment taxes, then you'll need to make estimated tax payments quarterly. Even if you don't expect to meet the threshold for quarterly payments, you most likely still need to file a tax return.
There is no specific formula used for calculating how much a small business can make before paying taxes. The legal structure of the business and other factors such as allowable business expenses and special deductions will all be considered when determining the tax payment amount. A few examples of business expense deductions can include office supplies, business meals, or work-related travel expenses.
The method of filing will differ based on the legal structure of your business. For instance, LLCs most often report their business income using Form 1040 while S-Corporations might use Form 1120S. You can file your taxes independently or work with an accountant or CPA who will prepare them on your behalf. Check out the Rocket Lawyer Tax Legal Help Center to find special offers on small business tax preparation and bookkeeping services from our partners.