5 Things to Know About Business Tax Forms

DBabbage | April 27, 2022 | 0 | More of the Richest People

Small businesses have tax compliance costs that are 67% higher than large corporations. The filing of business tax forms costs about $74 per hour.

It puts a big burden on small business owners to understand IRS tax forms. We’re about to help take that burden off your shoulders.

Read on to learn five important things about the business tax forms you may need to file.

1. Employee Tax Forms

Hiring employees adds new responsibilities to your shoulders. You’ll need to be prepared for them. It starts with your onboarding processes.

You’ll need to have new hires fill out Form W-4. This tells you how much you should withhold for taxes. If employees aren’t sure how much should get withheld, have them try the IRS withholding calculator.

Form I-9 also needs to be on file because it verifies if an employee is legally able to work in the United States.

Are you hiring contractors? You’ll have them fill out Form W-9. This asks to verify the tax ID number of the contractor.

2. Tax Forms for Estimated Payments

Self-employed workers don’t have an employer to withhold taxes. They have to do it themselves and make quarterly payments to the IRS.

Individuals who have taxable income (anything above $400) and will owe more than $1,000 in taxes have to pay estimated taxes. This is done using Form 1040-ES.

3. End of Year Tax Forms

There are IRS tax forms that you have to use at the end of the year to distribute to the IRS, employees, and contractors.

The main forms are W2 forms and 1099s. What’s the difference between W2 vs. 1099? A 1099-MISC gets sent to contractors, while a W2 gets distributed to employees.

Click here to learn more about the different types of 1099s and their deadlines.

4. Forms for Filing Taxes

When it’s time to file your annual business tax returns you want to use the right business tax forms. What you need depends on the type and structure of your business.

For instance, a sole proprietor only needs to file form 1040 and report business income on form Schedule C. S-corporations use 1120-S.

5. What Happens When You Use the Wrong Business Tax Forms

Business taxes are confusing and there are hundreds of different business tax forms. It’s easy to make mistakes and file the wrong tax forms with the IRS.

If this happens, you want to fix the mistake as soon as possible.

You’ll need to amend your tax return and file it with the IRS. You may want to hire a tax professional to handle this to ensure you have the correct forms.

If you don’t catch the mistake and the IRS does in processing, there may be penalties and interest assessed on your tax bill.

Understanding Business Tax Forms

Business tax forms are a critical part of tax compliance. Knowing which IRS tax forms need to get filed and when helps you stay out of tax trouble.

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