As a business owner, it is important to understand your tax obligations at the federal, state, and local levels. Doing so will help ensure you file your taxes accurately and make required payments on time. Importantly, the business entity structure (e.g., LLC, S-Corp, Corporation) you choose when starting a business will determine what taxes you will pay and how you pay them.
All businesses, except partnerships, must file an annual income tax return. Partnerships file an annual information return (IRS Form 1065) to report income, gains, losses, and other important tax information. The specific type of return required to be filed depends on your business entity structure For more information about the tax consequences associated with the various business entity structures, see the Business Entities category in the FAQs below.
Additionally, almost every state imposes a business or corporate income tax, though each state and locality has its own unique tax laws. Check out the Small Business Administration's state-by-state lookup tool to find out the business income tax requirements in your state or territory.
Form 1120 is used by domestic corporations use to: (a) report their income, gains, losses, deductions, or credits; and (b) figure their income tax liability.
File a Form 1099-MISC for each person or entity you paid $600 or more to during the year in the course of your trade or business, including payments made to independent contractors and payments for rent.