As a small business owner, one of your key responsibilities will be ensuring your business stays compliant with tax regulations, which may get quite hectic.
Unfortunately, figuring out the IRS tax filing rules can be tricky, but complying with them will ensure your business stands on the right side of the law.
This is an insightful article discussing the IRS Tax Filing requirements for small businesses in the USA and how Easyfiling can help you with each of these steps.
1. Identify Your Business Model
The IRS has differing rules for different business structures, the first thing you will need to figure out is how your business is structured. The structure you select will determine the taxes owed, how returns are filed, and which forms to submit. Below are the various business structures:
Sole Proprietorship: This is virtually the easiest form of doing business. It’s just a single person who owns and runs the business and reports business income on a personal tax return through Schedule C (Form 1040). A sole proprietorship is not a separate legal entity, meaning the owner assumes all business debts and obligations personally.
Partnership: A partnership is formed by a minimum of two individuals. A partnership does not pay income taxes directly, but instead submits an information return (in the form of 1065) annually. Rather, income is allocated to the partners, who are then responsible for reporting it in their tax filing. Every partner is given a schedule K-1 to account for the profits or losses that were attributed to them.
Limited Liability Company (LLC): An LLC allows members and owners to protect themselves from personal liabilities. Whether it is a single-member or multi-member LLC determines how the business will be taxed. LLCs can be taxed as sole proprietorships, partnerships, or corporations. LLCs have to file a Form 1065 (as a partnership) or have the option of being taxed as an S Corp or C Corp.
Corporation: A Corporation is distinct from its owners and possesses its legal status. We can distinguish between 2 forms of corporations:
- C Corporations (C Corp): These corporations incur taxes separately from the owners. They complete tax declaration form 1120 as their self-return. The owner’s taxes correlate to the dividends they get and thus a C Corp faces double taxation.
- S Corporation (S Corp): This business structure gives the shareholders the freedom to report the profit in their returns which helps them escape the double taxation that C Corps deals with. With S Corps, shareholders are also provided with Schedule K-1. The Form 1120S is filed by S Corps.
Comprehension of your business structure is the first step to knowing the forms needed for IRS filing. At Easyfiling, we will guide you through this, selecting optimal solutions and deciding the most suitable business structure for your needs and aims.
2. Applying for an Employer Identification Number (EIN)
It is known as a Federal tax ID as well Employer Identification Number (EIN) is used by most businesses such as corporations, partnerships, LLCs, and even employers. If you don’t employ anyone and you are a sole proprietor, you might still need this number. An example is if you have a Keogh plan, or if you wish to file certain tax forms.
You can apply for an EIN directly on the IRS website, but a lot of small business owners find it cumbersome. Easyfiling takes away this burden by applying for the EIN in your name and ensuring that all forms are adequately filed.
3. Document and Report Business Income
No matter the source or amount of the business income, small firms need to report it. The IRS assumes that businesses keep thorough records, which means maintaining reports on:
- Sales Revenue: within a given time range, the income received from the sale of goods and services.
- Interest and Dividends: the returns on investment and/or earned on savings accounts.
- Rental Income: income earned when the enterprise owns property that is leased out.
- Other Sources: grants, awards, and any other form of income that is generated from non-operating activities.
Investments must include a diversified pool of assets, as it will help reduce tax obligations and maximize deductibles. It is advised to separate business expenses from personal ones from the very beginning, as this greatly aids in accurate bookkeeping.
4. Self-employment Taxes
The tax system of the United States covers both federal self-employment tax, in addition to Social Security and Medicare. If you have a business as a sole proprietor, if you are a partner, or if you are an LLC member, chances are you will incur those taxes.
Self-employment tax obligations are reported on Schedule SE which gets filed alongside Form 1040. The self-employment tax rate stands at 15.3% for the 2025 tax year which is further divided into the following:
- 12.4% for social security
- 2.9% for medicare
If income crosses a certain limit, there could be a 0.9% additional tax on health care too.
5. As an employer, taxes need to be deducted from employees.
If you have employees on the payroll, as an employer, you have to withhold federal income tax, social security, and Medicare taxes from their salaries and send these to the IRS every quarter via payroll tax submission.
Some of the key documents needed are:
- Form 941 for quarterly payroll tax submission.
- Form 944 enables businesses with lesser obligations to file it once a year.
Don’t forget the employer part, there is a need to also pay the social security and medicare contributions that the employees give. To deposit payroll tax payments, use the Electronic Federal Tax Payment System (EFTPS) and remember to submit payments promptly to avoid fines.
6. Sales Tax
When it comes to selling tangible goods or certain services, you may need to raise sales tax with your client. Similarly to the collection of sales tax, each state has its varying rules thus requiring you to pay a visit to your state’s authority to gather more information.
There is no nationwide sales tax, but businesses working in the aforementioned states will have to submit sales tax returns at the state level alongside federal income tax returns.
7. Deductions and Credit
Tax deductions for small businesses can be very useful in bringing down your taxable income. Employee business deductions can include the following:
- Office Expenses: Rent, utility costs, office supplies.
- Travel and Meals: Airfare, lodging, and meal expenses incurred during a business trip.
- Employee Wages: Paid wages and salaries alongside benefits given to employees which includes retirement plan contributions.
- Depreciation: Certain office equipment like furniture, computers, and vehicles used by the business can be depreciated and deducted.
Moreover, small and other businesses that meet the qualifications can gain beneficial tax credits such as the Research and Development (R&D) Tax Credit which boosts innovative ideas, or the Work Opportunity Tax Credit (WOTC) which can encourage the hiring of particular groups of people.
8. Deadlines for Filing Returns
For various business structures, the filing of tax returns has its deadlines.
Partnerships, Sole Proprietors, LLCs, and S Corporations: The deadline remains the same as individual returns, April 15. If an extension applies, ensure you check the deadline.
Corporations: Form 1120 (C Corporation) returns filed by Corporations with Calendar Years mostly have an April 15 deadline, whereas all others must submit theirs within the 4th month of the precisely fixed fiscal year.
Staying on track with the filing deadlines is imperative, as failure to do so renders one vulnerable to interest and penalties for taxes still outstanding.
9. Estimated Tax Payments
If the little business produces a good amount of revenue, the IRS obliges them to exercise a quarterly estimated tax payment system. This payment mode allows the user to settle dues every April, June, and September, and the following January. Form 1040-ES denotes all estimated taxes to be settled and in practice.
Underpayment penalties are non-existent for estimated taxpayers, and being compliant with the IRS is paramount for any business.
How Easyfiling Can Help with IRS Tax Filing for Small Businesses
Easyfiling is a platform made to assist small businesses that find filing taxes overwhelming because it simplifies the whole process. Here is how Easyfiling does it:
IRS Tax filing in business structures: Easyfiling supports entrepreneurs in filing ABC taxes on Sole proprietor businesses, partnerships, LLCs as well Corporations. Easyfiling guides clients step by step in filing their taxes. All forms are prepared and filed in compliance with IRS standards and requirements.
EIN registrations: Easyfiling does file and apply for an Employer Tax identification number (EIN) on your behalf. This is done to make sure we commence our tax filing from a solid position.
Tax Reporting: Easybookkeeping services make sure all income and expenses are recorded and reconciled in preparation for tax reporting.
Payroll Taxation: Companies using easy filing and having employees are guaranteed proper management of taxes. Employees’ taxation filing forms 941 or 944 are done punctually and properly.
Filing Quarterly Estimated Taxes: Easyfiling can help you in calculating and filing your quarterly estimations tax payments so that you stay compliant throughout the year.
With Easyfiling, you can spend more time growing your business instead of worrying about the hectic tax filing deadlines as we take care of every detail from filing to compliance. We do this to ensure that you remain compliant, and at the same time reduce the taxes you pay.
Nabin Adhikari
