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Starting a Business All-In-One For Dummies by Consumer Dummies

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Chapter 5

Satisfying the Tax Man

In This Chapter

  • Filing sole proprietor taxes
  • Reporting taxes on partnerships
  • Filing taxes for corporations
  • Reporting and paying sales taxes

Paying taxes and reporting income for your company are very important jobs, and the way in which you complete these tasks properly depends on your business's legal structure. From sole proprietorships to corporations and everything in between, this chapter explains how taxes are handled for each type. You also get some instruction on collecting and transmitting sales taxes on the products your company sells. (See Book II Chapter 6 for in-depth information on what's what with all the different forms of business structure and for choosing the right legal structure for your business.)

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Go to www.irs.gov to see the latest and greatest versions of the federal tax forms discussed in this chapter.

Tax Reporting for Sole Proprietors

The federal government doesn't consider sole proprietorships to be separate and distinct legal entities, so they're not taxed as such. Instead, sole proprietors report any business earnings on their individual tax returns — that's the only financial reporting they must do for income tax purposes.

Most sole proprietors file their business tax obligations as part of their individual 1040 tax return using the additional two-page form Schedule C, Profit or Loss from Business. On the first page ...

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