As a business owner, understanding your federal, state, and local taxes is vital to your overall success. Knowing how and when to file reduces time spent navigating IRS forms — and helps you remain in legal compliance — so you can put more energy into running your business.
While all businesses must pay taxes, the specific taxes you owe and how you must pay them will depend on your business structure. In this guide, we break down everything you need to know about business taxes, from common business tax forms to this season’s deadlines.
What is an Employer Identification Number (EIN)?
An Employer Identification Number (EIN) is your business’s federal tax ID number. Most businesses require an EIN to file business taxes, but not all. According to the IRS, you need to apply for an EIN if any of the following items apply to your business:
- You have employees.
- Your business is a corporation or partnership.
- You have a Keogh (tax-deferred pension) plan.
- You withhold taxes on income paid to a nonresident alien.
- You file Employment, Excise, or Alcohol, Tobacco, and Firearms tax returns.
- You are involved with certain trusts, estates, real estate investments, nonprofits, farmers’ cooperatives, or plan administrators.
If you do require an EIN, you can apply for one on the IRS’s website.
Types of business taxes
The taxes you’re required to pay depend largely on two elements: the type of business you own and the state you do business in. According to the IRS, these are the different business taxes you can anticipate:
Income taxes
All business entities — aside from partnerships — must file and pay taxes on received income during the year. Nearly all states impose a business or corporate income tax, but each state has its own tax laws. As you prepare your business taxes for the year, make sure you understand your required income tax at the state and local levels.
Estimated taxes
Freelancers, solopreneurs, partners, and S corporation shareholders are expected to make estimated tax payments if they anticipate owing $1,000 or more when they file their return. Determining just how much you must pay every quarter can be confusing for new business owners. It’s important to get your estimation right as you can receive a penalty for missing or underpaying these taxes. Visit the IRS’s guide on estimated taxes to determine if this tax applies to your business and to help calculate how much you owe.
Self-employment taxes
The self-employment tax (SE tax) is a Social Security and Medicare tax that contributes to your coverage under the Social Security system. Social Security coverage provides you with retirement, disability, survivor, and Medicare benefits. Self-employed sole proprietors and independent contractors must file Schedule SE (Form 1040 or Form 1040-SR) to calculate and pay these taxes.
Employment taxes
If you have W-2 employees, you must file and pay certain federal taxes that include Social Security and Medicare taxes, federal income tax withholdings, and federal unemployment tax. Furthermore, each state requires specific state employment taxes, such as unemployment insurance and workers’ compensation insurance, so make sure you get all the information you need at your state’s department of taxation.
Excise taxes
These taxes are paid when purchases are made on certain goods, such as gasoline, and are often included in the price of the goods. Many different types of businesses are required to pay excise taxes, but fuel is usually a major component. Excise taxes are collected mostly from sales of motor fuel, airline tickets, tobacco, alcohol, and health-related goods and services. For a more complete list, visit the IRS’s page on excise taxes.
[Read More: 5 Types of Tax Forms Every Small Business Owner Should Know]
A note about the Employee Retention Credit
The Employee Retention Credit (ERC), also known as the Employee Retention Tax Credit (ERTC), is a refundable credit for businesses impacted by the COVID-19 pandemic. Eligible employers can retroactively claim the ERC on wages paid during specific periods in 2020 and 2021. If you’re unsure whether your business qualifies for this credit, visit the IRS’s ERC eligibility checklist.
The anticipated ERC application deadline for 2020 claims is April 15, 2024; for 2021 claims, it is April 15, 2025. However, though nothing is confirmed as of December 2023, there is a legislative proposal that seeks to accelerate the ERC deadline. Notably, a precedent exists for this, with the credit retroactively being shuttered in the third quarter of 2021 rather than the fourth quarter of 2021.
Additionally, the IRS has paused processing for ERC claims through the end of calendar year 2023. This pause aims to give the IRS adequate time and resources to manage the 3.6 million-plus claims already in the system, as well as to identify and investigate fraudulent claims. Businesses concerned about the accuracy of their already-filed ERC claims may now withdraw their claims without penalty or interest; however, legitimate businesses and tax providers acting in good faith are unlikely to face audits.
Filing tax forms
With an understanding of which taxes your business may be required to pay, you can familiarize yourself with the right forms. While most tax preparation companies and software packages provide the correct forms for you, it’s best to get acquainted with them so you can fill them out accurately and quickly when the time comes.
The IRS provides a thorough list of business tax forms and instructions, though if you’re not sure you have everything you need, you should consult a certified public accountant (CPA), professional tax preparer, or tax accountant.
If you run a sole proprietorship or operate your business as a single-member limited liability company (LLC), you will likely need to fill out a Schedule C (Form 1040) to report your business’s income and losses. In many cases, if you fill out a Schedule C form, you will also need to submit a Schedule SE (or self-employment tax) form. Schedule C is a simple business tax form at only two pages long. To complete this form, you simply list all the expenses you claim, then subtract your expenses from your earnings to find your net profit or loss. Finally, you transfer this number to your personal income tax form.
If your business is a corporation, or if you opt to treat your LLC as one, then you must prepare a separate corporate tax return on Form 1120 (or Form 1120-S for S corporations), which is the estimated tax form for corporations. Form 1120 is similar to Schedule C, as you calculate your business income the same way. However, this form is often more complicated because it requires more details than Schedule C, and you must file it separately from your personal income tax return.
With an understanding of which taxes your business may be required to pay, you can familiarize yourself with the right forms.
Here is a list of the common tax forms your business may be required to file depending on the type of business you own:
Annual return of income (partnerships)
Income tax
Schedule E (Form 1040), Supplemental Income and Loss (partnerships)
1120, U.S. Corporation Income Tax Return (C corporations)
Schedule K-1 (Form 1120-S) (S corporations)
Self-employment tax
Estimated tax
Employment tax
Social Security, Medicare taxes, and income tax withholding
W-2, Wage and Tax Statement (to employee)
W-3, Transmittal of Wage and Tax Statements (to the Social Security Administration)
Federal unemployment (FUTA) tax
For a more complete list of tax forms, consult a business tax professional or visit the IRS’s tax forms and instructions page.
Deadlines, extensions, and past due
If you don’t file your business taxes on time and become delinquent, you may face fines, penalties, and back taxes, so it’s important to know when they are due. Here are some of the most important business tax due dates for the upcoming year:
January 16, 2024
- Sole proprietors:
- File and pay quarterly estimated tax for the last quarter of 2023 using Form 1040-ES.
January 31, 2024
- All businesses:
- Deadline to provide information statements (for example, 1099-MISC, 1099-NEC, 1099-B, or 1099-S) to recipients of certain payments during 2023. See IRS General Instructions for Certain Information Returns.
- Deadline to provide employees with W-2 for 2023.
- Deadline to file Form W-3, Transmittal of Wage and Tax Statements, including copy A of all W-2s issued.
- File and pay Federal Unemployment Tax for 2023 using Form 940.
- File and pay any Withheld Income, Social Security, and Medicare Taxes for the fourth quarter of 2023 using either Form 941 or Form 944. If you made payments on time and in full, the deadline is February 10, 2024.
- Begin withholding income tax from any employee who did not give you a W-4 for 2023.
- Sole proprietors, in addition to the above may choose to:
- File and pay 2023 income tax if you did not make a final quarterly payment of estimated income tax for 2023 by the due date of January 16, 2024. Filing and paying any amount due by this date will avoid a penalty for late payment. Use Form 1040 or Form 1040-SR. File a separate Schedule C for each business or a separate Schedule F for each farm business.
February 15, 2024
- All businesses:
- Provide information statements to recipients of certain payments during 2023 for Forms 1099-B, 1099-S, and 1099-MISC.
- Begin withholding income tax from any employee who did not give you a W-4 for 2023. Form W-4 indicates the amount of tax you should withhold for an employee, based on personal circumstances (e.g., filing status, the number of dependents in their household, and whether they hold a second job).
February 28, 2024
- All businesses:
- If filing by paper, submit information returns for payments made in 2023 (certain Forms 1099). Use Form 1096 to summarize and transmit these payments. See General Instructions for Certain Information Returns.
March 15, 2024
- Partnerships:
- File 2023 income tax return using Form 1065.
- Provide each partner with Schedule K-1 (Form 1065).
- If needed, file Form 7004 to request an automatic six-month extension on your 2023 income tax return.
- S corporations:
- File 2023 income tax return using Form 1120-S and pay any tax due.
- Provide each shareholder with Schedule K-1 (Form 1120-S).
- If needed, file Form 7004 to request an automatic six-month extension. Pay estimated taxes owed.
March 31, 2023
- All businesses:
- If filing electronically, submit Form 1099 and similar forms. For additional information, see IRS Publication 1220.
April 15, 2024
- Sole proprietors:
- File and pay your personal income tax using Forms 1040 or 1040-SR. File a separate Schedule C for each business or a separate Schedule F for each farm business.
- For an automatic six-month extension, file Form 4868. Pay any estimated taxes owed.
- If income was more than $400, pay self-employment tax. Use Form 1040 or Form 1040-SR, Schedule SE.
- File and pay first quarter 2023 estimated income tax using Form 1040-ES.
- Corporations:
- File income tax return for 2023 using Form 1120. Pay any tax due.
- If needed, file for an automatic six-month extension using Form 7004. Deposit estimated taxes.
- Deposit first quarter estimated income tax for 2023 using Form 1040-ES.
April 30, 2024
- All businesses:
- File and pay withheld Social Security, Medicare, and income tax for the first quarter of 2024 using Form 941. If you made payments on time and in full, the deadline is May 10, 2024.
- Deposit Federal Unemployment tax if the amount owed through March is more than $500.
June 17, 2024
- Sole proprietors:
- File and pay second quarter 2024 estimated income tax using Form 1040-ES.
- Corporations:
- Deposit second estimated income tax payment for 2024.
July 31, 2024
- All businesses:
- File and pay withheld Social Security, Medicare, and income tax for the second quarter of 2024 using Form 941. If you made payments on time and in full, the deadline is August 10.
- Deposit Federal Unemployment tax if the amount owed through June is more than $500.
- If you have an employee pension, profit-sharing, or stock bonus plan, file Form 5500 or Form 5500-EZ for 2023.
September 16, 2024
- Sole proprietors:
- File and pay third quarter 2024 estimated income tax using Form 1040-ES.
- Partnerships:
- File 2023 income tax return using Form 1065 if you requested a six-month extension.
- S corporations:
- File 2023 income tax return using Form 1120-S if you requested a six-month extension.
- Provide each shareholder a copy of Schedule K-1 Form 1120-S.
- Corporations:
- Deposit third installment of estimated income tax using Form 1040-ES.
October 16, 2024
- Sole proprietors:
- If you filed for a six-month extension of income tax, file and pay using Forms 1040 or 1040-SR. File a separate Schedule C for each business or a separate Schedule F for each farm business.
- Corporations:
- If you filed for a six-month extension of income tax, file and pay using Form 1120.
October 31, 2024
- All businesses:
- File and pay withheld Social Security, Medicare, and income tax for the third quarter of 2023 using Form 941. If you made payments on time and in full, the deadline is November 10.
- Deposit Federal Unemployment Tax if the amount owed through September is over $500.
December 15, 2024
- Corporations:
- Deposit estimated income tax for the fourth quarter of 2023 using Form 1040-ES.
[Read more: What Are Estimated Tax Payments For Businesses?]
Determining which dates apply to your business, adding in your state and local deadlines, and setting reminders will help your business avoid costly penalties and help you avoid unnecessary worry.
While preparing your business taxes can be overwhelming and time-consuming, investing the time to prepare, calculate, and plan your taxes can help you make smart business decisions and avoid hefty penalties and fees. If you’re not comfortable working on your business taxes alone, consult a CPA or other business tax professional.
This article was originally written by Sean Peek.
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