Many small business owners use a sole proprietorship which allows them to report all of their business income and expenses on a Schedule C attachment to their personal income tax return. You always need to report your business earnings to the IRS and pay tax on them, but choosing the right form to report earnings on depends on how you operate your business. Step 2-Find the right formĭetermine the correct IRS tax form. TurboTax works with programs like QuickBooks and Quicken, so you can import information directly into your tax return.
If you use a computer program or a spreadsheet to organize and keep track of all transactions during the year, calculating your income and deductions is much easier than trying to remember every sale and expenditure that occurred during the year. Before filling out any tax form to report your business income, you should have all records in front of you that report your business earnings and expenses. TurboTax has two products to serve business owners- TurboTax Home & Business is designed for sole proprietors and 1099 contractors, while TurboTax Business helps you prepare taxes for corporations, partnerships and LLCs. Regardless of the form you use, you generally calculate your taxable business income in similar ways. When it’s time to file a federal income tax return for your small business, there are various ways you can do it, depending on whether you run the business as a sole proprietorship or use a legal entity such as an LLC or corporation.Įach type of entity requires a different tax form on which you report your business income and expenses.
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