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All the Forms Small Businesses Need for the Tax Season

October 16, 2019
Small Business

Filing taxes and preparing tax returns is never a welcome task for individuals, and even less so if you are a business owner. There is no denying that running a business is difficult enough without adding the hassle and complexity of filing taxes every year. Experts say that the key is to work closely with your accountant or tax professional throughout the year, not just when you are preparing your tax return. This is the best way to stay abreast of changes in tax laws.

Keep in mind that as a small business owner, your tax obligations are more involved and greater, which means you are responsible for completing a number of IRS business forms throughout the tax year.

Pursuing your dream of running a small business and bringing your vision to life is certainly a fulfilling and aspirational endeavor; however, juggling all of the loose ends and completing the relevant tax forms for your small business can seem like too much of a hassle sometimes.

However, don’t worry as we have collected all the essential tax forms that small business owners have to know about and file if they would like to stay out of hot water with the IRS.

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Form SS-4

We will start at the beginning with a basic form. Note that Form SS-4 is used when you apply for an employer identification number (known as EIN) for tax filing and corporate reporting purposes.EIN is a unique, 9-digit number that is assigned to sole proprietors, employers, corporations, partnerships, trusts, estates, certain individuals, and other business entities.

While sole proprietorships, as well as single-person LLCs that have no employees, are not required to have an EIN, we would recommend that all business organizations complete form SS-4. This is because there are several benefits of getting an EIN, such as making it easier to manage all your personal and corporate finances.

Form I-9

According to the federal Immigration Reform and Control Act (IRCA), all employers must hire only those individuals who can legally work in the US. This is why, as an employer, you have to ensure proper and timely completion of Form I-9 for all individuals you hire within the US. In order to complete this form, your employees must provide you with all acceptable documents that provide reliable evidence of employment authorization and identity. Employees have to complete the first section of this form. Employers, on the other hand, must complete the second section and third section, if necessary. It is important that the information on the I9 matches payroll records if you have employees in your business.

Form W-9

In case your small business hires and works with contractors, not employees, a W-9 form will allow you to easily keep track of your external workforce. Note that contractors have a duty to complete Form W-9 in order to provide you with their Taxpayer Identification Number (TIN). This will allow you to report to the IRS on how much you pay them. The contractors you have hired fill out a Form W-9 so that you may report on the following:

 Income

 Mortgage interest

 Real estate transactions

 Acquisition and abandonment of secured property

 Contributions made to an IRA

 Cancellation of debt

Form W-2

As an employer, if you pay $600 or more each year for services rendered by an employee, you have to file a Form W-2 for each employee. Note that this form informs the IRS of the employee’s Medicare, Social Security, and income tax withheld in a calendar year.

Form 945

This is another important tax form for small businesses in the US. Form 945 is also called the Annual Return of Withheld Federal Income Tax. You should use the form to report federal income tax you have withheld from nonpayroll payments, such as:

 Pensions (like distributions from various tax-favored retirement plans)

 Annuities

 Gambling winnings

 Military retirement

 Voluntary withholding on specific government payments

 Backup withholding

Form 1065

This important tax form is used for partnerships for reporting their income, losses, gains, deductions, and credits, among others.  Before partners can file any profit or loss from their business in their individual tax return, they have to first submit Form 1065.

A partnership is also called a pass-through entity, which means any profit or loss has to “pass-through” to the partners through Schedule K-1 (Form 1065). Partners have to include partnership items on their respective income tax returns.

Form 4562

When your small business purchases property, the Internal Revenue Service doesn’t allow the business to claim the entire cost of the item as a tax deduction within the first year. The form is used for reporting depreciation on various assets, such as equipment, office furniture, motor vehicles, buildings and other property and assets used in your business.

However, instead of claiming the full amount, your business can deduct a certain portion of the asset’s cost by reporting depreciation or amortization on Form 4562.

The term depreciation refers to the gradual decline in the value of your tangible assets, such as a new piece of equipment, machine or a building, while amortization refers to the decline in the value of intangible assets, like patents and copyrights.

Form 941

This form is called Employer’s Quarterly Federal Tax Return and is a mandatory form for all small business owners with employees. Note that if your business pays anyone wages, you have to use Form 941 in order to notify the IRS of your workers’ taxable income and tax liability, and this should be consistent with the information on their W-2.

Your business is expected to submit Form 941 four times each year, at the end of January, April, July, and October. However, seasonal employees don’t require Form 941 if they don’t work the entire quarter.

Final Thoughts

The list of tax forms above is by no means an exhaustive one, and as a small business owner, you will have to determine what else you’ll be expected to complete and the amount you have to pay by the April 15th deadline. Halon Private Client can help take care of all your tax needs! We can prepare your personal and business return all in one place.

Christopher Ragain, CPA

Christopher Ragain, CPA is the founder of Halon Tax and one of the industries top authorities on micro-business taxation and tax planning.

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