Getting started on a new business is an exciting endeavor that comes with a decent amount of paperwork as well. Especially if your company involves employees and payroll, you’ll need to get started on the right footing by understanding which IRS forms are appropriate for your circumstances, as well as making sure you disclose information about expenses, employee benefits, and contact information for your business.
While there might seem like a lot of IRS forms, remember that your particular business may only require a few of these forms. Filing the correct IRS forms helps you avoid having to deal with audits and other scrutinies. Read on to learn which IRS forms and paperwork are relevant for your new business.
IRS Forms to Get You Started: Choosing a Business Organization Structure
Before you can determine which IRS forms are relevant, you need to choose a business structure. To begin your business, you’ll have to select what kind of organization you will have. Common business structures include sole proprietorships, where a single person becomes self-employed without any other owners of the business.
You may also form a partnership, an organization that lets two or more individuals organize their shared ownership of a company.
When you move into the world of LLCs and corporations, you are creating an entity outside of yourself and your fellow owners, one that comes with specific additional benefits and responsibilities. An S Corporation, versus a default C Corporation, maybe the right entity for you if you plan to have fewer than 100 shareholders and want to use it as a pass-through entity rather than filing separate corporate tax returns.
A tax professional can help you not only choose what organization you want for your business, given your plans for the future but also can help you file the IRS forms you need to get started. Here are some of the documents you might have to use.
- Getting your EIN: This key form helps you get the number you’ll need to be able to track payments to employees and contractors.
- Estimated Tax Forms (for sole proprietors and other individuals as well as for corporations): Because businesses must estimate their tax payments throughout the year, this form allows you to submit each of those four required payments.
- IRS forms for sole proprietorships
- IRS forms for partnerships
- IRS forms for corporations
- IRS forms for S Corporations
- IRS forms for LLCs
- IRS forms to pay Employment Taxes: This site gives you information on the payroll-related taxes that self-employed individuals must pay and that employers pay for their employees. This can help you set compensation correctly and pay your own taxes as well.
- Information Return guidance: This section gives you insight into whether and how you should file information returns (1099s of various kinds), which acknowledge payments made to contractors, royalties, dividends, distributions, and other potential payments. They report financial information and are part of your tax filing as a company or self-employed individual.
Reporting Your Business Income For Tax Purposes
Each business organization has a different tax return process, and learning the one most relevant to your new business is key. Sole proprietorships, for instance, attach the Schedule C to a personal tax return, while corporations must submit a separate tax form for their business. Connected to these forms are the special cases where you might need to report the depreciation of business assets, recognizing that it impacts your profit or the ways you can report expenses if one of your major business expenses is also your personal home.
- Schedule C, Profit or Loss From a Business Sole Proprietorship: This form is where you itemize the money that came into your business and the expenses required to run the business. The Schedule C allows you to clearly outline whether your company made money (profit) or lost money (loss) this year, which determines what taxes are due.
- Schedule F, Profit or Loss From Farming: Specific rules govern your farming business, so if you’re farming, you’ll need this form.
- U.S. Return of Partnership Income: Because partnerships are pass-through entities, this form allows you to account for your income on each partner’s individual income tax return.
- U.S. Corporation Income Tax Return: Unlike sole proprietors, corporations will need to submit their own, separate tax form.
- U.S. Income Tax Return for an S Corporation: If you’ve chosen an S corporation as your form of business organization, this form is necessary to report things like profits, losses, income, deductions, and expenses.
- Form 4562 for Depreciation and Amortization: For both loans and assets that depreciate and are held in your business’ name, you can report using these IRS forms as a form of a business expense. Your trustworthy tax professional can help you make sense of depreciation, even if you’ve not used this tax optimization strategy before.
- Form 8829 for Business Use of Your Home: Since some businesses are run out of home offices, there needs to be clear guidance about how your home can be a personal expense as well as a business expense. This document helps you clearly delineate which portion of your home expenses are for business and which part are for personal time.
Additional IRS Forms for Business Reporting and Tax Situations
The IRS assists new business owners through a variety of helpful information that may or may not apply to your business. First, they offer a clear list of all the websites for the administration of state taxes, which helps you get started on reporting your new business’ income and expenses to your own state, as well as forms that might be useful to you for situations like a change of address or filing for a replacement social security card.
- State Tax, Forms, and Information: This list connects you to the official website of your state’s tax office, helping you learn about the unique business tax situations you might have in your individual state. Silver Tax Group can help you make sure that you know about any unusual laws in your state as well, as well as handle any unfiled tax returns.
- Form SS-5, Application for a Social Security Card: Whether you’re applying for your first social security card or requesting a replacement for a lost one, this document gives you guidance that helps you get the number and document you need for many other aspects of paying taxes, contributing to social security, and being identified for your taxes.
- Form 1045, Application for Tentative Refund: In a few specific circumstances, you can expedite a tax refund, sometimes due to carrybacks or overpayments. Your tax professionals can help you verify whether you qualify and should submit this application in order to be processed quickly for a refund.
- Form 2553, Election By a Small Business Corporation: This is the form under which you can change from being a C corporation (the default form) to being elected into S corporation status. This site will give you both instructions and the form to fill out.
- Form 2848, Power of Attorney and Declaration of Representative: This useful document allows you to have someone represent you to the IRS, usually a tax professional whose background makes them able to discuss and negotiate the situation of your taxes more easily than you might be able to accomplish yourself. It can be a real weight off your mind to know that your responsibility is just to get and maintain the records while your tax professional makes the actual documents and fills out the forms.
- Form 6252, Installment Sale Income: A very specific form for when a particular sale occurs in installments that don’t neatly fall within one tax year.
- Form 8822-B, Change of Address: To keep the IRS informed of who is in charge of your business and where the business is headquartered for tax purposes, you can file this form to make sure you continue to receive relevant notices from the IRS.
- Form 8903, Domestic Production Activities Deduction: Unless you are working on tax years prior to 2017, you most likely won’t need this information about the Domestic Production Activities Deduction, but in the case that you think it still applies, definitely talk to your tax professional first before filing Form 8903.
Forms for Business Circumstances Related to Tax Deductions and Estimated Taxes
Businesses are allowed a variety of fairly complex potential deductions for putting money into employee retirement plans, donating to charitable organizations, and more. Here are some of the IRS forms that may help if your company has any of the circumstances described below.
- Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts: This useful form allows you to calculate the potential penalty you owe for not paying enough in estimated taxes. A tax professional can help you calculate your estimated taxes in the future to avoid this penalty, though highly variable income may result in needing to file Form 2210 from time to time.
- Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts: This site offers guidance on the taxes that might be owed on tax-favored accounts as well as individual retirement accounts.
- Form 8283, Noncash Charitable Contributions: If your business donates property, rather than cash, to a charitable organization that totals more than $500 in value, you’ll use this form to acknowledge it and receive your tax deduction.
- Form 8606, Nondeductible IRAs: This form offers guidance on how to report a variety of different IRA distributions and nondeductible contributions, key elements of certain forms of Individual Retirement Accounts. There are also ways to use this form when converting an IRA into another type of IRA, such as a traditional to a Roth IRA.
Disclosing Employee Benefits Information
When a company has employees with retirement plan benefits of any kind, there will be additional paperwork to file. The following IRS forms help you adequately disclose the contributions you make to your employee’s retirement plans, helping you to ensure that you’re using each kind of retirement account or pension in the appropriate way.
- Form 1096, Annual Summary and Transmittal of U.S. Information Returns: This summary form allows you to document all W2, 1099, and other working relationships necessary for your business.
- Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.: These forms must be submitted to acknowledge if you have distributed retirement and profit-sharing to your employees or retired employees.
- General Instructions for Certain Information Returns (IRS Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G): There are many different kinds of 1099s, as well as other kinds of information returns, and understanding the correct ones to use for particular kinds of contractors or other recipients of distributions from you is key to filing your taxes accurately. It’s also helpful for allowing those individuals to acknowledge income they’ve received on their own individual tax returns.
- Form 5300, Application for Determination for Employee Benefit Plan: A key form if you’ve decided to create an Employee Benefit Plan that requires the determination letter from the IRS; your tax professional can help you determine the right timing for this form.
- Form 5305, Traditional Individual Retirement Trust Account: The form for starting a traditional IRA.
- Form 5305-SEP, Simplified Employee Pension – Individual Retirement Accounts Contribution Agreement: The form for beginning a contribution agreement for a SEP IRA, which allows for retirement contributions from an employer to employees.
- Form 5309, Application for Determination of Employee Stock Ownership Plan: Similar to the above application for a determination letter, this form begins the process of opening an employee stock-ownership plan and helps you create your plan according to the regulations of the IRS regarding stock-ownership plans for employees.
- Form 5500EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan: If your retirement plan only includes the owners and their spouses, you can file a special, simpler form of annual return that focuses on this circumstance and isn’t subject to particular parts of the Employee Retirement Income Security Act of 1974.
IRS forms can seem daunting. Remember, any given business doesn’t need all of these IRS forms! This is meant to be a one-stop shop for you to get started on your new business, but we believe that you’ll have an even easier time when you work with Silver Tax Group to get your new business paperwork in order. We’ll help you understand the benefits of each kind of organization and what IRS forms will be needed to report your earnings and employee benefits correctly. If you’ve struggled with filing your taxes in the past, our experienced attorneys can help you get back on track and work with the IRS.
Get in touch with Silver Tax Group today to get started on a new business with a trusted tax attorney!