Reporting & Recordkeeping (6)
The Form W2 is the summation of all of an employees payroll data for the year. It is sent with all other W2s and a summary form called a W3 to the Social Security Administration by January 31st of the following year. It must also be supplied to the employee by the same date.
The Schedule C is used for the typical single owner business (sole proprietorship). If you have an LLC set up in your state, your filing status may be determined by state laws. For instance, in CA, single-member LLC’s can’t use Schedule C for sole proprietorship. They must file as a C or S corporation.
If your state doesn’t dictate how you can file, LLC’s can choose their tax status. For single owners, you can choose a Schedule C sole proprietorship on your personal return, or you can be taxed as a C or S corporation. If there are 2 or more owners, you can choose between a Partnership or a C or S corporation.
Partnerships file on a form 1065. C corporations file on a form 1120. S corporations file on a form 1120S. Business returns are generally due by March 15th each year, unless you have a fiscal year end other than the calendar year. K-1’s are required to be issued to the owners from the business in a partnership or S corporation to report the income earned from the business. The K-1 is then reported on the owner’s personal return to pay taxes on the business income. C Corporations pay taxes directly on their returns, so no K-1 is necessary.
If you’re unsure about what to file, or what will be best for you and your business to choose as a business and tax entity, you should consult with a tax professional. I often help small businesses figure out their best route and then I assist them with their accounting and taxes to keep them compliant.
What’s the best way to keep track of the many deadlines related to tax withholding, reporting, and payments?
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