Business Tax Preparation

Just like an individual, businesses must pay several different kinds of taxes, some easier to understand than others. Taxes for businesses come in several varieties: federal, state, and local.

There are also different types of taxes depending on various business activities, like selling taxable products or services, using equipment, owning business property, being self-employed versus having employees, and of course, making a profit.

If you are just starting your business, you need to know what taxes you’ll be expected to pay. If your business has changed—if you have bought property or started hiring employees, for example—you’ll need to know about the taxes associated with these activities. 

All businesses must pay tax on their income; that is, the business must pay tax on the profit of the company (the income of the business less deductible expenses). How that tax is paid depends on the form of the business.

Small businesses (sole proprietors and single-member LLCs), partners in partnerships, and S-corporation owners pay taxes through their personal income tax returns. The concept – called pass-through tax – is the same for all of these business types.

Sole proprietors and single-member LLC members pay taxes by filing a Schedule C included with their personal return

Partners in partnerships and multiple-member LLC owners file a partnership business tax return for information purposes only. The individual partners or LLC members pay income taxes their share of the income of the business, by including this income in their personal returns.