Small business tax returns

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1. Income Reporting: Small businesses report their income, which can include sales revenue, service income, and income from other sources.

2. Expense Deductions: Businesses can deduct various expenses to lower their taxable income. These can include operational expenses like rent, utilities, supplies, payroll, and marketing costs.

3. Depreciation: This accounts for the loss in value of assets over time and can be deducted from taxable income.

4. Self-Employment Tax: If you’re a sole proprietor or an LLC member, you might need to pay self-employment tax, which covers Social Security and Medicare taxes.

5. Payroll Taxes: If you have employees, you must withhold payroll taxes (including income tax, Social Security, and Medicare taxes) and pay your share as an employer.

6. Quarterly Estimated Taxes: Small business owners often need to make quarterly estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.

7. Specific Forms: The forms you’ll use depend on your business structure:

   • Sole Proprietorships: Schedule C (Form 1040 or 1040-SR) to report business income and expenses.

   • Partnerships: Form 1065, with K-1 forms distributed to partners.

   • Corporations: Form 1120 or 1120-S.

8. State and Local Taxes: Depending on location, you may also owe state and local taxes.

9. Deductions and Credits: Small businesses may be eligible for various tax deductions and credits, which can reduce tax liability.

10. Year-End Tax Planning: This involves strategies to minimize tax liabilities, such as deferring income or accelerating deductions.

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