IRS Publication 583: Starting a Business and Keeping Records

1 File a separate schedule for each business. 2 Various other schedules may be needed. Reminder. If your business is an LLC, how you elected to have the LLC treated for tax purposes (either as a corporation, partnership, or as part of the LLC owner's tax return) will determine what taxes you must pay and what forms you should use to pay your taxes. Estimated tax. Generally, you must pay taxes on income, including self-employment tax (discussed next), by making regular payments of estimated tax during the year. Sole proprietors, partners, and S corporation shareholders. You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. For more information, see Pub. 505. Corporations. You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. You must deposit the payments as explained later under Depositing Taxes . For more information, see Pub. 542. Self-Employment Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Your payments of SE tax contribute to your coverage under the social security system. Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Your net earnings from self-employment were $400 or more. You had church employee income of $108.28 or more. Use Schedule SE (Form 1040) to figure your SE tax. For more information, see Pub. 334. . You can deduct a portion of your SE tax as an adjustment to income on your Form 1040 or 1040-SR. . The Social Security Administration (SSA) time limit for posting self-employment income. Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. The SSA will not change its records to increase your self-employment income. Employment Taxes This section briefly discusses the employment taxes you must pay, the forms you must file to report them, and other forms that must be filed when you have employees. Employment taxes include the following. Social security and Medicare taxes. Federal income tax withholding. Federal unemployment (FUTA) tax. If you have employees, you will need to get Pub. 15 (Circular E), Employer's Tax Guide. If you have agricultural employees, get Pub. 51 (Circular A), Agricultural Employer's Tax Guide. These publications explain your tax responsibilities as an employer. If you are not sure whether the people working for you are your employees, see Pub. 15-A. That publication has information to help you determine whether an individual is an employee or an independent contractor. Also, people who provide a service generally associated with the sharing (or on-demand, gig, or access) economy are, under certain circumstances, independent contractors. An independent contractor is someone who is self-employed. Generally, you do not have to withhold or pay any taxes on payments to an independent contractor. If you wrongly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker plus a penalty.