CoatingsPro Magazine

MAR 2018

CoatingsPro offers an in-depth look at coatings based on case studies, successful business operation, new products, industry news, and the safe and profitable use of coatings and equipment.

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COATINGSPRO MARCH 2018 21 of business structure uses a different form. Find your business structure below to see which form you will use for filing and paying your business taxes. • Sole Proprietorships: Use Schedule C to file your business tax return if you are a sole proprietor. Schedule C helps you calculate profit or loss from business operations. Attach Schedule C to your individual tax return, Form 1040. Some small businesses can use Schedule C-EZ to file their taxes. Schedule C-EZ is a simplified version of Schedule C. To use Schedule C-EZ, your business must: î Have expenses no greater than $5,000 î Have no employees î Have no inventory î Not use depreciation or deduct the cost of the owner's home î Not be a partnership (Partnerships are pass-through tax entities. That means that taxes pass through the business. Instead of the partner- ship paying business taxes, the partners are responsible for paying taxes. Both the partnership and partners must report to the IRS on separate forms. The partnership uses Form 1065, showing the total profit and loss of the business. The partnership should send Form 1065 to the IRS. Each partner is given a Schedule K-1 by the partnership. The form indicates each partner's share of profit and loss within the business. Partners use Schedule K-1 to fill out parts of their individual tax return, Form 1040.) • Corporation: If your business is incorporated, use Form 1120 to file your business tax return. Form 1120 reports your business's income, losses, and write-offs. You also use the form to figure your income tax liability. • Limited Liability Company (LLC): When you set up your LLC, you can choose whether you want to be taxed as a corporation. This election and the number of members in your LLC affect the form you use for filing taxes. Single-member LLCs follow the directions for a sole proprietor- ship. Use Schedule C and attach it to your individual tax return. Multiple- member LLCs follow the directions for a partnership. Use Form 1065 to file your tax return. Each member should receive Schedule K-1 from the LLC. If you elected to be taxed as a corporation, follow the directions for a corporation. Use Form 1120 to file your tax return. How to File You can file your small business tax return by mail or e-filing. If you mail the form, the instructions include the correct address you should send it to. E-filing through the IRS's e-file system is faster and easier than sending a paper form. Accounting for small business owners may still seem a bit intimidating. You may want to hire an accountant or tax preparer to help you file your business tax return. An accountant can help you accurately file, deduct write-offs, and make your journal entry for tax refund money. Even if you're filing your first business return, doing the taxes for your small contracting business doesn't need to be difficult if you have the right information up front! CP Amanda Cameron is a content w r iter for Pat r iot Sof t ware, LLC, a prov ider of on l ine account ing and pay rol l sof t ware. At Pat r iot, she w r ites about pay rol l , sma l l business account ing , t he recr u it ing process, and ot her sma l l business topics. Editor's note: e original version of this article appeared online at www.patriotsoftware.com. Money Matters Re ad e r In qui r y at co ati n g sp ro m a g.co m /i n q0318

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