Small Business Taxes For Beginners? Detailed Guideline

Understanding small business taxes for beginners is one of the most important steps when starting your own business. It may seem tricky at first, but with the right help, it becomes much easier. You don’t need to be an expert you just need to know what to do and when to do it. Let's check types of taxes you might owe, to how to file them, track your expenses, and claim deductions. If you’re new to running a business, this blog will help you stay on track and avoid problems later.

How to File Small Business Taxes

Every small business is structured differently and because of that, the process of filing taxes can vary quite a bit. The type of business you run determines which forms you’ll need to fill out, how you report income, and what you’re responsible for come tax season. There are six main types of business structures. let’s understand each type so you can see what applies to you and know exactly what to expect when it’s time to file your small business taxes.

Can you claim yourself as a dependent

Filing Taxes as a Sole Proprietor

If you’re running your business solo, with no legal separation between you and the business, you’re a sole proprietor. It’s the simplest structure, and thankfully, it’s also the easiest to file taxes for.

You’ll just need to complete Schedule C, which gets attached to your personal income tax return (Form 1040). This form shows the IRS how much profit (or loss) your business made during the year. No extra business return is needed it all flows through your personal return.

Filing Taxes as a Partnership

In a partnership, two or more people share ownership of the business. Here, the business files a separate informational return with the IRS Form 1065. This form doesn’t calculate taxes owed by the business itself, but it does report income and expenses to the IRS.

Each partner then receives a Schedule K-1, showing their share of the income or losses. That K-1 is what each person uses to report business earnings on their personal tax return. Even though the partnership doesn’t pay tax as an entity, each partner still pays taxes individually on their share.

Filing Taxes as a Limited Liability Company (LLC)

The beauty of an LLC is flexibility. If you’re the sole owner of an LLC, you’ll typically file taxes just like a sole proprietor using Schedule C on your personal tax return.

If your LLC has two or more members, then you file more like a partnership. That means filing Form 1065, then distributing Schedule K-1s to each member. Each person reports their share of the profit or loss on their own personal return.

Depending on your situation, you can also choose to be taxed as a corporation (S or C Corp), which brings its own filing responsibilities.

Why do i owe taxes this year

Filing Taxes as a C Corporation

If your business is registered as a C corporation, you’re dealing with a completely separate tax entity. This means you’ll file a full corporate return using Form 1120. Unlike sole proprietors or partnerships, C Corps pay taxes on their profits directly.

If you pay yourself a salary from the corporation, you’ll report that income on your personal tax return, just like a regular employee. But dividends paid to shareholders can also be taxed separately this is often referred to as double taxation. Because of the complexity, many small businesses hire a CPA or tax professional to help file Form 1120 correctly.

Filing Taxes as an S Corporation

An S Corp is a special type of corporation where profits and losses pass directly through to the shareholders, avoiding corporate tax. But you still have to file a return for the business Form 1120S.

Each shareholder also gets a Schedule K-1, which shows their portion of the business’s income or loss. That K-1 amount is reported on their personal return. While S Corps save you from double taxation, the paperwork can get technical most business owners work with a CPA to make sure everything’s done right.

Filing Taxes as a Nonprofit

Nonprofits are unique. If your organization qualifies as a 501(c)(3), it may be exempt from federal income tax altogether. But that doesn’t mean you skip filing.

Nonprofits typically file Form 990, which gives the IRS an overview of the organization’s financial activity. If your nonprofit earns unrelated business income (like selling merchandise), you may also need to file other forms and pay taxes on that income. The rules can be strict, so it's smart to consult with a tax pro familiar with nonprofit accounting.

Self-Employed Taxes

If you’re a freelancer, gig worker, or run a one-person business, you’re considered self-employed even if you call yourself a sole proprietor or single-member LLC. In addition to income tax, you’ll owe self-employment tax, which covers Social Security and Medicare.

That tax rate is currently 15.3% of your net earnings. You’ll calculate it using Schedule SE, and pay it along with your income taxes. Many self-employed people also need to pay estimated taxes quarterly to avoid penalties, since taxes aren't withheld from their income the way they are for traditional employees.

Gather Your Business Records

Before you even open a tax form, take some time to gather your business records. This step is crucial and saves hours of stress later. You’ll want all the documents that show how much money your business earned and how much it spent.

Start with your income: invoices, bank statements, payment processor reports (like PayPal or Stripe), and any 1099 forms. Next, grab your expense receipts anything you spent money on for your business like equipment, marketing, utilities, and travel. Don’t forget to collect payroll records if you have employees, and mileage logs if you drove for business. Keeping this information organized in folders digital or physical makes filing smoother and gives you peace of mind.

Prepare Your Books for Tax Season

Your books are just a fancy way of saying your financial records. These should be clean, organized, and ready for tax filing. If you’ve been keeping track of everything month-to-month, this part will be a breeze. But if you haven’t, don’t worry now’s the time to catch up.

Start by reviewing your profit and loss statement. Make sure income and expenses are categorized correctly. Reconcile your bank statements to confirm they match your records. If something doesn’t look right like missing income or duplicate expenses now’s the time to fix it.

Using bookkeeping software like QuickBooks or Wave makes this process easier. You can even generate reports directly from the software that plug right into your tax forms. Preparing your books properly helps reduce errors and ensures you don’t miss out on any deductions.

How to Pay Your Small Business Taxes

Once you know how much you owe, you’ll need to pay your small business taxes and luckily, it’s not as hard as it sounds. The IRS offers several ways to pay, including online payments through IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or even by check. If you're self-employed, you may need to pay estimated taxes every quarter. These are based on your projected income for the year. You can calculate them using IRS Form 1040-ES or with help from a CPA.

Many states also require state tax payments, so check your local rules. It’s smart to keep a separate tax savings account so the money’s always ready when payment deadlines roll around. Late payments can result in penalties, so setting reminders for due dates is a helpful habit.

How SK Financial CPA Can Help with Your Small Business Tax Filing

At SK Financial CPA, we take the hassle out of managing your small business finances. With over 23 years of experience, we specialize in helping business owners stay compliant, organized, and confident with their numbers.

Here’s how we help:

• We maintain clean, accurate, and up-to-date financial records through professional bookkeeping.

• We organize your financial data and provide clear monthly and yearly reports to support smarter decisions.

• We prepare and file your federal, state, and local taxes on time, no matter your business structure.

• We help you plan ahead to minimize your tax bill and avoid unexpected liabilities.

• We support you with IRS notices, audits, and ensure you stay compliant with changing tax laws.

With over 20,000 tax returns filed and 15,000+ satisfied clients, SK Financial CPA is more than a service provider we’re your long-term partner. If you're ready to stop stressing over taxes and get your books in order, book your free consultation today.

How to Claim Your Small Business Tax Deductions

Tax deductions can save you a lot of money if you know how to claim them the right way. Simply put, a tax deduction lets you subtract certain business-related expenses from your total income. That lowers the amount of income the IRS can tax, which means you pay less in taxes overall.

The first step is to make sure the expenses you want to deduct are ordinary and necessary for your business. That’s the IRS’s way of saying the expense must be common in your industry and helpful in running your business. Think things like office rent, supplies, internet bills, software subscriptions, marketing, travel, and even business meals.

How to claim your deductions properly:

1. Track every expense – Keep receipts, invoices, bank statements, and any digital proof of your spending. If you’re using bookkeeping software, most of this can be stored automatically.

2. Categorize your expenses – When preparing your taxes, make sure each expense is placed under the right category like advertising, utilities, travel, or office expenses. This helps avoid confusion and errors.

3. Use the right tax forms –

• Sole proprietors and single-member LLCs report deductions on Schedule C.

• Partnerships and multi-member LLCs report on Form 1065 and pass the details to partners through Schedule K-1.

• S Corporations use Form 1120S, and C Corporations use Form 1120.

4. Apply only to business expenses – Personal expenses don’t qualify unless they’re partially used for business, like your home office or car mileage. In those cases, you can deduct only the portion used for work.

5. Don’t exaggerate or guess – Always use real numbers. If the IRS ever audits your return, you’ll need to show proof of each deduction.

Many new business owners miss out on valuable deductions simply because they don’t keep track or aren’t sure what qualifies. That’s why it’s a good idea to review your expenses regularly and work with a tax professional if you’re unsure.

How You Can Track Your Business Expenses

One of the smartest habits you can build as a business owner is to track your business expenses. Not only does it make tax season easier, but it also gives you a clear picture of where your money is going and helps you catch problems early.

The first step is to separate your business and personal finances. This means opening a dedicated business bank account and, ideally, using a business credit card. When all your income and expenses go through one place, it’s much easier to keep things organized. Mixing personal and business spending can lead to confusion and possibly even trouble with the IRS.

Next, start recording your expenses regularly. You don’t have to do it daily, but setting aside time once a week or even once a month to log your expenses makes a big difference. You can track manually with a spreadsheet, but using bookkeeping tools like QuickBooks, Wave, or FreshBooks can save you time and automate much of the process.

Breakdown of what to keep track of:

• Receipts and invoices for purchases like supplies, equipment, and software

• Utility bills and internet expenses if you use them for work

• Mileage logs if you drive for business

• Meal and travel expenses related to client meetings or business trips

• Subscription costs for tools or platforms you use to run your business

• Contractor or freelancer payments

Tip: Take pictures of your receipts and store them in cloud folders or apps that integrate with your bookkeeping software. That way, you’ll never lose them and you’ll have proof ready in case the IRS asks.

Final Thoughts

Small business taxes for beginners doesn’t need to feel like walking through a maze. Start with the basics, get organized, and don’t be afraid to ask for help when needed. Over time, it becomes part of your regular routine, just like checking emails or tracking sales. Taxes may never be the most exciting part of running a business, but they don’t have to be your worst nightmare either. Think of them as just another tool to help you stay compliant, manage your money better, and keep your business running smoothly. With a little attention and the right habits, you’ll be filing like a pro before you know it. If you're in your first year of business or even thinking about launching one, having a reliable partner like SK Financial CPA can give you confidence and clarity. From taxes to long-term planning, they’ve got you covered.

FAQ 

Do I need to pay taxes if my small business didn’t make a profit this year?

Yes, even if your business didn’t make a profit, you may still need to file a tax return. If you spent money running your business, you can report those losses. In fact, reporting a loss can help reduce your tax bill in future years. Also, if you’re self-employed, you might still owe self-employment tax even if your overall income is low.

What records should I keep for tax purposes as a small business owner?

You should keep all business-related receipts, invoices, bank statements, mileage logs, payroll records (if you have employees), and any tax documents like 1099s. It's best to store these digitally and organize them by category. Good recordkeeping makes tax filing easier and protects you if you're ever audited.

How much should I set aside for small business taxes?

A safe rule is to set aside 25% to 30% of your income for taxes. This helps cover income tax and self-employment tax. If you're paying quarterly estimated taxes, this cushion ensures you're not caught off guard when payments are due. Keep this amount in a separate savings account to avoid dipping into it accidentally.

When are quarterly estimated tax payments due?

Quarterly taxes are usually due four times a year:

• April 15

• June 15

• September 15

• January 15 of the following year
  Missing these deadlines can lead to penalties, so it’s a good idea to mark them on your calendar and plan ahead.

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