The 1040 Form For Business Owners
(& How to Make It Easier!)
It’s the best time of the year!
(We’re accountants – we have to say that.)
Tax season is the time of year where we all rush around frantically, wondering how much money we made, how much money we’ve spent, and which forms, statements, and receipts we need to send in to Uncle Sam.
We wrote a great blog post about how to NOT rush around frantically, by the way. If you’re a business owner, you should check out that post here.
In a bid to make tax time a bit easier, we’re breaking down what the 1040 form is, whether or not you need to fill it out as a business owner, and how to make the process more seamless.
What Are 1040 Forms?
Let’s start by breaking down what the 1040 form is.
The 1040 Form is the standard Internal Revenue Service (IRS) form that individual taxpayers use to file their annual income tax returns.
It’s on this form that you calculate your deductions, and ultimately figure out how much you owe in state and federal income taxes.
If you are Single and your income is over $12,550, you must file a 1040 Form with the IRS. If you are married, the threshold is $25,100.
Do I Still Need To File 1040 Form as a Business Owner?
Yes!
In fact, depending on the type of business structure you have set up, the 1040 Form may be the only tax form you need to file.
If you are self-employed and your business falls under any of the below categories, you will use Form 1040 to also report your business income and expenses,
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You’re self-employed and/or a freelancer
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You’re a small business owner who runs your company as a sole proprietorship
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Your company is structured as a single-member LLC
In each of these cases, you need to report your business income on a Schedule C attachment to the Form 1040.
You typically must file Form 1040 and its related schedules by April 15 each year.
If your company is structured as a Partnership, S corporation or a C corporation, or you choose to treat your LLC as a corporation, you will still need to file Form 1040 for your personal income taxes.
However, you will need to also prepare and file an additional, separate corporate tax return for your business, using IRS Form 1120, 1120S, or 1065 by March 15 each year.
How Can You Make The Form 1040 Process Easier?
Uh… hire an accountant?
While we really do mean that, there are a few things as a business owner that you can do to make the 1040 Form easier.
The first is to organize your business finances first by using a good cloud based accounting system like Xero. This will help organize and automate many of your bookkeeping processes.
If you fall under the category of using the Schedule C attachment to Form 1040 (see above), you will have to list all of your income sources, including the income from self-employment, as well as any business deductions you’ve had throughout the year.
This is going to be an almost impossible task if your business bookkeeping isn’t up to date.
And if you don’t have a monthly bookkeeper and you make over $100,000 a year – it’s time to get one.
Additionally, get your 1099 Forms done well in advance.
This will be a lot easier if you send out the W-9 form as soon as you sign on a new vendor. In fact, we recommend collecting a completed W-9 form before you even pay a vendor a cent.
But having the 1099 forms completed and your business bookkeeping up-to-date will go a long way in making the 1040 Form much more manageable.
But really… get some help with it!
In all honesty, one of the best things you can do to make tax season easier is to outsource the work. Especially if you are self-employed.
When working with an experienced accountant, if you have all your accounting well organized your personal income taxes should only take about 1 day to complete.
1 day!
And even if you don’t hire us, we strongly recommend bringing in an experienced accountant year-round to advise you on the best financial decisions for your business as you are most likely missing out important tax deductions and tax savings strategies.
Getting rid of tax season headaches is just a bonus.
If you’re still on the hunt for a relatable, jargon-free accountant, you can book a 15-min call with us anytime. We’ll point you in the right direction, even if it’s not with us.
Until next time!
