Small-Business Taxes for Beginners: A 2025 Guide

Small businesses face unique challenges when it comes to taxes. It’s important to follow specific steps depending on your business structure and other factors.

For first-time small business tax preparers, starting with essential tasks can provide a solid foundation. These tasks will help you understand your tax responsibilities and available tax breaks.

Here’s a beginner’s guide to navigating small business taxes.

This initial step is crucial in determining the applicable tax forms and deadlines based on your business structure.

There are five main business structures for tax purposes.

If you’re unsure of your chosen structure, LLCs, corporations, and partnerships usually require registration with the state they operate in. Verification can typically be done through the state department’s online portal.

Tax classification aligns with partnership, corporation, or sole proprietorship status. Understanding LLC business taxes may require additional consideration.

The IRS treats single-member LLCs as sole proprietorships and multi-member LLCs as partnerships by default. Unless you opted for corporation classification during business initiation, specific forms would have been required.

Most businesses, including LLCs, partnerships, corporations, and those with employees, require a business tax ID or EIN for tax filing purposes.

While sole proprietors without employees aren’t mandated to obtain an EIN by the IRS, having one can facilitate future business growth. For instance, hiring employees and opening a business bank account often necessitates an EIN.

After confirming your business structure, tax classification, and EIN, you can begin filling out tax forms. Familiarizing yourself with these forms and their deadlines, even outside tax season, is beneficial.

Various types of taxes may require filing, each with its specific due date.

Deadlines for most businesses include:

• Sole proprietorship: File Schedule C with Form 1040 by April 15.

• Partnership: File Form 1065, U.S. Return of Partnership Income, and distribute K-1s to all partners by March 15.

• C corporation: File Form 1120, U.S. Corporation Income Tax Return, by April 15.

• S corporation: File Form 1120-S, U.S. Income Tax Return, by March 15.

Fiscal year variations will impact deadlines, typically falling on the 15th day of the fourth month after year-end. A fiscal year ending on June 30 requires filing by September 15.

While federal returns are annual, quarterly estimated tax payments are likely necessary.

State and local tax obligations vary depending on business structure and location. Seeking advice from a small business tax advisor can ensure compliance with these requirements.

State sales tax requirements vary, with due dates based on state regulations. Check your state’s tax department website for specific information.

Businesses with employees must file Form 940 for FUTA taxes and Form 941 quarterly for federal income, Social Security, and Medicare taxes.

Self-employed individuals must pay Social Security and Medicare taxes, with quarterly estimated payments required.

Businesses subject to excise taxes must file Form 720 quarterly for products like fuel, tobacco, and alcohol.

Distinguishing tax filing due dates from payment deadlines is crucial. Businesses may need to make employment and self-employment tax payments more frequently.

Understanding small business tax deductions can help reduce taxable income. Deductions may apply to expenses like auto, travel, and rent.