How to File tiny Business Taxes in 6 Steps (2025)

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Running your own tiny business means you’re in fee. That comes with benefits, but it also means tackling tasks like filing tiny business taxes.

Whether it’s your first responsibility period or your 10th, filing a business responsibility yield can be overwhelming. Without bookkeeping encounter, responsibility filing feels daunting. Miscalculating your tiny business taxes could outcome in fines and penalties you desire to avoid.

If you live in the US, this step-by-step navigator will assist you file tiny business taxes well before they’re due.

What are the most ordinary tiny business taxes?

Your business type determines which taxes you require to pay. Sole proprietors have different federal taxes than corporations with employees and assets.

Here are the main taxes most tiny businesses pay:

returns responsibility

Federal returns responsibility is a percentage of your business’s returns paid to the IRS. Rates vary based on your business entity and location. Forty-three states fee state responsibility on corporate returns. If you’re self-employed, you’ll pay business returns taxes on your personal returns, with rates from 10% to 37%.

Payroll responsibility

As an employer, you and your employees must pay: 

• Social safety: You each pay 6.2% of wages
• Medicare: 2.9% of gross wages total
• Federal unemployment responsibility: 6% of each employee’s first $7,000 in yearly wages

Self-employment responsibility

Self-employment taxes cover Social safety (12.4%) and Medicare (2.9%), making the total responsibility rate 15.3% of your business returns.

capital distribution gains responsibility

When business investments boost in worth or you sell assets, you may owe capital distribution gains taxes. This typically ranges from 15% to 28%, depending on your returns, how long you owned the resource, and the resource type.

Property responsibility

If your business owns property like buildings or land, you’ll pay property taxes to your county based on the property’s worth. Rates vary by location.

distribution responsibility

Dividends are portions of corporate returns distributed to shareholders, which count as taxable returns. responsibility rates for dividends are 0%, 15%, or 20%, based on capital distribution length and the shareholder’s taxable returns.

Excise responsibility

If you manufacture sure products like alcohol or tobacco, you might require to pay excise responsibility. Rates vary by state.

6 steps for filing tiny business taxes

1. Collect your corporation records
2. comprehend sales responsibility requirements
3. discover the correct responsibility form and fill it out
4. recognize the responsibility filing deadlines
5. Hire an accountant
6. File your tiny business taxes

1. Collect your corporation records

Accurate bookkeeping is essential when filing tiny business taxes. It shows you exactly how your business is performing and protects you if you’re audited. Inaccurate books could navigator to unintentional untrue claims to the IRS.

Track these items in your tiny business bookkeeping structure:

• Business costs: Keep a record of all costs related to your business.
• returns: Track all the money your business has earned.
• Profits and losses: Maintain a obvious record of your returns and any losses.
• Salaries: Document what you’ve paid your employees.
• Taxes paid: Keep records of any quarterly estimated responsibility payments.

You can gather this information from:

• Receipts
• investment slips
• Invoices
• lender statements

You can manage this yourself with ecommerce bookkeeping software or hire a bookkeeper. Choose the way that fits your period, distribution, and comfort with bookkeeping.

2. comprehend sales responsibility requirements

Sales responsibility rules can be complicated, especially for online businesses. Consider talking to an accountant about your sales responsibility obligations.

Sales responsibility depends on nexus—your business’s physical or economic connection to a state. If you have nexus in a state, you require to collect sales responsibility there.

Your business might have nexus in multiple states. These factors can make nexus:

• Having an office
• Employing staff
• Operating a warehouse
• Running a pop-up shop or selling at events
• Storing inventory

You require to collect sales responsibility wherever your business has nexus. Since responsibility laws differ by state, check with a responsibility professional about your state responsibility requirements before filing.

3. discover the correct responsibility form and fill it out

The responsibility forms you’ll require depend on your business structure and whether you have employees. Here are the most ordinary forms:

• Schedule C with Form 1040: Sole proprietorships and single-person LLCs should use this form to update business returns. You’ll require to recognize total returns earned, business costs, and expense of goods.
• Schedule SE with Form 1040: Self-employed individuals use this to compute self-employment responsibility with their returns responsibility yield.
• Form 1120: Corporations use this form to update returns and losses. You’ll require gross receipts, business costs for deductions, distribution information, and basic information about the corporation.
• Form 1065: Partnerships use this form to update returns, losses, and deductions.
• Form 940: Businesses with employees file Form 940 to update federal unemployment responsibility payments.
• Form 941: Employers use this to update employee wage withholdings for Social safety, Medicare, and returns taxes.

4. recognize the responsibility filing deadlines

Keep track of your responsibility deadlines to avoid penalties. Your filing dates depend on your business structure and whether you have employees. You might require to file annually or quarterly.

Key responsibility filing dates for 2025:

• January 31: Employers should file Form 940 by January 31.
• March 15: Partnerships should submit Form 1065 by March 15, or the 15th day of the third month after their budgetary responsibility year.
• April 15: Calendar year filers must submit Form 1120 for corporations, or Form 1040 with Schedules C and SE for sole proprietors.
• Quarterly: Most businesses make estimated responsibility payments on a quarterly basis. Employers are also required to file Form 941 quarterly.
• Four months + 15 days after the budgetary year: tiny businesses using their own budgetary calendar must file taxes by day 15 of the fourth month after their budgetary year ends.

responsibility deadlines can be straightforward to miss, leading to expensive penalties. Mark these dates in your calendar and note that filing dates may transformation each year.

💡 Here is the IRS’s online responsibility calendar with all the latest deadlines.

responsibility extensions: require more period to file? You can request an extension:

• Corporations and partnerships: Form 7004 for a six-month extension
• Sole proprietors: Form 4868 for a six-month extension

recall: Extensions provide you more period to file, not to pay. You still require to pay your estimated taxes by the original deadline to avoid penalties and yield.

5. Hire an accountant

You didn’t commence a business to compute taxes. Luckily, experienced budgetary professionals such as chartered community accountants (CPAs) can receive the job off your plate. inquire your current bookkeeper for recommendations, or check if your bookkeeping software lists trusted responsibility specialists. 

When choosing a responsibility accountant, consider their industry knowledge, understanding of your business needs, and their billing way (hourly or flat fee).

inquire your accountant these questions to potentially reduce your responsibility statement:

• Are there any local responsibility credits available?
• Does my business have nexus in other states?
• Would changing to an LLC structure advantage my business?

6. File your tiny business taxes

Submit your taxes by the deadline to avoid late filing penalties. The IRS charges 5% of unpaid taxes for each month your yield is late, up to 25%.

ordinary responsibility deductions for tiny businesses

A responsibility deduction (or deduction) is an “ordinary and essential” business outlay in your industry. The IRS lets online sellersdeduct sure business costs from their returns to reduce their responsibility statement. If you’re just starting out, check with your accountant—some costs might count as commence-up costs.

Here are ordinary tiny business responsibility deductions:

Business property

You can deduct rental costs for properties you use exclusively for business. This includes office space, storage units, and warehouses.

Home office

If you regularly use part of your home as your main business location, you might qualify for the home office deduction. Your home office must be used only for business and be where you conduct your core business activities.

You can use the IRS’s simplified way to deduct $5 per square foot of business space, up to a maximum of $1,500 yearly. Alternatively, use the regular way by dividing household costs by the percentage of your home used for business.

Office supplies

You can deduct costs for shipping materials, printer ink, labels, document, pens, and software.

Education

Deduct work-related education that adds worth to your business or increases your expertise.

Phone and internet

If you have a business-only phone number, deduct the packed expense. For phones used for both business and personal purposes, deduct the percentage used for business. Video conferencing services like Zoom count as office costs. Your internet statement can be deducted based on business usage.

Web hosting and online store themes

You can deduct costs for domain registration, ecommerce hosting, and web hosting. Custom Shopify themes can be deducted as software or marketing costs.

Contractor work

Deduct costs for independent contractors. If you pay an independent contractor more than $600 yearly, you’ll require to send them Form 1099 and submit a copy to the IRS.

Employee salaries

Employee salaries are responsibility deductible.

Shipping costs

Deduct the expense of shipping goods to your customers, such as postage and packaging costs.

Vehicle use

Track business mileage using a mileage tracker tool or manual odometer logs. Many businesses track business and personal mileage for a two-week period each quarter to compute their business-use ratio.

Online service fees

Services like Shopify that you use to run your online store are deductible business costs.

Equipment

You can recover equipment costs through deficit in worth or a Section 179 deduction. Rented business equipment is also responsibility-deductible. Consider working with an accountant to choose the best way for your circumstance.

trip costs

When traveling outside your usual business location, you can deduct essential trip costs like transportation, lodging, and meals.

Professional services

Business-related fees for accountants, legal services, and business registration specialists can be deducted as professional services.

Advertising and marketing

You can deduct costs for web design, business cards, and both print and digital advertising from your responsibility yield.

Until next responsibility period

Taxes might not be the highlight of running a tiny business. You started your business to be creative and make money—not to track responsibility liabilities. But with excellent planning, you can maximize your deductions and make responsibility period easier.

Shopify helps simplify responsibility period. compute your responsibility liabilities, collect sales taxes at checkout, and file taxes directly from your Shopify admin.