Wow–2010. I’m sitting here at my computer, first day back at work after the holiday break, and already I’ve had to delete “200-” and re-type “2010”…many times.
Not only does this time of year bring excitement and anticipation for what’s in store (and maybe a little post-holiday letdown), it also brings a season near and dear to our hearts…tax season.
If you, like me, are a business owner, it’s time to start organizing your tax forms. Here’s a brief outline of what’s due and what it all means:
(NOTE: this is intended for educational purposes only. You really should consult with a professional accountant for all your tax needs. Also be aware the I do not cover sales taxes as most of you are not in the business of selling product. I’ll save that for another post.)
Payroll Taxes (if you have employees)
- Quarterly Payroll Taxes (Federal Income Tax, State Income Tax, and SUTA). It’s time to file your payroll taxes from the last quarter. I’ve written in more detail about payroll taxes here and here. Briefly, your Form 941 (for federal income taxes) are due to the IRS along with the taxes you owe. You will also have to file and pay your state unemployment taxes (or SUTA) AND your state income taxes. These are the same forms and taxes you file every quarter. They are due by January 31st.
- Annual Payroll Taxes. It’s time to pay your Federal Unemployment Insurance Tax (or FUTA). Your state equivalent (SUTA) is filed quarterly, but the federal ones are filed annually (unless your FUTA fees exceed $500 a quarter). Simply fill out Form 940 (available from the IRS) and submit that in with your payment. The due date is January 31st.
Other employee-related forms
- W-2s. A W-2 is a “Wage and Tax Statement,” a form that tells the IRS how much money a person’s been paid and how much they owe in taxes. If you hire and pay employees, it’s your responsibility to prepare their W-2s. You will have 4-6 copies for each employee: 2-4 will go to your employee (by January 31st), 1 to the IRS, and 1 for your records. You can prepare all your W-2s electronically at www.socialsecurity.gov/employer. You can create your W-2s, file them with the IRS, and print off copies for you and your employees. W-2s are due to the IRS by February 28th.
- W-3. A W-3 is like a summary statement of all your W-2s. You prepare your W-3 as you get all your W-2s ready. The W-3 is submitted to the IRS along with copies of all your W-2s. All those forms are due by February 28th. You can use the same service to prepare and file your W-3 as you do your W-2 (cool, huh?).
- Form 1099. If you use subcontractors (also known as independent contractors, or ICs), and you’ve paid them over $600 during the year, you need to prepare and file Form 1099. You yourself may receive a Form 1099 from some of your clients (depending on your business structure). Like with the W-2, you’ll create multiple copies of Form 1099: 1 for the independent contractor, 1 for the IRS (that YOU submit) and 1 for your records. The subcontractor needs their 1099 by January 31st, the IRS by February 28th.
Every American knows that we have to submit our individual income taxes by April 15th. Guess what? Businesses also have to submit income taxes. The type of filing you do will depend on your business structure (NOTE: I do not include partnerships as the vast majority of therapy businesses I’ve seen are not partnerships.):
- Corporations (C-corp or S-corp) must file their federal taxes on Form 1120, available from the IRS. Due date: March 15th.
- Sole proprietors file their business taxes in conjunction with their individual taxes (Form 1040). Fill out and submit the Schedule C section of your 1040, which is the “Profit and Loss from Business” section. You will also need to submit the Self-Employment tax using Schedule SE on your 1040. Due date: April 15th.
- LLCs are flexible. When you incorporate as an LLC, you will decide whether you want to file your income taxes as a sole proprietorship, a partnership, or a corporation.
You can easily find any federal tax form by visiting the IRS website, www.irs.gov. Click on the “Forms and Publications” link. The forms mentioned in this article that you will find on the IRS site include: Form 941, Form 940, Form 1099, W-2, W-3, Form 1120, Form 1040 (including Schedules C and SE).
Where you find your state tax forms depends on the state where you live. In Colorado, we get all our state tax forms from the CO Department of Revenue. You’ll need to talk to your accountant to figure out the rules in your state.
Taxes can take awhile to understand and prepare correctly, especially when you are first starting out. Hopefully this overview gives you a basic understanding of what’s needed.
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