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Jean   Murray

Common Business Tax Questions #1 - Do I Have to File a Business Tax Return?

By February 13, 2013

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Over the years, I've heard all the questions about business taxes. So, I will answer some of them over the next few days. Today:

Do I have to file a business tax return? Do I have to file a return if I have a business loss?

The answer in general, is "YES." If you have a business that is registered with your state, like a partnership, LLC, or corporation, you must file a business tax return. You must file a return every year, even if you don't have a profit. You will need to know what type of tax return to file. The IRS imposes fines and penalties for failure to file a business tax return.

But let's say you don't have a formal business structure. If you receive business income, including 1099-MISC income as an independent contractor, you must include that income on your personal tax return (usually on line 12). So, here's my question for you: If you have business income, are you keeping track of your business expenses, so you can minimize income tax and self-employment tax?

Sure, you can just sell stuff or provide a service to someone and get money, but why not take the time to set up a simple business and realize the tax advantages of having a business?

You can easily set up your business as a sole proprietorship.  All you need to do is get a business checking account and probably a business credit card and keep track of expenses related to the business. Doing all the right things can mean your business gets taken seriously by the IRS, even if you don't make a profit every year.

And, yes, you definitely want to file a business tax return if you have a business loss. That loss can offset other income on your personal tax return but you show a loss unless you file a business tax return.

More Commonly-Asked Business Tax Questions


All the Answers to the Most-Asked Business Tax Questions


February 20, 2013 at 5:04 pm
(1) Lisa Steward says:

Very straight-forward answer to this question. Thought it’d be helpful for those business owners who are wondering what forms they need to file to link to this helpful article: http://www.signaturefiling.com/blog/50/the-business-owners-must-have-guide-to-filing-business-tax-returns/

It provides a great overview of filing business taxes and links to the needed forms.

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