I am opening a small business by myself. What income Tax Forms will I have to file? Is it a W2 and a 1099?

Question

I am opening a small business by myself. What income Tax Forms will I have to file for myself at the end of the tax year? Is it a W2 and a 1099? I am searching the net and can't find an exact answer. It is going to be a breakfast deli. Thanks for the help. I'm sure there is a small business owner out there with the answer.

Answer 1

you will need to pay sales taxes on sales and estimated quarterly taxes on your personal income

Answer 2

1099s are for filing when you have people who work for you, but are not employees. Ex. Independent contractors- you would also be required to send them to the payee in order for that person to use them for their tax return preparation.

They are also used if you have paid interest, or dividends to anyone, but that doesn't seem to be in effect here.

The W-2 is another "information return" where it tells the IRS the amount you paid to which employees. You may also be required to send them to the employees for help in preparing their own tax returns.

Neither of these are forms that you will file for you personal income, as the are not tax return forms, but instead are information returns.

If you are incorporating, you need a corporate attorney to make sure that you file all of the correct forms, as there are a large amount to file.

If you want any more details regarding your specific situation, don't hesitate to email us at [e-mail]  

Answer 3

When you incorporate you create an "individual" or an "entity" in the eyes of the IRS.  The corporation will need to file tax returns.

You can be paid in two ways.  You can take a salary as President/CEO/Manager of the company.  This should be done as a W-2 employee as it will reduce your tax burden.  Then you can receive distributions of the profits of the company, and they will treated differently.  As well as returns for "paid in capital"... what ever money you used to start the company is considered a loan to the company and a liability that needs to be repaid.

A good accountant will be able to structure everything for you to reduce your tax liability as well as giving you guidance as to how much to put away on a monthly basis to cover all the taxes you'll have to pay over the course of the year.

Answer 4

Since you have decided to incorporate you have two choices.

If your business qualifies as an S-Corp the entire profits of the business are passed directly through to the stockholders and there are no corporate profits.  In this case you would file a corporate tax return (information only) and on your personal 1040 show the profits from the business.

If you elect not to file as an S-Corp (or can't due to having too many investors) your business must file a corporate tax return and pay the taxes.  Your compensation would consist of a salary and dividends.  Your salary would be reported on a W-2 and any dividends on a 1099.

Hope this helps

Jerry-the-bookkeeper

Answer 5

It depends on the structure of the business.  I would recommend that you do not open it as a sole proprietor.  I would go with an s-corporation or LLC.  S-corp is cheaper and you don't need a lawyer.  No matter which way you go, you would never file a 1099 for yourself.  W2's are only filed if you have payroll and deduct employment taxes.  If that's the case, you will also need to file quarterly federal and state payroll returns.  This is really quite extensive, and from your question I wonder if you have thought this through carefully.  I would really talk to an accountant if I were you.

Edit:

For your own personal taxes, your accountant will still file a regular 1040 for you.  You will receive a W2 from the corporation, just as if you were working for someone else.  In addition, if it is an S-corp, you will receive a K-1 from the corporation which will show any additional income/loss for the year.

Your accountant will be able to file the proper forms to incorporate and declare you an S-corp (if that's what you will do).  Contrary to the other posts, you do not need an attorney to file these for you, unless you have a spare several thousand dollars laying around and need to get rid of it.  I have owned and successfully operated 2 businesses since 1997 and never had one conversation with a lawyer.  The only time I would even consider going that route is if you were going into business with someone else.  By yourself, you don't need the extra expense.