Starting a new business venture is an exciting time for any entrepreneur. However, many entrepreneurs forget that they need to pay taxes on their new business ventures. So today we're going to talk about how to file your taxes once you have started a side business.

The good news is that while the business is still in its infancy stage tax implications are not too complex. Here's a list of tax forms you will file for your personal return as well as your new side business, which will be filed together at the end of the year. Please note that the following information is intended for a side business venture that doesn’t make excessive amounts of income. If your business venture already makes a significant amount of income, there are other tax planning and structuring strategies available that may decrease your tax bill.

IRS Form 1040: The 1040 is the standard federal income tax return form for all individuals in the country. When you have a side business you will still need to file this return, but you will need to add some supporting schedules and make some additional line entries to support the additional income you made.

IRS Schedule 1 (Form 1040): Depending on your current situation, you may already be required to file a Schedule 1 attachment to your 1040 for additional income and adjustments to income. for today's purposes we will be focusing on line 12 and line 27. These lines represent business income reported on your Schedule C (see below) and the deductible part of self-employment tax reported on your Schedule SE (also see below).
IRS Schedule 4 (Form 1040): You will also need a 1040 Schedule 4 to report your self-employment taxes owed to the IRS.

IRS Schedule C (Form 1040): Schedule C is used to report a profit or loss from a sole proprietorship business. if you're reading this it's very unlikely that you have not Incorporated your business or elected some alternative method of reporting its income. You will use this form to report the income of your side business as well as the relevant expenses that took place during the year. individuals who report business income on Schedule C will be taxed at their regular tax rate for the net amount of business income (not the gross amount). This net amount is also subject to self-employment tax which we'll get to below when we pull up the schedule SE.

IRS Schedule SE (Form 1040): Income reported on line 31 of the schedule C is subject to self-employment tax because you were effectively self-employed for that portion of your income. This form is used to pay that self-employment tax as well as Deduct a portion of that tax paid against your taxable income.

The information for each of the forms can be summarized below (based on the 2018 schedules):

That covers everything! If you have any questions, please feel free to reach out to us by using the contact tab. We hope to see you again soon!

What Tax Forms Do I Need for My New Side Business?