This is my first time filing small business taxes, and I'm not sure what to do. I am the sole owner, and the sole employee. What tax forms do I need to fill out for my quarterly taxes? I'm assuming I need to do the 1040, but does the 941 apply to me, even though I have no employees? Or do I count myself as an employee?
a sole proprietor is never an employee so even if you had employees you would not include your income or pay your taxes through form 941. since you have no employees there is no 941 filing requirement.
you file Schedule C to report your business income on your 1040.
generally, you can avoid penalties for not paying in the taxes you will owe by meeting either of these 2 options
pay in for 2021 on each of these dates (on 5/17/2021, 7/15/2021, 9/15/2021 and 1/15/2022)
a) 25% of your 2020 taxes if your adjusted gross income was $150,000 or less or 27.5% if your AGI was over $150,000
b) 22.5% of your 2021 tax
since most people don't know what their 2021 tax will be they use option a
you make payments by either using form 1040-ES or you can use the IRS website
if your state has an income tax, it's likely you'll owe periodic tax payments to the state
If you are new to being self employed, are not incorporated or in a partnership and are acting as your own bookkeeper and tax preparer you need to get educated ....
If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-NEC for some of your income but you need to report all your income. So you need to keep your own good records. Here is some reading material……
IRS information on Self Employment….
Publication 334, Tax Guide for Small Business
Publication 535 Business Expenses
Publication 463 Travel, Gift, and Car Expenses
Home Office Expenses … Business Use of the Home
Publication 946 … Depreciation
There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Self Employed return and will help you keep up in your bookkeeping all year along with calculating the estimated payments needed ....
Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C. You pay 15.3% for 2017 SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire. You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040. The SE tax is already included in your tax due or reduced your refund. It is on the 1040 line 57. The SE tax is in addition to your regular income tax on the net profit.
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2017 SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.
You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
To prepare estimates for next year, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.
OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button