Business filing questions

[shtomlin]

I am a full-time, salaried employee with fairly considerable tax withholdings. I also have an extremely small side business with a federal EIN. The money that I earn through my business is 100% received through a contract with a W9 reported at the end of the year. If I report 100% of that W9 and my EIN in my personal tax filing, do I still need to file a separate business tax report? Also, do I need to file the business tax quarterly, since it’s based on commissions? Or because the business income is so extremely small is it OK to file annually along with my regular income that has already been withheld for the IRS?

[vithalanin]

First thing you need to look at is the type of entity you have formed for your business:

1) if it a single member LLC or just a sole-proprietor business, then the business income and expenses would be reported in your personal return as a self-employed income. This business is shown on Sch C of your personal tax return. There is no separate tax return to be filed

2) if it a Corporation, an S-Corporation or a partnership, then the income and expenses for it would get reported on a Form1120, Form 1120S or Form 1065, respectively. These are separate business tax returns.

If you are required to file the Schedule C, or Form 1120S or Form 1065, then you would need to pay quarterly estimated taxes to the IRS under your Social Security number on the bottom line profit that you will be receiving from this business. If you do not make estimated tax payments and then owe money to the IRS, they will collect penalty and interest on this income from Jan1 of the tax year you are reporting this income for.

If this is a regular C Corporation, then the business will need to make estimated tax payments to the IRS under the entity's EIN.

[shtomlin]

Thank you! Yes, it is a single-member LLC. If I later decide to start charging a fee, I can just keep track of that additional income and report it in addition to what I earn via the W9, yes?

[gforeman1]

Your small business can be filed with your personal tax return in most cases. If you are operating your business as a Sole Proprietor or Single-Member LLC, you may file your Income (i.e. Form1099-NEC) and expenses on a  Schedule C as part of your personal tax return.  There is no separate business return required unless your business structure is different than the two mentioned. 

The IRS does not require quarterly business taxes. With the additional income you are earning through your business, you may be required to make estimated quarterly tax payments. This is to be sure you are paying the taxes due on the business income you are earning during the year.  For more information on quarterly tax payments, please see Estimated Taxes and When to Pay Estimated taxes.

[vithalanin]

Yes, as it is a business, it is not limited to the W9 income.