Should I file my business and personal taxes together?

by TurboTax•1104• Updated 3 weeks ago

Whether you need to file your business and personal taxes together or separately depends on your business structure.

You can report all your business income and expenses on a Schedule C attachment to your personal income tax return if:

You’re a small business owner using a sole proprietorship.
You’re the sole owner of a limited liability company (LLC).

You must always prepare a separate corporate tax return if:

Your business is a corporation (Form 1120).
Your business is an S corporation (Form 1120S).
Your business is a partnership or you elect to treat your LLC as a partnership (Form 1065).

When you use TurboTax Home & Business (for sole proprietors and contractors) or TurboTax Business (for corporations, LLCs, and partnerships), you'll answer simple questions about your business income and expenses, and we’ll fill in all the right forms for you.

Continue reading for a breakdown of each structure to better understand where your business fits in.

Sole proprietorship

Sole proprietorships are the default business type for independent contractors. If you own an unincorporated business by yourself, you’re considered a sole proprietor and should report your business income on your personal tax return using Schedule C.

If you’re self-employed with net earnings of over $400, you also need to fill out Schedule SE and include it with your return.

Partnership

If your business has two or more owners, you’ll likely file as either a partnership or corporation.

A partnership must file an information return using Form 1065. You’ll then be issued a K-1 to report your share of the partnership’s income on your personal tax return using Form 1040.

C corporation

A C corporation is recognized as a separate tax-paying entity, which means you must file your business income separately from your personal taxes.

Form 1120 is used to file a corporation’s tax return.

S corporation

Shareholders of S corporations report the flow-through of income and losses on their personal tax returns. As a shareholder, you should first file Form 1120-S. The S corporation will then issue you a K-1 to report on your personal tax return using Schedule E.

Limited liability company

By default, an LLC with one owner is taxed as a sole proprietorship, meaning the business income and expenses are reported on Schedule C of your personal return.

Similarly, LLCs with two or more owners are treated as partnerships. The partnership will first file a Form 1065 and issue you a K-1. You can report the K-1 on Schedule E of your personal return.

However, an LLC can elect to be treated as a corporation, whether it has one or multiple owners. If your LLC follows corporate tax rules, you must file your business taxes separately using Form 1120.

LLCs can ask the IRS to treat them as a corporation by filing Form 8832.

For more details on your business type, visit the IRS page on business structures.