Meeting tax filing requirements is essential to avoid penalties and maintain compliance. TFX offers tax service packages for various types of businesses in the United States: self-employed, corporations (C corps and S corps), partnerships, and Limited Liability Companies (LLCs). TFX tax preparers will work on your non-personal federal return, U.S. state returns, as well as your personal tax return.
Filing requirements differ depending on your business structure. This article covers the following topics:
Types of business entities
Self-employment — A self-employed person carries on a trade or business as a sole proprietor or an independent contractor. A sole proprietor owns an unincorporated business by themselves or is an individual and the sole member of a U.S. LLC unless it elects to be treated as a corporation. In some cases, a couple filing married filing jointly endeavoring in business together may each be treated as operating a sole proprietorship under Qualified Joint Venture rules. Refer to the IRS Tax guide for small business for more information.
Single-member Limited Liability Company (LLC) — An LLC is an entity formed under state law by filing articles of organization. Generally, and by default, for income tax purposes, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner's federal income tax return, unless the LLC elects to be treated as a corporation. Refer to the IRS Single Member Limited Liability Companies for more information.
Multiple-member Limited Liability Company (LLC) — A U.S. LLC with at least two members is classified as a partnership for federal income tax purposes unless it elects to be treated as a corporation. Refer to the IRS LLC filing as a Corporation or Partnership for more information.
C corporation — A U.S. C corp is a legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity. Unless exempt under Section 501, all U.S. corporations (including corporations in bankruptcy) must file an income tax return, whether or not they have taxable income. The taxation of profits from the business at both corporate and personal levels may create a double taxation situation. Refer to the IRS Corporations for more information.
S corporation — S corps elect to pass income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level. Refer to the IRS S Corporations for more information.
Partnership — It is the relationship between two or more people to do trade or business. Each person contributes money, property, labor or skill, and shares in the profits and losses of the business. Partnerships file an information return to report their income, gains, losses, deductions, credits, etc. A partnership does not pay tax on its income but "passes through" any profits or losses to its partners. Partners must include partnership items on their tax or information returns. S corp and partnership confer similar tax treatments but S corp has more restrictions, except that S corps can have only one member while partnerships must have at least two. Refer to the IRS website Tax information for Partnerships for more information.
⚠ Note: If you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. However, you may qualify to report as sole proprietors if you meet the Qualified Joint Venture rules.
Documents required for filing the U.S. tax return
Self-employment:
1099, 1099-K, 1099 MISC, and 1099-NEC records for all self-employed work completed. They are issued by the payor.
Records of expenses related to your self-employment and your home office, if you have one.
Records related to personal deductions, including childcare expenses, educational expenses, etc.
Any W-2 or 1099 forms you issued, if you have employees.
Corporations:
Income statement (Profit and Loss Statement).
Balance sheet.
Records of business expenses.
Employee payroll records (if applicable).
Note: You should also report the salary you received from the corporation as income on your 1040 personal tax return.
Partnerships:
Partnership or organizing agreements.
Income statement and balance sheet.
Records of business expenses and income distribution among partners/members.
Business entity filing requirements
Schedule C (Form 1040) – For sole proprietors and Single-Member LLCs:
Schedule C is filed with your Form 1040 to report income or loss from a sole proprietorship, professional practice, or single-member LLC (as long as the LLC is not engaged in farming and is owned by an individual).
One Schedule C is included in our “Expanded income bundle".
A separate Schedule C must be filed for each single-member LLC you own.
Some states, such as Texas and California, may also require a state-specific return for single-member LLCs.
Schedule E (Form 1040) – For rental income, sole proprietors, S corps, Partnerships, LLCs:
Schedule E is filed with Form 1040 to report income or loss from:
Rental real estate
Royalties
Partnerships
S corporations
Estates and trusts
Residual interests in Real Estate Mortgage Investment Conduits (REMICs)
One Schedule E is included in our “Expanded income bundle”.
A separate Schedule E must be filed for each rental real estate, royalty, or entity property.
Form 1120 or Form 1120-F – For Corporations:
Form 1120 is filed by U.S.-based C corporations.
1120-F is filed by foreign corporations that are either:
Engaged in a U.S. trade or business, or
Had no effectively connected income, or
Had income exempt from U.S. tax under a tax treaty.
Form 1120-S – For S corporations
Form 1120-S is used to report income, deductions, credits, and other financial information of an S corporation.
S corporations are pass-through entities, meaning income and other tax items are passed through to shareholders and reported on their individual tax returns via Schedule K-1 (Form 1120-S).
Schedules K-2 and K-3 may also be required if the S corp has foreign income, deductions, or international partners/shareholders.
Form 1065 – For Partnerships and Multiple-Member LLCs:
Form 1065 reports the financial activity of a partnership or multi-member LLC.
These entities are also pass-through, so income is not taxed at the entity level.
Instead, each partner/member receives a Schedule K-1 (Form 1065) showing their share of the entity’s income, deductions, and credits.
Schedules K-2 and K-3 are required when there are foreign operations or partners involved.
Form 5471 – For U.S. citizens/residents with ownership in foreign corporations:
Form 5471 is required for U.S. persons (including corporations or individuals) who own or have control over certain foreign corporations.
This form provides detailed information on ownership, structure, and financials of the foreign corporation.
Penalties for failure to file can be substantial (starting at $10,000 per missed form per year).
Form 5472 + Pro Forma 1120 – For Foreign-Owned U.S. Disregarded Entities (FOUSDEs):
A U.S. single-member LLC owned by a non-U.S. person (nonresident alien) is treated as a disregarded entity for income tax but must still meet information reporting requirements.
If a foreign person owns 100% of a U.S. LLC, the LLC is required to file:
These forms are used to report transactions between the foreign owner and the LLC, including capital contributions, loans, payments, and reimbursements.
Failure to file these forms results in a minimum $25,000 penalty per year.
Note: If you need to close down your registered US entity, TFX can prepare Form 1120, Schedule L, Balance Sheets per Books, for you, and all other necessary US tax forms based on your situation. However, we recommend you file paperwork with the U.S. state first in closing your entity, and then file your final tax return requirements. Refer to the IRS for more information on Closing a business.
Filing deadlines for different business entities
Self-employment:
Filing deadline: Follow the individual tax filing deadline (usually April 15th).
Single-member LLCs:
Filing deadline: Follow the individual tax filing deadline (usually April 15th).
Multiple-member LLCs:
Filing deadline: File as a partnership or corporation based on their election date and follow the respective filing deadlines.
C corporations (C corps):
Tax year end: A C Corp may use either the calendar year or a fiscal tax year.
Filing deadline: The corporate tax return (Form 1120) is generally due by the 15th day of the fourth month following the end of the corporation's tax year (April 15th for calendar year C corps). However, for instance, a corporation with a fiscal tax year ending June 30 must file by the 15th day of the third month after the end of its tax year (September 15 in that case).
S corporations (S corps):
Tax year end: Usually December 31st.
Filing deadline: S Corps generally file Form 1120-S due on the 15th day of the third month following the end of its tax year (March 15th for calendar year S corps).
Note: A corporation that has dissolved must generally file by the 15th day of the fourth month after the date it dissolved.
Partnerships:
Tax year end: A partnership may use either the calendar year or a fiscal tax year.
Filing deadline: Partnerships file Form 1065, due on the 15th day of the third month following the end of its tax year (March 15th for calendar year partnerships).