If your business is a sole proprietorship or an unincorporated single-member LLC with you as the sole owner, the income is considered yours and taxed as such. Which means that the business portion is recorded on your personal tax return.
FREE TIP: Once your estimated taxes reach $1,000 or more, you need to start paying estimated taxes.
If your business is a partnership, an unincorporated multi-member LLC, or an S corporation, the ordinary business income passes through to members and is reflected on their personal returns. Hence, that free tip above also applies here.
In case you may owe more than the allowable amount at the end of the year after any withholding and refundable credits, you should make quarterly estimated tax payments. The alternative is to increase the withholding on any other income that is subject to withholding. You can use Form 1040-ES, Estimated Tax for Individuals, to determine if you need to make estimated tax payments.
When you file your income tax return at the end of the year, you should include income from your business on the following forms:
- Form 1040, U.S. Individual Income Tax Return.
- Schedule C (Form 1040), Profit or Loss from Business.
- Schedule E (Form 1040), Supplemental Income and Loss.
- Schedule SE (Form 1040), Self-Employment Tax.
Don’t forget to claim any estimated tax payments you may have made during the year on your individual income tax return.
Generally, all corporations must make installment payments if they expect their estimated tax for the year to be $500 or more.