The tax return you file for your business is determined by how the business is organized. TaxAct supports all the following business types.
Limited Liability Company (LLC): LLC designation is done at the state level and doesn’t determine which federal tax return to file. That is determined by the business structure. An LLC may file as part of the owner’s individual return, or separately as a partnership or corporation. You will need to determine which of the following return types is correct for your business.
Sole Proprietorship: A sole proprietor is someone who owns an unincorporated business by themselves. In this case, Schedule C, E, or F is filed with the business owner’s individual 1040 return to report business income.
Partnership: A partnership 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 Form 1065.
C Corporation: In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. C corporations file Form 1120.
S Corporation: An S corporation is a corporation that has elected to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. To become an S corporation, the corporation must submit Form 2553, Election by a Small Business Corporation signed by all the shareholders. S corporations file Form 1120S.
For more information, see the IRS webpage Business Structures.
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