Quick overview

Starting and running a small business brings tax responsibilities from day one. The federal filing and payment steps you take in year one set a pattern for compliance, recordkeeping, and cash flow planning in later years. This guide lays out the essential forms, typical federal deadlines, common traps I see in practice, and a practical checklist for new owners. For IRS guidance, refer to the Small Business and Self-Employed Tax Center (IRS) and the Guide to Small Business Taxes (IRS).

Sources: IRS Small Business and Self-Employed Tax Center: https://www.irs.gov/businesses/small-businesses-self-employed and Guide to Small Business Taxes: https://www.irs.gov/businesses/small-businesses-self-employed/guide-to-small-business-taxes

What federal forms will most new small businesses need?

  • Sole proprietors: File Form 1040 (individual return) and attach Schedule C (Profit or Loss From Business) to report business income and expenses. Self-employment tax is reported on Schedule SE. (See About Form 1040 and Schedule SE on IRS.gov.)

  • FinHelp interlink: Schedule C (Profit or Loss from Business) — https://finhelp.io/glossary/schedule-c-profit-or-loss-from-business/

  • Partnerships: File Form 1065 (U.S. Return of Partnership Income). Partnerships issue Schedule K-1s to partners to report each partner’s share; partners report K-1 items on their personal returns. (See About Form 1065 on IRS.gov.)

  • FinHelp interlink: How to Use Schedule K-1 for Partnerships and S Corporations — https://finhelp.io/glossary/how-to-use-schedule-k-1-for-partnerships-and-s-corporations/

  • S corporations: File Form 1120-S and issue Schedule K-1s to shareholders.

  • C corporations: File Form 1120; the entity pays tax at corporate rates. (See About Form 1120 and About Form 1120-S on IRS.gov.)

  • Employment/federal payroll taxes: If you have employees, you generally must file Form 941 quarterly (report withheld income tax and employer/employee share of FICA), and Form 940 annually for FUTA. Deposit schedules for payroll taxes vary by your deposit history. (See About Form 941 and About Form 940 on IRS.gov.)

  • Contractor payments: Use Form 1099-NEC to report nonemployee compensation to contractors paid $600 or more in a year. (See About Form 1099-NEC on IRS.gov.)

  • Estimated tax payments: Owners who expect to owe tax of $1,000 or more (after withholdings/credits) generally must make quarterly estimated payments using Form 1040-ES (individuals) or the corporate equivalent. Schedule SE and Form 1040-ES details are available on IRS.gov.

Practical note from my practice: many clients underestimate self-employment tax (Social Security and Medicare) when they budget estimated payments. Use Schedule SE to estimate your self-employment tax liability.

Typical federal deadlines (general guidance)

  • Individual returns (Sole proprietors attaching Schedule C): Generally due April 15 each year (when the date falls on a weekend or holiday, the due date may shift per IRS rules). See About Form 1040.

  • Partnerships and S corporations: Generally due March 15.

  • C corporations: Generally due April 15 (calendar-year corporations); different rules apply for fiscal-year filers.

  • Payroll returns (Form 941): Quarterly (filing due the last day of the month following the quarter end); deposits follow the EFTPS schedule based on your tax liability.

  • Annual FUTA (Form 940): Generally due January 31 for the prior year.

  • Estimated tax payments for individuals (Form 1040-ES): Generally due April 15, June 15, September 15, and January 15 of the following year.

Note: These are federal timeframes—state income, franchise, and sales tax deadlines vary by state. Always check your state revenue department.

Authoritative sources: About Form 1040 (IRS): https://www.irs.gov/forms-pubs/about-form-1040; About Form 1065: https://www.irs.gov/forms-pubs/about-form-1065; About Form 1120: https://www.irs.gov/forms-pubs/about-form-1120; About Form 941: https://www.irs.gov/forms-pubs/about-form-941; About Form 940: https://www.irs.gov/forms-pubs/about-form-940

Step-by-step filing workflow for a new business (practical checklist)

  1. Choose and document your tax structure. The structure determines the federal forms you file and whether business income flows through to your personal return.
  • If you change election (for example, an LLC electing S corporation status), the election timing matters—file Form 2553 for S election within the IRS deadline for the tax year when the election should start.

  1. Obtain an EIN (Employer Identification Number) if you hire employees, form a partnership or corporation, or if a bank requires it. Sole proprietors without employees can often use an SSN, but an EIN reduces SSN disclosure and is commonly recommended.

  2. Set up bookkeeping from day one. Record income, invoices, receipts, and bank statements. Use accounting software (QuickBooks, Xero) or a trusted bookkeeper. Reconcile monthly.

  3. Classify workers properly: employee vs independent contractor. Misclassification is a common audit trigger and can create payroll tax liabilities. Use IRS guidance and, when in doubt, consult a payroll specialist or CPA.

  4. Register for any state withholding, sales tax, or employer accounts required by your state. Sales tax registration is separate from federal filing and depends on nexus and the products/services sold.

  5. Estimate quarterly taxes and set up automatic payments. Underpaying estimated taxes leads to penalties.

  6. File required information returns (1099-NEC) to contractors and to the IRS by the due date.

  7. Prepare and file your annual business income return (Schedule C with 1040, Form 1065, Form 1120-S, or Form 1120) and any payroll reconciliations.

  8. Retain records: keep tax returns, receipts, payroll records, and supporting documents for at least three years (many professionals recommend seven years for extra protection).

In-practice insight: I recommend a quarterly bookkeeping review and a pre-year-end planning meeting in November–December to harvest deductions, review depreciation elections (Section 179/bonus depreciation decisions), and confirm estimated-tax strategy.

Common mistakes and how to avoid them

  • Poor recordkeeping: Failing to document expenses reduces legitimate deductions and increases audit risk. Keep digital copies of receipts and reconcile bank/credit-card statements monthly.

  • Missing payroll deposits: Employers who miss payroll deposits face steep penalties and interest. Use EFTPS and set calendar reminders for deposit cycles.

  • Misclassifying workers: Misclassification can trigger back taxes, penalties, and interest. Use Form SS-8 or consult a tax professional if classification is unclear.

  • Ignoring state taxes: Sales tax, state-income tax, and state unemployment taxes have separate registration and filing requirements—don’t assume federal filing covers state obligations.

  • Waiting until filing season: Year-round tax planning keeps surprises small. I’ve helped clients reduce year-end tax bills by reviewing expected revenue and adjusting retirement contributions or timing deductible expenses.

Penalties and remedies

  • Late-filing and late-payment penalties apply. File a return even if you can’t pay in full to reduce the late-filing penalty; then arrange a payment plan with the IRS. See the IRS website for penalty calculation rules.

  • If you miss a deadline, file as soon as possible and consider requesting an extension (Form 4868 for individuals; business extension forms exist for partnerships and corporations). Extensions extend the filing date but generally do not extend payment due dates.

Useful forms & links (quick reference)

Internal FinHelp articles you may find helpful:

Final professional tips

  1. Start with organized books and a simple chart of accounts. Clean data reduces tax-prep time and fees.
  2. Plan for payroll from day one if you expect growth—tax deposits and withholding are frequent and unforgiving.
  3. Use prepayment strategies to avoid underpayment penalties: set aside a percentage of each sale in a separate account for taxes.
  4. Get ahead of state compliance—register for sales tax and payroll withholding where required.
  5. When in doubt, consult a CPA or enrolled agent. In my experience advising small businesses for 15+ years, an hour of planning in month 10–12 of the first year often saves significant tax and administrative costs.

Professional disclaimer: This article is educational and informational, not personalized tax advice. Tax rules change; check IRS guidance and consult a licensed tax advisor for decisions that affect your business.

Authoritative sources cited: IRS Small Business and Self-Employed Tax Center; About Forms 1040, 1065, 1120/1120-S, 941, 940, 1099-NEC (links above).