Easy, right?īusiness taxes can be confusing. Finally, you multiplied your tax rate and your taxable income to get how much you owed the IRS. That taxable income put you in certain tax brackets, with each bracket corresponding to a tax rate. How Do You Calculate Income Taxes for Small Businesses?ĭo you remember how you calculated income taxes for your personal filing? You took your yearly income and subtracted deductions and credits to get your taxable income. If that doesn’t sound right to you, take a second and get a refresh on each of the business structures.
The IRS will classify your business as one of the following five structures: sole proprietorship, partnership, LLC, S corporation, or C corporation.įor the head scratchers out there, thinking, Well, I don’t know-I just own a small business, the IRS is probably classifying you as a sole proprietorship. Whether you run a bookstore or a research consulting firm, the IRS will classify your business as one of the following five structures: sole proprietorship, partnership, LLC, S corporation, or C corporation. How Is Your Business Legally Structured?įirst off, before you touch a single spreadsheet, make sure you’re clear on the legal structure of your business. There’s a lot that goes into this, so put your nerd hat on and let’s dive right in. It’s not everyone’s favorite weekend activity, but unfortunately, you have to calculate your small-business taxes at least once a quarter. Yep, you guessed it-calculating small-business taxes. But no matter how much fun you have running the show, there’s one thing about owning a small business that makes most small-business owners cringe. Owning a small business has its perks, right? You get to be your own boss, set your own hours, make your own decisions.