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How To Start a Business in Fayetteville
Federal Income Tax
The method of paying federal income taxes depends upon your legal form of business. The following procedures must be considered:
- Sole Proprietorshop: You must file IRS Federal Form Schedule C with your personal Federal Income Tax return (Form 1040) and any other applicable forms that help to determine the gains or losses in your business.
- Partnership: You must file a federal Partnership return (Form 1065). The form shows gross and net earnings of profit and loss. Also, each partner must report his share of partnership earnings on his individual form 1040 based on the information from the K-1 filed with the form 1065.
- Corporation: You must file a federal Corporation Income Tax Return (Form 1120). You will be required to report your earnings from the corporation including salary and other income such as dividends on your Personal Income Tax Return (Form 1040).
Self Employment Tax:
If you work for yourself, you are required to pay self-employment tax which is a Social Security and Medicare tax if your net earnings from self-employment is $400 or more. You report the tax when you complete your individual federal income tax and you may need to make periodic estimated self-employment tax to the IRS.