Do Businesses Get Tax Returns? How to File Business Taxes

Businesses do not “get” tax returns in the same way individuals might receive a refund. Instead, businesses are obligated to file tax returns with relevant tax authorities. These filings serve as formal documents to report a business’s income, expenses, and profits or losses over a specific period, typically a tax year. The information provided on these returns is used to determine the business’s tax liability.

Understanding Business Tax Returns

A business tax return functions as a comprehensive financial summary required by tax authorities annually. It reflects a business’s financial performance and position throughout a given tax year. The primary purpose of this submission is to accurately calculate the business’s taxable income, which then determines its overall tax obligation.

This process provides a clear picture of how much the business earned, what it spent, and its resulting profitability. Accurate and organized record-keeping is a prerequisite for preparing these returns, as all reported figures must be verifiable.

Tax Filing Based on Business Structure

The specific type of tax return a business files is largely determined by its legal structure. Different entity types have distinct tax treatments and corresponding reporting requirements. This distinction ensures that profits and losses are accounted for appropriately, either at the business level or passed through to the owners.

Sole Proprietorships and Single-Member LLCs

Sole proprietorships and single-member Limited Liability Companies (LLCs) that are not specifically elected to be taxed as corporations are considered “pass-through” entities. The business’s income and expenses are reported on Schedule C (Form 1040) of the owner’s personal income tax return.

Partnerships and Multi-Member LLCs

Partnerships and multi-member LLCs, which are generally taxed as partnerships, also operate as “pass-through” entities. The business must file an informational return, Form 1065, U.S. Return of Partnership Income. This form details the partnership’s income, deductions, gains, and losses. The partnership then issues Schedule K-1s to each partner, who report their share on their individual tax returns.

S Corporations

S Corporations are another form of “pass-through” entity, offering liability protection similar to C corporations but avoiding direct corporate income tax. These entities file Form 1120-S, U.S. Income Tax Return for an S Corporation, to report their income, losses, deductions, and credits. Like partnerships, S Corporations issue Schedule K-1s to their shareholders, who then report their proportional share on their personal tax returns.

C Corporations

Conversely, C Corporations are treated as separate legal entities from their owners for tax purposes. They are responsible for paying corporate income tax on their profits and file Form 1120, U.S. Corporation Income Tax Return. This structure can lead to what is known as “double taxation,” where the corporation pays tax on its profits, and then shareholders pay personal income tax on any dividends received.

Required Information for Business Tax Returns

Regardless of the specific business structure, all tax returns necessitate a comprehensive summary of financial activities. This requires meticulous record-keeping throughout the year to ensure accuracy and compliance. Businesses must collect and organize various categories of financial data to complete their tax filings.

Gross income or revenue represents all money earned from the business’s primary activities before any deductions. If the business sells goods, the cost of goods sold (COGS) encompasses the direct costs associated with producing or acquiring the products sold, including raw materials and labor directly tied to production.

Operating expenses cover the routine costs of running the business, which are generally deductible. Common examples include rent for business premises, utility bills, salaries and wages paid to employees, advertising costs, office supplies, and professional fees. Depreciation on business assets and insurance premiums also fall into this category.

Other income or losses, such as interest earned on business accounts or capital gains and losses from the sale of business assets, must also be reported. Businesses using the accrual method of accounting or larger entities may also need to provide balance sheet information, detailing assets, liabilities, and equity at the end of the tax year. For businesses with employees, comprehensive payroll information, including wages paid and taxes withheld, is also required.

Filing Processes and Deadlines

Once all the necessary financial information is compiled and the appropriate tax return is prepared, businesses must adhere to specific filing processes and deadlines. These dates are set by the tax authorities and vary based on the business structure and its fiscal year end. Missing these deadlines can result in penalties.

For calendar-year partnerships and S Corporations, the tax returns (Form 1065 and Form 1120-S, respectively) are generally due by March 15. Sole proprietorships and C Corporations using a calendar year typically file by April 15. If any of these dates fall on a weekend or holiday, the deadline is extended to the next business day.

Businesses unable to meet the original deadline can file for an extension using Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. This generally provides an additional six months to file the return, extending the March 15 deadline to September 15 and the April 15 deadline to October 15. An extension to file is not an extension to pay; any estimated taxes due must still be paid by the original deadline to avoid penalties.

The most common method for submitting business tax returns is electronic filing, or e-file. This method is often mandatory for many businesses and provides efficiency and confirmation of submission. While electronic filing is widely preferred, paper filing remains an alternative for some smaller businesses or in specific circumstances.