Do I Have to File a Separate Business Income Tax Return with the IRS?

Avoid Having to File an Amendment with the IRS - Common Misconception I've Noticed Popping Up

Let's Clear Up a Misconception I've Noticed Popping Up More Frequently in Conversations I've been having with Small Business Owners...

Have you ever applied for business credit and been asked for your "business and personal IRS tax returns"?

I noticed even bankers, car dealership financing departments, underwriters for credit, and other various "professionals" in their industry ask for this without recognizing the instances in which there would NOT be a separate IRS business income tax return from the IRS personal income tax return.

Not all businesses are required to file a separate business income tax return with the IRS...

Sole Props and Single-Member LLCs (who didn't elect to be taxed as an S-corp or C-corp):

• Sole Props and Single-Member LLCs (who didn't elect to be taxed as an S-corp or C-corp) DO NOT file a separate IRS Business Income Tax Return.

All business income and expenses are reported on Schedule C and must be included on their personal tax return.

IF there were NO business expenses and NO business income, then a Schedule C is not required to be filed. This would apply to "inactive" businesses.

• Single-Member LLCs (who elected to be taxed as an S-corp or C-corp)
• Multi-Member LLCs
• Partnerships
• S-corps
• C-corps

All five entities are required to file a separate business IRS Income Tax Return in addition to their personal tax return.

Here are the main forms each will need to file:

• Single-Member LLCs (who elected to be taxed as an S-corp or C-corp) - file the below forms according to which entity type you elected to be taxed as
• Multi-Member LLCs and Partnerships - file Form 1065 and Schedule K-1 (per partner/member)
• S-corps - file Form 1120-S, Schedule K-1 (per partner/member), and W-2
• C-corps - file Form 1120, 1099-DIV, and W-2

What should I do if I didn't include my Single-Member LLC income on my personal tax return?

If you've already filed your personal tax return and did not include your LLC's business income and expenses, you will need to file Form 1040X to file an Amendment with the IRS.

If you don't take the time to amend your personal tax return, the IRS could (at a later date) catch the situation and file an adjustment to include the income. The IRS will not include any tax credits or business expenses. This will cost you more to let them do it.

If the IRS does file the adjusted tax return, I recommend you file an Amendment to include any credits and deductions you can rightfully claim to minimize your tax balance.

You can expect to be hit with penalties and interest for "failing to report all your income".

As always, I hope this was helpful, and I TRULY APPRECIATE YOU!

Stay tuned for more…

To your success!

- Loma