When choosing which 2010 federal tax forms to fill out for your business, you have a few options. You must choose between corporation, partnership, or sole proprietorship. Some business owners believe they are in charge of a corporation, but this might not necessarily be so. This will change which federal tax forms you file.
A true corporation will pay taxes as its own entity independent of its owners. To be classified as a corporation, a business must have filed a form called “Entity Classification Election.” If you need to fill this out, look for tax form 8832.
When filling out these 2010 federal tax forms, you must elect to be taxed as a corporation. After that, you must file the U.S. Corporation Tax Return tax forms, otherwise known as form 1120. If you haven’t performed these steps, your business is not considered a corporation by the IRS.
If more than one person owns a business and it hasn’t elected to become a corporation, it is automatically a partnership. If you file your business as a partnership, all funds gained or lost are taxed as each owner’s personal income on your 2010 federal tax forms.
A partnership must file with the federal tax forms in the series 1065 tax forms. These tax forms are called the “U.S. Return of Partnership Income.” When filing these forms, you must claim your own share of income, as well as credits and deductions. Plus, you must claim your partner’s share as well.
If you only have one owner for your business, your business is considered a sole proprietorship. These can only be considered a corporation. However, like above, you must have actually filed to become a corporation.
Non-corporation sole run businesses like these are known as “disregarded entities.” This means your taxes are treated like you are an individual. Owners of a business in this class will file with the 1040 series of federal tax forms just like individuals do.