For those of you who are just starting your business this summer, I have a few tips over the next couple of weeks that will help.

First you must decide what type of business entity you are going to establish. The type of entity determines the tax return you will file at the end of the year. The most common types of business are:

1. Sole proprietorship-file a Schedule C in addition to all of your other schedules on your personal return

2. Partnership – Two or more people, can be husband and wife, doing business together file a Form 1065 with the partnership profit or loss carrying forward to your personal return.

3. Corporation - files its own return and pays its own taxes – does not affect the personal return.

4. S corporation – acts as a corporation but the tax is paid by the individual shareholders.

 
This information is provided in an effort to help you gather and organize the information necessary to file your individual or small business income tax return. While these financial tools are not a substitute for financial advice from a qualified professional, they can be used as a starting point in your decision making process.