55 direct answers to common US and Canadian small-business tax and bookkeeping questions. Every answer links to the full guide with official IRS, CRA, state and provincial sources. Browse all guides.
New Jersey C corporations pay the Corporation Business Tax at 9%, or 7.5% with entire net income of $100,000 or less and 6.5% at $50,000 or less, with a minimum tax of $500 to $2,000 based on New Jersey gross receipts. Partnerships and multi-member LLCs file Form NJ-1065, and those with more than two owners may owe $150 per partner. Sales tax is 6.625%, reported quarterly on Form ST-50.
In New York, an LLC taxed as a partnership or disregarded entity with New York income files Form IT-204-LL with the Tax Department and pays a filing fee from $25 to $4,500, due the 15th day of the 3rd month after its tax year ends with no extension. C corporations file Form CT-3 under Article 9-A, due April 15 for calendar-year filers, and pay the largest of a business income tax (6.5% for most), a capital tax or a fixed dollar minimum starting at $25.
Washington businesses pay the Business and Occupation (B&O) tax to the Department of Revenue on gross receipts, with no deduction for labor, materials or other costs: 0.471% for retailing, 0.484% for manufacturing and wholesaling, and 1.5% for service income under $1 million on the October 2026 return. Retailers also collect the 6.5% state sales tax plus local rates. A business license is required once gross income reaches $12,000 a year.
Farmers deduct the ordinary and necessary costs of operating a farm for profit on Schedule F (Form 1040), per IRS Publication 225. For 2025 the Section 179 limit is $2,500,000, 100% bonus depreciation is back for property acquired and placed in service after January 19, 2025, and cash-method farmers can deduct prepaid supplies only up to 50% of their other farm expenses.
The IRS treats an independent contractor as self-employed: income goes on Schedule C, and anyone with $400 or more of net earnings from self-employment pays 15.3% self-employment tax on Schedule SE (12.4% Social Security on the first $184,500 in 2026, plus 2.9% Medicare on all of it). Freelancers who expect to owe $1,000 or more generally pay estimated tax with Form 1040-ES, due April 15, June 15 and September 15, 2026 and January 15, 2027.
Most US tax-exempt organizations file an annual Form 990-series return with the IRS: Form 990-N if gross receipts are normally $50,000 or less, Form 990-EZ if gross receipts are under $200,000 and total assets under $500,000, and the full Form 990 above that. In Canada, every registered charity files a T3010 with the CRA within six months of its fiscal year-end, and some non-profit organizations file a T1044.
Restaurant bookkeeping has to track tips and service charges separately because the IRS treats them differently: employees who get $20 or more in tips in a month must report them to the employer by the 10th of the next month, while mandatory service charges paid to staff are wages. A large food or beverage establishment, one where tipping is customary and the employer normally had more than 10 employees on a typical business day last year, also files IRS Form 8027 each year, due March 1, 2027 on paper or March 31, 2027 electronically for 2026.
A US startup claims the research credit on IRS Form 6765, and a qualified small business can elect to use up to $500,000 of it against payroll taxes, claimed quarterly on Form 8974. Unused research credit is carried back one year and then forward 20 years. In Canada, SR&ED credits are claimed on Form T661, generally within 18 months of a corporation's year end, at 15% or an enhanced 35% for CCPCs.
Every paid tax return preparer must have an IRS PTIN, which costs $18.75 for 2026 and for 2027 and expires on December 31 each year. A preparer or firm that reasonably expects to file 11 or more covered returns, such as Forms 1040 and 1041, in a calendar year must e-file them.
A self-employed attorney reports practice income on the individual return, which is due the 15th day of the 4th month after the tax year ends, and pays quarterly estimated tax: for 2026, on April 15, June 15 and September 15, 2026 and January 15, 2027. Clients that pay a law firm report attorneys' fees of $2,000 or more in box 1a of Form 1099-NEC, even when the firm is a corporation.
The IRS treats a C corporation as a separate taxpaying entity that files Form 1120: its profit is taxed when earned and taxed again to shareholders when paid out as dividends. An S corporation is a corporation that elects on Form 2553 to pass its income, losses, deductions and credits through to its shareholders, who pay tax at individual rates, and it files Form 1120-S. To elect, it must be domestic, have no more than 100 shareholders, allow only individuals, certain trusts and estates as owners, and have one class of stock.
Form 1120-S is the IRS return a corporation or other entity files for each tax year it has an accepted S corporation election (Form 2553) in effect. It is due by the 15th day of the 3rd month after the tax year ends, which was March 16, 2026 for calendar-year 2025 returns, and Form 7004 filed by that date gets an automatic extension of time to file. Each shareholder gets a Schedule K-1 showing their share of income, deductions and credits.
A corporation or an entity eligible to be treated as a corporation, such as an LLC, elects S corporation status by filing IRS Form 2553, Election by a Small Business Corporation. The IRS instructions say to file it no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the tax year before it, which is March 15 for an existing calendar-year corporation. A late election can get relief under Rev. Proc. 2013-30 if Form 2553 is filed within 3 years and 75 days of the intended effective date and the other conditions are met.
An S corporation passes its income, losses, deductions and credits through to its shareholders, who report them on their personal returns and pay tax at their individual income tax rates, so the IRS says corporate income avoids double taxation. The S corporation files Form 1120-S by the 15th day of the 3rd month after its tax year ends (March 16, 2026 for 2025 calendar-year returns) and owes entity-level tax only on certain items such as built-in gains and passive income.
An LLC is a business structure set up under state law. An S corporation is a federal tax status a corporation or eligible LLC chooses by filing IRS Form 2553, due no more than 2 months and 15 days after the start of the tax year it should take effect. By default the IRS taxes a one-owner LLC on the owner's return (Schedule C, plus 15.3% self-employment tax on net earnings) and a multi-owner LLC as a partnership on Form 1065, while an S corporation files Form 1120-S and passes income to shareholders on Schedule K-1.
An S corporation files Form 1120-S by the 15th day of the 3rd month after its tax year ends, which is March 15 for a calendar-year corporation, moved to the next business day when it falls on a weekend or legal holiday. The IRS set March 16, 2026 for 2025 calendar-year returns because March 15 fell on a Sunday. Form 7004, filed by that date, extends the time to file, generally by 6 months, but not the time to pay.
The federal corporate income tax rate is a flat 21% of taxable income. The IRS says that for tax years beginning after December 31, 2017, the graduated corporate rates no longer apply, and corporations, including qualified personal service corporations and members of a controlled group, are taxed at 21%. C corporations report it on Form 1120, generally due by the 15th day of the 4th month after the tax year ends.
Form 1120, U.S. Corporation Income Tax Return, is the IRS form a domestic corporation uses to report its income, gains, losses, deductions and credits and to figure its income tax. Every domestic corporation not exempt under section 501 must file it, even with no taxable income, by the 15th day of the 4th month after its tax year ends (April 15 for a calendar-year corporation). Form 7004 gives an automatic 6-month extension to file, not to pay.
Form 1065 is the IRS information return a partnership, including a multi-member LLC taxed as a partnership, uses to report its income, gains, losses, deductions and credits. The partnership generally doesn't pay income tax itself. It is due on the 15th day of the 3rd month after its tax year ends (March 15 for calendar-year partnerships, and March 16, 2026 for 2025 returns), and Form 7004 gives an automatic 6-month extension.
The IRS treats an LLC as a corporation, a partnership or a disregarded entity, depending on its elections and number of members. By default, a one-member LLC is disregarded and reported on the owner's return (Schedule C, E or F for an individual), and a domestic LLC with two or more members is a partnership that files Form 1065. An LLC can file Form 8832 to be taxed as a corporation (Form 1120) or, if eligible, Form 2553 to be taxed as an S corporation (Form 1120-S).
The IRS business standard mileage rate for 2026 is 72.5 cents per mile from January 1 through June 30, and 76 cents per mile from July 1 through December 31. The medical and military moving rate is 20.5 cents, then 23.5 cents from July 1. The charity rate stays at 14 cents per mile all year.
The qualified business income (QBI) deduction, also called the Section 199A deduction, lets eligible owners of sole proprietorships, partnerships, S corporations and some trusts and estates deduct up to 20% of their QBI, limited to 20% of taxable income minus net capital gain. For 2026 the IRS thresholds are $201,750 ($201,775 married filing separately, $403,500 married filing jointly), and starting in 2026 taxpayers with at least $1,000 of QBI from businesses they materially participate in get a minimum deduction of $400.
Schedule C (Form 1040) is the IRS form a sole proprietor uses to report income or loss from a business or profession. It attaches to Form 1040, 1040-SR, 1040-SS, 1040-NR or 1041, and its line 31 net profit goes to both Schedule 1 (Form 1040), line 3, and Schedule SE, line 2. Self-employment tax of 15.3% applies when net earnings from self-employment are $400 or more.
Self-employment tax is the Social Security and Medicare tax people who work for themselves pay, figured on Schedule SE (Form 1040). The IRS rate is 15.3%: 12.4% for Social Security on the first $184,500 of combined wages, tips and net earnings in 2026, plus 2.9% for Medicare on all net earnings. It generally applies to 92.35% of net earnings once those reach $400, and half of the tax is deductible when figuring adjusted gross income.
By default the IRS treats a single-member LLC as a disregarded entity, so an individual owner reports it on Schedule C of Form 1040 and pays self-employment tax in the same manner as a sole proprietorship. The difference is legal and optional: the SBA says a sole proprietorship isn't a separate entity, so the owner can be held personally liable for business debts, while an LLC protects personal assets in most instances and can elect to be taxed as a corporation (Form 8832) or an S corporation (Form 2553).
An LLC's federal due date depends on how the IRS taxes it. A multi-member LLC taxed as a partnership (Form 1065) or an LLC taxed as an S corporation (Form 1120-S) files by the 15th day of the 3rd month after its tax year ends, which was March 16, 2026 for calendar-year 2025 returns because March 15 fell on a Sunday. A single-member LLC reported on the owner's Form 1040 and an LLC taxed as a C corporation (Form 1120) file by the 15th day of the 4th month, April 15 for calendar-year filers.
Affordable bookkeeping covers the core work the Bureau of Labor Statistics lists for bookkeepers: recording transactions, assigning debits and credits to accounts, reconciling differences and producing balance sheets and income statements. Payroll and tax returns are separate jobs. The costly gaps are compliance ones: for payments made after December 31, 2025, the IRS requires Form 1099-NEC for $2,000 or more paid to a nonemployee, and a late or missing information return can cost $60 to $340 per return in 2026.
Automated bookkeeping uses accounting software to record and process transactions, which the IRS calls an automatic data processing (ADP) system when records are processed by other than manual methods. Automation doesn't change the recordkeeping rules: IRS Publication 583 says computerized records must reconcile with your books and return, identify the underlying source documents, and come with a description of the system and its controls.
The median pay for bookkeeping, accounting and auditing clerks was $24.36 an hour, or $50,670 a year, in May 2025, according to the Bureau of Labor Statistics. An employer pays more than the wage: in June 2026, BLS data put total compensation for private-industry office and administrative support workers at $36.73 per hour worked, of which $25.22 was wages and $11.51 benefits.
Bookkeeping is recording every business transaction, from the supporting documents your purchases, sales and payroll create, so you can prepare financial statements and tax returns. The IRS lets you use any recordkeeping system that clearly shows income and expenses. Keep records supporting a return for at least 3 years in most cases, and employment tax records for at least 4 years.
Bookkeeping for a medical practice is mostly about receivables from insurers and patients, staff costs and information returns. Under IRS Publication 538, a cash-method practice reports income when it is actually or constructively received and can't hold checks into the next year to delay tax, while an accrual-method practice reports income when it is earned. For 2026, health and accident insurance plans report payments of $2,000 or more to a physician or physicians' corporation on Form 1099-MISC.
Outsourcing bookkeeping means an outside team records transactions, posts debits and credits, keeps the general ledger and produces financial statements instead of an employee. An in-house bookkeeper earned a median of $50,670 a year in May 2025, according to the Bureau of Labor Statistics. The IRS lets a tax professional, payroll service or other trusted third party make your electronic federal tax deposits, but you stay responsible for the accuracy of your return.
A tax accountant computes the taxes a business owes, prepares its returns and makes sure the tax is paid properly and on time, as the U.S. Bureau of Labor Statistics describes the job. Anyone paid to prepare a federal return needs an IRS Preparer Tax Identification Number (PTIN), but the IRS says only CPAs, enrolled agents and attorneys have unlimited rights to represent clients before the IRS, including audits, collections and appeals.
A bookkeeper keeps a business's financial records complete and accurate. The Bureau of Labor Statistics says bookkeepers are often responsible for some or all of an organization's accounts, known as the general ledger: they record all transactions, post debits and credits, prepare bank deposits and produce financial statements and other reports. The median pay for bookkeeping, accounting and auditing clerks was $50,670 a year, or $24.36 an hour, in May 2025.
The IRS requires Form 1099-NEC to be furnished to each recipient and filed with the IRS by January 31, on paper or electronically, and there is no automatic extension. When January 31 falls on a Saturday, Sunday or legal holiday, the due date is the next business day. For payments made in 2026, the form is required for each nonemployee paid at least $2,000 for services in the course of a business, up from $600 for earlier payments.
IRS Form 941, the Employer's Quarterly Federal Tax Return, is due by the last day of the month after each quarter ends: April 30, July 31, October 31 and January 31. If you made timely deposits in full payment of the quarter's taxes, the IRS lets you file by the 10th day of the second month after the quarter, such as May 10 for the first quarter. When a due date falls on a Saturday, Sunday or legal holiday, you may file on the next business day.
Form W-4, Employee's Withholding Certificate, is completed by every new employee and given to the employer, not the IRS, so the employer can figure federal income tax withholding. If an employee doesn't give a properly completed W-4, the IRS says to withhold as if they are single or married filing separately with no other entries. A W-4 claiming exemption lasts one year: for 2026 it must be renewed by February 16, 2027.
Employers must give Form W-2 to employees and file Copy A with Form W-3 at the Social Security Administration by January 31, or the next business day when January 31 is a Saturday, Sunday or legal holiday. For 2025 wages the IRS set the date at February 2, 2026 for both paper and electronic filing. Extensions are not automatic.
Business tax planning starts with the IRS pay-as-you-go rule: tax is paid as income is earned, through withholding or estimated payments. Sole proprietors, partners and S corporation shareholders generally pay estimated tax if they expect to owe $1,000 or more, and corporations if they expect to owe $500 or more. Most avoid the underpayment penalty by paying the smaller of 90% of this year's tax or 100% of last year's tax shown on the return.
IRS Form 1040-ES lists four 2026 estimated tax due dates for calendar-year individuals: April 15, 2026, June 15, 2026, September 15, 2026 and January 15, 2027. The January payment isn't required if the 2026 return is filed by February 1, 2027 with the full balance paid. Individuals, including sole proprietors, partners and S corporation shareholders, generally must pay if they expect to owe $1,000 or more, and corporations if they expect to owe $500 or more.
Section 179 lets a business elect to expense part or all of the cost of qualifying property placed in service during the tax year and used more than 50% for business, instead of depreciating it over several years. Under the IRS Form 4562 instructions, the maximum deduction for tax years beginning in 2025 is $2,500,000, reduced dollar for dollar once the cost of Section 179 property placed in service tops $4,000,000. The election is made on Form 4562.
Form 940 is the IRS return employers use to report annual Federal Unemployment Tax Act (FUTA) tax, which only employers pay. The tax is 6.0% of the first $7,000 paid to each employee in a year, and a credit of up to 5.4% for state unemployment tax usually brings it to 0.6%. The 2025 Form 940 was due February 2, 2026, or February 10, 2026 if all FUTA tax was deposited on time.
Form SS-4, Application for Employer Identification Number, is how a business gets a free 9-digit EIN from the IRS. A U.S.-based applicant can apply online and use the EIN immediately. By fax it generally takes 4 business days, and by mail about 4 weeks.
Form W-9, Request for Taxpayer Identification Number and Certification, is how a U.S. person gives their correct TIN to a business that must file an information return with the IRS, such as Form 1099-NEC. You give it to the requester, not the IRS. If you don't provide a TIN, the payer may have to withhold 24% of reportable payments as backup withholding.
Form 1040 is the annual US individual income tax return filed with the IRS. A 2025 return is due April 15, 2026 for calendar-year filers, or October 15, 2026 with an automatic extension. Whether you must file depends on gross income, filing status and age, and anyone with $400 or more of net self-employment earnings must file Form 1040 with Schedule SE.
Form 2848, Power of Attorney and Declaration of Representative, authorizes an individual who is eligible to practice before the IRS to represent you and to receive and inspect your confidential tax information. It has no annual filing date. You submit it online at IRS.gov/Submit2848, or by fax or mail to the CAF unit for your state, and it must name specific tax matters, forms and years.
Alberta taxes corporations at 2% on active business income up to $500,000 for eligible Canadian-controlled private corporations and 8% otherwise. Because Alberta collects its own corporate tax, corporations file an Alberta AT1 return with Alberta Tax and Revenue Administration as well as the federal T2 with the CRA, each due within six months of the tax year end.
Every resident corporation in Canada, including inactive and non-profit corporations, has to file a T2 Corporation Income Tax Return with the Canada Revenue Agency (CRA) for every tax year, even with no tax payable. The T2 is due within six months of the end of the tax year, but the balance of tax is generally due two months after year end, or three months for qualifying Canadian-controlled private corporations (CCPCs). For tax years starting after 2023, most corporations have to file electronically or face a $1,000 penalty.
Form T2125, Statement of Business or Professional Activities, is the Canada Revenue Agency form self-employed people use to report business or professional income and expenses and work out the gross and net income that go on their T1 return. You file a separate T2125 for each business or professional activity. For the 2026 tax year, a self-employed person's return is due June 15, 2027, but any balance owing is due April 30, 2027.
The Canada Revenue Agency requires a business to register for the GST/HST once it makes taxable supplies in Canada and is no longer a small supplier, meaning its worldwide taxable supplies, together with those of its associates, went over $30,000 in a single calendar quarter or over the last four consecutive calendar quarters. The business then has 29 days from its effective date of registration to register, and it gets a 15-digit GST/HST number such as 123456789 RT 0001.
As of October 31, 2026, TurboTax lists Expert Assist Business at $229 federal for sole proprietors and $639 federal for S corps and partnerships, and Expert Full Service Business at $1,549 federal for S corps and partnerships, with state returns extra. Its online business products don't support C corps (Form 1120). Aldro charges $399 flat for the year, covering federal and state business returns, C corps included.
EBITDA is an acronym for earnings before interest, taxes, depreciation and amortization. The IRS uses it to describe adjusted taxable income (ATI) under section 163(j): for tax years beginning after 2024, ATI again adds back depreciation and amortization, replacing the EBIT-based calculation used for 2022 through 2024. Business interest expense is generally limited to 30% of ATI plus business interest income and floor plan financing interest.
A small business invoice needs your business name, the invoice date, a unique invoice number, the customer, what you sold and the total. In Canada, the CRA requires a GST/HST registrant's invoice to show its registration number from $100, and the buyer's name, a description and payment terms from $500, or the customer may be denied input tax credits.
The IRS estimates that a small business filing Form 1065 spends about $3,300 out of pocket on average to prepare and submit it, a small S corporation filing Form 1120-S about $4,200, and a small C corporation filing Form 1120 about $3,900. For owners who report business income on Form 1040 (Schedule C, E or F), the IRS average is about $560 and 24 hours per return.
How you file federal business taxes depends on your structure. The IRS has sole proprietors and single-member LLCs report on the owner's return with Schedule C (and Schedule SE when net self-employment earnings are $400 or more), multi-member LLCs file Form 1065 as partnerships, S corporations file Form 1120-S, and C corporations file Form 1120 by the 15th day of the 4th month after the tax year ends. Form 7004 extends a business's time to file, never its time to pay.