Filing basics
How to file business taxes: the steps for each business structure
How to file federal business taxes as a sole proprietor, LLC, partnership, S corp or C corp: which IRS return each files, self-employment tax, estimated tax, Form 7004 extensions and the 2026 late-filing penalties, with worked numbers.
Prepared by Aldro Accounting · Updated · Sources checked
The quick answer
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.
Step 1: Find the return your structure files
The form you file follows your business structure and any tax elections you made. The IRS instructions for Form 1120 set out the defaults.
A single-member LLC is generally disregarded as an entity separate from its owner and reports its income and deductions on the owner's federal return. An LLC with more than one owner is generally treated as a partnership and files Form 1065. An LLC files Form 1120 only if it filed Form 8832 to be treated as a corporation.
Every domestic corporation not exempt under section 501 must file an income tax return, whether or not it has taxable income. Corporations file Form 1120 unless they are required, or elect, to file a special return. An S corporation files Form 1120-S instead.
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| Structure | Federal return | How the owner is taxed |
|---|---|---|
| Sole proprietor or single-member LLC (default) | Owner's Form 1040 with Schedule C | Schedule SE for self-employment tax when net earnings are $400 or more |
| Multi-member LLC or partnership (default) | Form 1065 | Partners report their share on their own returns |
| S corporation | Form 1120-S | Shareholders report their share and may owe estimated tax |
| C corporation, or LLC that elected corporate treatment on Form 8832 | Form 1120 | The corporation figures and pays its own income tax |
Step 2: Get your ID numbers and records together
To pay self-employment tax, you need a Social Security number or an individual taxpayer identification number. A corporation without an employer identification number (EIN) can apply online at IRS.gov/EIN, where the EIN is issued once the application is validated, or by faxing or mailing Form SS-4.
Records that support income, deductions or credits on a corporate return usually must be kept for 3 years from the date the return is due or filed, whichever is later. The IRS also says a corporation should keep copies of all filed returns. Your prior year's return is a useful starting point when you estimate this year's tax.
A corporation can't use the cash method of accounting unless it is a small business taxpayer. For tax years beginning in 2025, that means average annual gross receipts of $31 million or less for the 3 prior tax years, and not being a tax shelter.
- Your SSN or ITIN, and the business's EIN if it has one
- Last year's federal return
- Records that support every item of income, deduction and credit
- Any Form 8832 or S corporation election the business filed
- Records of estimated tax payments made during the year
Step 3: Sole proprietors and partners figure self-employment tax
Sole proprietors and independent contractors generally figure net earnings from self-employment on Schedule C and the tax itself on Schedule SE. You must pay self-employment tax and file Schedule SE if your net earnings from self-employment were $400 or more, or if you had church employee income of $108.28 or more.
The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. For 2026, the Social Security part applies to the first $184,500 of combined wages, tips and net earnings. An additional 0.9% Medicare tax applies above $200,000 for single filers, $250,000 for married filing jointly and $125,000 for married filing separately.
You can deduct the employer-equivalent portion of self-employment tax when figuring adjusted gross income. That deduction lowers income tax only. It doesn't change your net earnings from self-employment or the self-employment tax.
Step 4: File the return on time
A corporation generally files Form 1120 by the 15th day of the 4th month after its tax year ends, which is April 15 for a calendar-year corporation. A corporation with a fiscal year ending June 30 files by the 15th day of the 3rd month instead. When the date falls on a Saturday, Sunday or legal holiday, the corporation can file on the next business day.
For returns filed on or after January 1, 2024, a corporation must e-file Form 1120 if it files 10 or more returns of any type during the calendar year, counting income tax, employment tax, excise tax and information returns.
A corporate return must be signed and dated by the president, vice president, treasurer, assistant treasurer, chief accounting officer or another corporate officer authorized to sign.
Step 5: Pay what's due, and estimated tax during the year
Federal tax is paid as income is earned, through withholding or estimated tax. Individuals, including sole proprietors, partners and S corporation shareholders, generally must make estimated tax payments if they expect to owe $1,000 or more when they file. They figure it on Form 1040-ES. Corporations generally must pay estimated tax if they expect to owe $500 or more.
Corporate installments are due by the 15th day of the 4th, 6th, 9th and 12th months of the tax year. For individuals, most avoid the underpayment penalty if they owe less than $1,000 after withholding and credits, or paid at least 90% of this year's tax or 100% of the tax shown on last year's return, whichever is smaller.
Businesses can make most common business tax payments, including estimated tax and federal tax deposits, through their IRS business tax account or Direct Pay for businesses. Some payments must still go through the Electronic Federal Tax Payment System (EFTPS). Corporations must use electronic funds transfer for all federal tax deposits.
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| Filer | Pays estimated tax when expected tax is | Form or method |
|---|---|---|
| Sole proprietor, partner or S corporation shareholder | $1,000 or more | Form 1040-ES |
| Corporation | $500 or more | Installments by the 15th day of the 4th, 6th, 9th and 12th months, by electronic funds transfer |
Extensions and late-filing penalties
A corporation requests an automatic extension of time to file with Form 7004, generally filed by the return's regular due date. The IRS is clear that an extension of time to file does not give you more time to pay.
For Forms 1040 and 1120, the failure-to-file penalty is 5% of the unpaid tax for each month or part of a month the return is late, up to 25%. For a return due after December 31, 2025 that is more than 60 days late, the minimum penalty is $525 or 100% of the unpaid tax, whichever is less. When the failure-to-pay penalty also applies, the failure-to-file penalty is reduced by it (0.5% for each month).
Partnership and S corporation returns work differently, because the tax is paid by the owners. For Form 1065 and Form 1120-S returns due after December 31, 2025, the penalty is $255 times the number of partners or shareholders, for each month or part of a month late, up to 12 months.
Small partnerships may get reasonable-cause relief under Rev. Proc. 84-35 if they have 10 or fewer partners, every partner is an individual (not a nonresident alien) or a deceased partner's estate, items are shared in the same proportion, and each partner reported their share on a timely filed return.
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| Return | Penalty |
|---|---|
| Form 1040 or Form 1120 | 5% of unpaid tax per month or part of a month, up to 25%. Minimum $525 or 100% of unpaid tax, whichever is less, if more than 60 days late |
| Form 1065 | $255 per partner per month or part of a month, up to 12 months |
| Form 1120-S | $255 per shareholder per month or part of a month, up to 12 months |
Filing it yourself or having it done
Each structure adds its own forms, and many businesses file several returns a year. Aldro prepares and files them for you. Our team handles Schedule C, Form 1065, Form 1120-S, Form 1120 and their state returns for $399 a year, one flat price that covers everything tax.
Worked example
Late filing, two ways. A sole proprietor files Form 1040 three months late with $8,000 of tax unpaid. Failure to pay: 0.5% x 3 = 1.5% of $8,000 = $120. Failure to file: 5% x 3 = 15% of $8,000 = $1,200, reduced by the $120 failure-to-pay penalty = $1,080. Together that's $1,200 plus interest. Now a three-partner LLC files its Form 1065, due after December 31, 2025, four months late. The penalty is $255 x 3 partners x 4 months = $3,060, even though a partnership itself usually pays no income tax. For self-employment tax, $50,000 of net earnings from self-employment is under the $184,500 Social Security cap, so the tax is 15.3% of $50,000 = $7,650 on Schedule SE.
Common questions
How much self-employment income can I earn before I have to file?
You must pay self-employment tax and file Schedule SE if your net earnings from self-employment were $400 or more, or church employee income was $108.28 or more.
Which form does an LLC use to file business taxes?
A single-member LLC generally reports on its owner's return. A multi-member LLC is generally a partnership and files Form 1065. An LLC that filed Form 8832 to be taxed as a corporation files Form 1120, or Form 1120-S if it is an S corporation.
Who has to make quarterly estimated tax payments?
Sole proprietors, partners and S corporation shareholders generally do if they expect to owe $1,000 or more when they file. Corporations generally do if they expect to owe $500 or more.
What is the penalty for filing a business tax return late?
For Forms 1040 and 1120, 5% of the unpaid tax per month, up to 25%, with a $525 minimum (or the unpaid tax, if less) after 60 days for returns due after December 31, 2025. For Forms 1065 and 1120-S, $255 per partner or shareholder per month, up to 12 months.
Does an extension give my business more time to pay?
No. Form 7004 gives a corporation more time to file only. Tax is still due by the original due date, and interest is charged on tax paid late even with an extension.
Can I file business taxes online?
Yes. Corporations can generally e-file Form 1120 with its schedules and Form 7004, and a corporation that files 10 or more returns of any type in a calendar year must e-file Form 1120.
Aldro
The cheapest way to get your business taxes done: $399 flat.
Business tax filing is $399 USD a year, and it covers everything tax for that year.
How it works
- Tell us about your business. A two-minute form. No payment is collected through it.
- Get your next steps by email. We’ll email you the next steps within one business day. After you sign up we’ll send you a secure upload link for your documents.
- We file it. Our team prepares and files your return. Add bookkeeping for $20 a month if you want it.
What's included
$399 a year covers everything tax for that tax year.
- Every business return for the year. All the federal and state or provincial business returns you need for the tax year: Schedule C, 1065, 1120-S, 1120 and their state returns in the US; T2, or T1 with T2125, in Canada.
- More than one state. Multi-state returns are included at the same price.
- Your personal return. The owner’s personal return (1040 or T1) is included when it’s needed for the business income.
- Quebec. Quebec returns (CO-17, TP-1 and TP-80) are included. Our Quebec pages are in French, and our team works with you in English.
- Extensions and reminders. Extensions (Form 7004 or 4868) and quarterly estimate reminders are included.
- Information returns. 1099-NEC, T4/T4A and T5018 slips are included in the tax price.
- City and excise returns. City and local business tax returns, and state excise returns such as Washington B&O, are included in the yearly price.
- Franchise tax reports. State franchise tax reports, such as the Texas franchise tax report, are included.
- Estimated tax and instalment amounts. We work out your quarterly estimated tax payments in the US, or your CRA instalments in Canada, and tell you what to pay and when.
- Unfiled past years. Each unfiled prior-year return is $399 per tax year, the same flat price.
- Bookkeeping at $20 a month. Unlimited bank and card accounts, monthly reconciliation and monthly statements.
Basic inventory tracking for online stores, such as Shopify, is included. Full cost-of-goods reconciliation is quoted separately. Payroll processing and sales-tax filing aren’t included in bookkeeping. Prices are in USD. Our team prepares and files your return.
Sources
- IRS: Instructions for Form 1120 · checked October 31, 2026
- IRS: Self-employment tax (Social Security and Medicare taxes) · checked October 31, 2026
- IRS: Estimated taxes · checked October 31, 2026
- IRS: Failure to file penalty · checked October 31, 2026
This guide explains general rules from the sources listed. It isn’t tax advice for your situation.