(1040, 1065, 1120S, 1099s — and what they really mean)
Running a small business means taking on more responsibility — including knowing what tax forms to file. Whether you’re a sole proprietor, an LLC, or an S-Corp, here’s a breakdown of the most common IRS forms small business owners need to know.
Form 1040 (Individual Tax Return)
All business owners — no matter your structure — file a personal return using Form 1040. Your business income “flows through” to this form if you’re:
A sole proprietor
A single-member LLC
A partner in an LLC or partnership (via Schedule K-1)
An S-Corp owner (via Schedule K-1)
Schedules Commonly Filed with Form 1040 for Business Owners
Depending on your business activity and income sources, you may need to attach one or more of the following schedules when filing your personal tax return:
Schedule C – Reports income and expenses from a sole proprietorship or single-member LLC
Schedule E – Reports supplemental income such as:
Rental properties
S-Corporation or partnership income (via Schedule K-1)
Royalties, estates, and trusts
Schedule SE – Used to calculate self-employment tax, typically filed by sole proprietors, single-member LLCs, or general partners
Schedule 1 – Reports additional income (e.g. unemployment, prize money) and adjustments (e.g. student loan interest, self-employed health insurance deduction)
Schedule 2 – Reports other taxes like self-employment tax, alternative minimum tax, or excess advance premium tax credits
Schedule 3 – Reports nonrefundable credits, like the foreign tax credit or general business credits
These are just some of the most commonly used schedules for small business owners. There are many additional schedules and forms that may apply, depending on your situation — such as those for depreciation (Form 4562), and more.
Form 1065 (Partnership Return)
If you run a multi-member LLC or a general partnership, you’ll file Form 1065 — the U.S. Return of Partnership Income.
This is an informational return (you don’t pay tax at the partnership level)
Each partner receives a Schedule K-1, which reports their share of the income
You’ll use that K-1 to report the income on your personal Form 1040
Form 1120S (S-Corporation Return)
If your business has elected to be taxed as an S-Corporation, you’ll file Form 1120S each year. This is the corporate income tax return that reports the business’s income, deductions, and distributions.
Key points for S-Corp owners:
The business itself doesn’t pay federal income tax — profits pass through to the owners and are reported on their personal Form 1040 via Schedule K-1
You are required to pay yourself a reasonable salary as an owner-employee
That salary must go through W-2 payroll, with proper tax withholdings
In addition to filing Form 1120S, S-Corp owners with payroll must also submit:
Form 941 – Quarterly federal payroll tax return (covers income tax withheld and Social Security/Medicare taxes)
Form 940 – Annual return for Federal Unemployment Tax (FUTA)
Using payroll software or working with a tax professional helps ensure you meet these filing and deposit deadlines correctly.
Form 1120 (C-Corporation Return)
If your business is structured as a C-Corporation, you’ll file Form 1120, the U.S. Corporation Income Tax Return. Unlike S-Corps, C-Corporations are separate tax-paying entities, meaning the corporation pays income tax directly.
Key points about Form 1120:
Profits are taxed at the corporate level
If dividends are distributed to shareholders, they are taxed again at the personal level — this is known as “double taxation”
C-Corps may make sense for certain larger businesses, those seeking investors, or those wanting to retain profits in the business
For most freelancers and small business owners, a C-Corp isn’t the most tax-efficient option — but it’s important to understand the difference when considering how to structure your business.
Form 1099-NEC / 1099-MISC (For Contractors You Pay)
If you paid $600 or more to an independent contractor or service provider during the year, you’ll likely need to file a Form 1099:
1099-NEC – for payments to freelancers, consultants, and non-employees
1099-MISC – for rent, legal services, or other miscellaneous payments
As a business owner, you’re required to:
Send a copy to the contractor
File it with the IRS, usually by January 31
Not sure if someone qualifies for a 1099? It depends on how they’re structured and what kind of work they did. When in doubt, check with your tax advisor.
Bonus: Other Forms You Might Need
Depending on your situation, you may also need:
Form 941/944 – for payroll tax if you have employees
W-2 and W-3 – for issuing wages and reporting to the SSA
State-specific business tax forms – like sales tax, franchise tax, or LLC fees
Final Thoughts
Filing the right forms is essential — not just for staying compliant, but for avoiding IRS penalties. At CleverTax, we help small business owners understand which forms apply to them and handle all the filings accurately and on time.
