How to File Taxes as a Small Business Owner: Forms, Strategies, and Key Differences for Sole Props, LLCs, and S-Corps

As a small business owner, you’re likely juggling marketing, operations, hiring, and yes, taxes. But come tax season, the difference between flying blind and filing confidently often comes down to understanding your business structure and the tax advantages it offers. Let’s walk through what you need to know about filing taxes based on your business type and how to proactively manage your tax burden.

Do I Need to File Taxes Differently if I’m Self-Employed?

If you’re self-employed, the short answer is yes, your tax obligations differ significantly from those of traditional W-2 employees. You’re responsible for both the employee and employer portion of Social Security and Medicare taxes, commonly referred to as self-employment tax.

Here’s what that means for you:

• Self-Employment Tax Rate: 15.3% (12.4% Social Security + 2.9% Medicare).

• When It's Due: Quarterly, via estimated payments (April 15, June 15, September 15, January 15).

• Tax Form You’ll Need:

• Schedule C (Form 1040): Reports your business income and expenses.

• Schedule SE (Form 1040): Calculates your self-employment tax.

Want to make this easier next year? Check out our guide on How to Track and Manage Business Expenses for Tax Purposes. Keeping detailed records makes Schedule C significantly more manageable.

What Forms Do I Need to File as a Sole Proprietor, LLC, or S-Corp?

Your legal structure plays a big role in how you file and how much you owe. Here's a breakdown by entity type:

Sole Proprietorship

This is the simplest structure. If you haven’t formally registered your business, this is likely your default status.

• File With: Schedule C + Schedule SE (attached to your personal Form 1040).

• Taxed As: Pass-through entity.

• Key Note: You pay income tax + self-employment tax on all profits.

Single-Member LLC

From the IRS’s perspective, this is treated the same as a sole proprietorship unless you elect otherwise.

• File With: Schedule C + Schedule SE (unless you elect S-corp status).

• Taxed As: Disregarded entity (unless S-corp elected).

• Key Benefit: Liability protection + tax simplicity.

Multi-Member LLC (Partnership)

If your LLC has more than one owner, you’ll need to file as a partnership.

• File With:

• Form 1065 (U.S. Return of Partnership Income).

• Schedule K-1 for each partner.

• Taxed As: Pass-through to members.

• Key Note: Partners report their share of income on their individual returns.

S-Corporation (S-Corp)

S-corps can offer significant tax advantages, but come with stricter filing and compliance requirements.

• File With:

• Form 1120-S (U.S. Income Tax Return for an S Corporation).

• Schedule K-1 for each shareholder.

• Key Advantage: You can split income between salary and distributions, potentially reducing self-employment tax.

• Don't Forget: You must run reasonable payroll for yourself.

Need help deciding between these? Our blog, How to Pay Yourself as a Small Business Owner, explores how compensation varies depending on business structure.

How Can I Reduce My Tax Liability as a Small Business Owner?

Minimizing your tax burden isn’t about cutting corners. It’s about knowing the rules and planning ahead. Here are proven strategies small business owners can use:

1. Deduct Everything You Can (Legally)

Common deductions include:

• Home office expenses.

• Business travel and meals.

• Equipment and software.

• Professional services (like legal or financial consulting).

• Startup costs.

Tip: Don’t forget about Section 179, which allows you to deduct the full cost of certain equipment or software in the year you purchase it.

2. Maximize Retirement Contributions

Setting up the right retirement plan can reduce your taxable income and help you save for the future.

Options include:

• Solo 401(k).

• SEP IRA.

• SIMPLE IRA.

Each has different limits and flexibility. Not sure what fits best? Our post on Best Retirement Savings Options for Small Business Owners breaks it down in detail.

3. Leverage the QBI Deduction

The Qualified Business Income deduction (Section 199A) allows eligible owners of pass-through businesses to deduct up to 20% of their qualified business income.

• Applies to sole props, LLCs, S-corps, and partnerships.

• Subject to income limits and service industry restrictions.

• Must have taxable income under $191,950 (single) or $383,900 (married) in 2024 to qualify without phaseouts.

This can be a game-changer for lowering your tax bill, especially if you’re operating efficiently.

4. Use Accountable Plans for Reimbursements

If you’re operating as an S-corp, set up an accountable plan to reimburse yourself for home office expenses, internet, phone, and mileage. This allows the business to deduct the expense without you having to recognize it as income.

5. Time Income and Expenses Wisely

If you operate on a cash basis, you can delay income or accelerate expenses to control your taxable income in a given year.

This can be especially useful if you expect income fluctuations or are planning a big business investment.

Want more smart strategies? Explore Maximizing Tax Deductions and Credits to ensure you're taking advantage of every opportunity.

Do I Need to Work with a Tax Professional?

Technically, no, but working with a qualified tax pro (especially one who understands small business) can often pay for itself. At Silicon Beach Financial, we go beyond basic tax prep by helping you:

• Forecast your future tax liability.

• Evaluate the impact of hiring, equipment purchases, and business structure changes.

• File both personal and business returns efficiently.

• Stay compliant with state and federal requirements.

Because taxes aren’t just a once-a-year obligation. They’re a strategic part of your financial plan.

A Closing Thought

Taxes may feel like a chore, but when you understand how to file based on your business structure and use smart planning strategies, you gain control over one of the biggest expenses in your business. Whether you're a solo entrepreneur or scaling a thriving LLC or S-corp, the key is getting organized and being intentional.

If you’re ready to stop guessing and start building a proactive tax strategy, Silicon Beach Financial is here to help. We specialize in working with ambitious business owners like you to build a financial system that supports your growth and reflects your values.

Curious how your current strategy stacks up? Schedule a Discovery Call to explore how we can support your business goals.