Business Taxes Pdf Guide for Small Business Owners

As a small business owner, managing business taxes can be a daunting task, but it doesn't have to be overwhelming. You can simplify the process by understanding the basics of business taxes.

First, you need to know that business taxes are a separate entity from personal taxes. Your business income is not included in your personal tax return, but you still need to file a business tax return.

To get started, you'll need to obtain a Employer Identification Number (EIN) from the IRS, which is a unique identifier for your business. This will be used to file your business tax return.

The IRS requires businesses to file a tax return each year, even if you don't have any income. This is known as a Form 1120, and it's due on the 15th day of the 4th month after the end of your tax year.

For more insights, see: First Year Business Taxes

The Business Income & Receipts Tax (BIRT) is a tax on gross receipts, and 5.81% on taxable net income.

Explore further: The Government Cuts Business and Personal Income Taxes

To file a BIRT return, you must report both gross receipts and net income. If you plan to carry forward net operating losses, it's recommended to file a complete BIRT return.

Net operating losses incurred in tax years 2022 and thereafter may be carried forward 20 years, while those incurred in tax years prior to 2022 may only be carried forward three years.

The current rates for BIRT are 1.415 mills on gross receipts, and 5.99% on taxable net income. This rate is the same for all tax years, including 2023, 2022, and 2021.

Here's a breakdown of the tax rates for BIRT over the past few years:

If you're running behind schedule, you're in luck - the city of Philadelphia will automatically grant you an extension of time to file your Business Income and Receipts Tax (BIRT) returns up to 60 days from the April due date.

To get this extension, you don't need to fill out a separate form - simply make an extension payment voucher either by paper or online, and it will serve as a filing extension as well.

Filing an extension doesn't give you more time to pay your taxes, though - payments made after the original due date will be subject to interest and penalty charges.

You can't get an extension on tax payments, but you can apply for an extension to file your return.

For another approach, see: How to File Extension for Business Taxes Online

Since tax year 2016, there's been a significant change in the way businesses are taxed. The exemption of the first $100,000 in gross receipts and a proportionate share of net income from the Business Income and Receipts Tax (BIRT) has been in effect.

This exemption is a great relief for many businesses, but it's essential to note that you're still required to file a BIRT return, regardless of whether you qualify for reductions or exemptions.

Some tax credits can be applied against the BIRT, which can help reduce the amount owed to the City. These credits include:

To find out more about specific eligibility and filing requirements, be sure to visit the Tax Credits section of this site.

You can file the NYC-EXT application online with e-Services for an automatic extension of time to file business income tax returns. This form is available for download, and you can also file the NYC-EXT.1 application online with e-Services for an additional extension.

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The NYC-2 business corporation tax return requires you to attach a worksheet to amended returns reporting changes or corrections to taxable income or other bases of tax by the IRS or New York State DTF. You can download the NYC-2 instructions and the business corporation tax worksheet from the relevant websites.

The NYC-2A combined business corporation tax return also requires you to attach a business corporation tax worksheet to amended returns. You can download the NYC-2A instructions and the business corporation tax worksheet.

The NYC-2S business corporation tax return – short form requires you to attach a business corporation tax worksheet to amended returns. You can download the NYC-2S instructions and the business corporation tax worksheet.

Here are some other business forms and regulations you should be aware of:

To dissolve a corporation that has done business in and incurred tax liability to the City of New York, you must obtain Tax Clearance from the Department of Finance.

As of October 1, 2009, this is a requirement under Section 1004 of the Business Corporation Law.

You'll need to complete the Request for Dissolution and mail it to the Department of Finance, which will send a Dissolution Consent to the address provided.

A signed and dated Power of Attorney is required if you're not an officer of the corporation and are filing on its behalf.

The Dissolution Consent must be attached to Certificates of Dissolution filed with the New York State Secretary of State.