Understanding IRS Requirements for a Particular Business Structure

 
It's a fact: Anyone who works in the United States must pay taxes. It is unavoidable - to attempt to do so is illegal and may result in steep fines, penalties, and even jail time. The biggest problem in figuring how much you need to pay and when is that it tends to vary depending on a number of factors so large, that there are individuals and professionals out there paid only to keep track of these requirements. Some of them change frequently. One major factor in determining how you pay taxes and file for tax returns is the structure of your business. 
One of the most important things to know about taxation is that nobody can tell you what you need to do, or what is required of you, other than the IRS, an attorney or a CPA. There are many resources online for advice and information about filing your tax returns; however the final decisions on what you should do should always be influenced and/or approved by one of those three to ensure that you file correctly and do not face fines, delays or even audits.
 
Your business structure is one of the most important parts in determining how you file taxes, but it can be broken down in to two different sections by answering one simple question: Are you incorporated? 
If not, you are personally liable for your business - including its taxes. It's quick and easy to handle the taxes for a sole proprietorship: Your taxes are simply your own. There are no separate taxes for your business, as you are the one liable for it and the taxes incurred are on money that is going directly to you. It is, in essence, taxable income, just like a paycheck from an employee. You are responsible for making sure all taxes are paid and filing a tax return every year to ensure your taxes were paid in full. You can be held responsible if taxes are not paid or you fail to file a tax return.
 
General Partnerships can get a little bit more complicated - by default, you and your partner(s) share liability for all business matters. This includes taxes. You will want to ensure that your partnership agreement covers the issues of taxes so that you aren't surprised by an audit on you or your business when it turns out that your partner has been practicing poor bookkeeping.
 
A corporation has things much easier in some ways, and much more difficult in others. By far, the greatest advantage of incorporating is that it eliminates personal liability for the business - including for taxes. Your business is responsible for paying its taxes, not you, so if there is a problem in the process, the business will be held responsible, not you. You are still responsible for your own personal income, but it is separate from your business. If your business receives an audit, it is only the business, not the business owner(s). However, there are problems and burdens that come with incorporating that you must be prepared to handle. It includes a much wider range of taxable items, typically more expensive taxes and more opportunities for deductions. In addition, filing your tax returns annually is much more important. 

With all of the complications involved in corporate taxation, it becomes much harder to run the business, while worrying about the taxes and the bookkeeping, and is a burden on the business owner, especially if he or she is the only employee. One of the most useful things you may do to eliminate some of this responsibility and minimize such risks as double taxation is to hire a CPA or a professional bookkeeper to ensure that your taxes are:
 
A. Actually handled - the worst thing that can be done is absolute nothing. 
B. Handled in a timely manner - being late on taxes is almost as bad as not paying them at all. 
C. Handled properly - paying too much or too little can have repercussions, both immediate and long-term, and improper bookkeeping and filing may result in fines, delays or audits.
 
The most important thing to do, above all else, is to ensure that taxes are paid and returns are filed. Whether it's you, or a CPA doing it, it's one of the aspects of the business that have to be taken care of, with no exceptions.