Finding the right tax forms for your tax filing is foundational to your business tax preparation success. Whether you are doing your own taxes or leaning on a preparer, knowing what forms you’ll be required to file can inform your information gathering and timeline.
This year, due to backlog and pandemic-fueled staff shortages at the IRS as well as lingering COVID-19 relief programs in 2021, knowing what forms you will need to file are more important than ever.
Review some of the common essential forms for small and midsized businesses (SMBs) below. Most states have parallel reporting requirements as the federal government, frequently with their own sets of forms. If some deadlines have passed to file forms listed here, don’t panic. Work with your tax advisor to make a plan to complete them as soon as possible. You may be eligible for the First Time Penalty Abatement Waiver.
On March 12, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which injected more funding for forgivable Paycheck Protection Program (PPP) loans and Economy Injury Disaster Loan (EIDL) grants. The PPP loan and EIDL grant programs ended on May 31, 2021 and December 31, 2021, respectively. Previous COVID-19 relief bills have specified that forgiven PPP loans are considered tax-exempt income and excluded from taxable income. According to the IRS, this means:
- Money received from your forgivable PPP loan will not be included in your gross income at the federal level.
- You will need to check with your state to determine if the forgivable loan is taxable on your state tax return.
- You can deduct qualifying expenses paid with the proceeds of a forgiven PPP loan or emergency Economy Injury Disaster Loan (EIDL) grant.
- Recipients of less than $150,000 in PPP loans who use Form 3508S to request loan forgiveness should review the questions and instructions on Form 3509, which is used to evaluate loan necessity. This can help you understand the documentation you need to retain in the event of an audit.
Thus, businesses that took out a PPP loan or a EIDL grant in 2021 will need to report the forgiveness of the PPP loan and EIDL grant and qualifying expense deductions on their 2021 tax return.
Additionally, businesses can still claim the Employee Retention Tax Credit (“ERTC”), which was part of a COVID-19 relief bill passed in 2020 and allows employers to claim a tax credit up to 70% of qualifying wages for each employee (up to a maximum of $7,000 per employee) against their employment taxes. The credit was initially available through December 31, 2022, but the tax benefit was retroactively terminated effective September 30, 2021, with the passage of the Infrastructure Investment and Jobs Act towards the end of 2021. That said, businesses can still retroactively claim a refund in 2022 of employment taxes paid in past quarters in 2021 (up through September 30, 2021) in which the business qualified for the credit by filing a Form 941-X with the IRS.
Finally, if you had to close a business last year, you likely need to file a final tax return for the year you closed and report employment taxes for any employees as well. Ask your tax preparer what related forms you may need.
Forms specific to startups.
Businesses that started or plan to start in 2022 may need to file the following IRS forms:
- Application for an employer identification number
- Make a tax entity classification by filing Form 8832 (if applicable)
- File a Form 2553 to make an S-corp election within the prescribed timeline (if you are planning on doing business as an S corporation)
- Register with your business’s state and the IRS for various taxes, employment tax forms, general business expense forms, and forms regarding employee benefits such as health insurance or retirement accounts.
The IRS and your state tax agency should have helpful resources on their respective websites regarding tax requirements for start-up businesses
W2 and W3.
The general deadline for employers to file Forms W-2 and W-3 wage and tax statement forms with the Social Security Administration in 2022 was January 31, 2022. This is also the date employers needed to get W-2 and W-3 forms to their workers. Automatic extensions to file these forms are not available, but extensions may be granted in certain circumstances.
First introduced in the 2020 tax year, businesses must file the 1099-NEC (non-employee compensation) form with the IRS and distribute the forms to contractors and other vendors by January 31, 2022. To help avoid penalties, it’s important that your workers are classified correctly as employees (who you pay Social Security, Medicare and unemployment taxes for) or contractors (who are responsible for these taxes themselves). If you’re unsure about anyone’s status, see the IRS classification rules for more information.
Previously used to report non-employee compensation, the 1099-MISC is now used to report miscellaneous payments of over $600, such as rent, prizes or awards, and certain insurance costs. This form should also typically be used to report direct sales of at least $5,000 in consumer products to a buyer for resale anywhere other than a permanent retail establishment. The Form 1099-MISC must be provided to recipients by January 31, 2022, and electronically filed with the IRS by March 31, 2022 (February 28, 2022, if paper-filed).
According to the IRS, Form 940 must have been filed by January 31, 2022 to report the Federal Unemployment Tax Act (FUTA) tax you owe for the previous year and the amount you have already paid. You must also submit the balance you owe at this time. However, if you deposited all your FUTA taxes for 2021, the deadline for filing the form with the IRS was February 10, 2022. These taxes provide funds for paying unemployment compensation to workers who have lost their jobs.
Forms based on business structure.
The IRS requires businesses to report their revenue, expenses, income, gains, losses, credits, and deductions on a tax return every year. Businesses that operate as sole proprietorships, including single-member LLCs, can file a Schedule C as part of the business owner’s personal return. Partnerships file a Form 1065; S-corporations file Form 1120-S; and C-corporations, a Form 1120. The due dates for Forms 1065/1120-S and Form 1120 are March 15, 2022, and April 18, 2022, respectively.
To file this year and get ready for next season, make sure you have enough copies of any forms you need to distribute to employees. If you plan to print forms yourself, check your printer’s ink level and replace the cartridge, if necessary, to ensure forms print legibly.
Each company has its own tax obligations so check with the IRS to make sure you have all the forms specific to your business needs.
This information is only provided for general informational purposes, and should not be considered as offering individualized tax advice. Please consult your tax advisor on specific issues related to your tax situation.