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The form you use will depend on what kind of entity your business
is for Federal tax purposes. Following are some general guidelines
and the forms which go with each entity:
1. If your business has only one owner, it will automatically be
considered to be a sole proprietorship unless an election is made
to be treated as a corporation. A sole proprietorship files Form
1040, U.S. Individual Income Tax Return and will include Form 1040,
SCHEDULE C, Profit or Loss from Business. If an election is made
to be treated as a corporation, Form 1120, U.S. Corporation income
Tax Return, is filed.
2. If your business has two or more owners, it will automatically
be considered to be a partnership unless an election is made to
be treated as a corporation. A partnership files Form 1065, U.S.
Partnership Return of Income. If an election is made to be treated
as a corporation, Form 1120, U.S. Corporation Income Tax Return,
is filed.
The election referred to is made by filing Form 8832, Entity Classification
Election.
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