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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