Business Tax Information On Your Personal Tax Return

Including Schedule C or Schedule K-1 on Your Form 1040

Business Taxes on Personal Tax Return
Including Business Taxes on Personal Tax Return. ericasphotography/Getty Images

Question: How Do I Include My Business Tax Information in My Personal Tax Return?

No matter what type of business you own, the income you receive from your business goes directly to your personal tax return. That means that the profits from the business you receive each year must be reported and paid as part of your personal 1040. 

How this business tax information gets into your personal return depends on the type of business you own.

  • If your business is a sole proprietorship or a single-member LLC, you report your business income on a Schedule C
  • If your business is a partnership or a multiple-member LLC, you report your business income on a Schedule K-1. 
  • If your business is an S corporation, you report your business income on a different type of Schedule K-1. 
  • If your business is a C corporation, you report dividend income on your personal tax return. 

Don't worry; all will be explained.  

This discussion applies to Schedule C for a sole proprietorship or single-member LLC, Schedule K-1 for a partnership, multiple-member LLC, or S corporation, and dividend income for corporate shareholders. Here is how you include this business tax information in your personal tax return

Filing Taxes as a Sole Proprietorship or Single-Member LLC

If you are filing business taxes as a sole proprietor or single-member LLC (which is taxed as a sole proprietorship), you will use Schedule C to determine the net income of your business.

Enter the information on Net Profit (Loss) on Line 31 of your Schedule C on Line 12 (Business Income or Loss) of your personal Form 1040. The net profit or loss of your business is used to determine your adjusted gross income and your personal taxes.

More information on Schedule C, including instructions on how to prepare, when you can use Schedule C-EZ, and more.

Filing Taxes as a Partner or LLC Member 

If you are filing business taxes as a partner in a partnership or member of a multiple-member LLC (which is taxed as a partnership), you will use Form K-1 to determine the net income of your business. Form K-1 information is obtained from the partnership tax return (Form 1065) which was previously completed and filed separately with the IRS. No taxes are paid on Form 1065; it is only an information return.

Schedule K-1 includes several pieces of information which must be included in the correct place on Schedule E - Supplemental Income and Loss. Then the total Schedule E information is entered onto your personal Form 1040 on Line 17. It's best to have a tax preparer help you with this work, or to use a tax software program that will allow you to enter the information on a blank K-1 and have the information automatically placed in the correct section of your 1040.

Special Situation for Spouses as Partners

If you and your spouse are partners in a business, you may qualify to file your business tax return as a Qualified Joint Venture. In this case, you may be able to file two Schedule C's instead of a partnership return. 

Filing Taxes as an S corporation Owner

If you have income as one of the owners of an S corporation, you file a different type of Schedule K-1 (for Form 1120-S) for your percentage of the income of the business.

The S corporation files a business tax return on Form 1120-S). 

Filing Taxes as a Corporate Shareholder

The corporation pays taxes on its income, but if you receive any dividends as a shareholder, you must pay taxes on that dividend income. (Yes, this is double taxation.) You will receive a 1099-DIV from which is included on the first page of your personal tax return. 

Including Business Income in Schedule SE for Self-employment Taxes

In addition to paying income taxes on your business income, you may also have to pay self-employment taxes (Social Security/Medicare for self-employed). If you are the owner of a corporation or S corporation,  you aren't considered to be self-employed. 

Your business income is used to determine the amount of self-employment tax. You must insert the information on your net income from Schedule C and your share of partnership income from Schedule K-1 on Schedule SE, to calculate your self-employment tax liability.

Mail Your Tax Return on Time

Make sure you file your tax return so it is received by the IRS no later than the due date. Check these two articles: