Business tax structure

Where to set it#

Settings/Business

Business

The details printed on your invoices and estimates.

General Information

Your legal name is on every invoice and estimate. A trade name, if you use one, leads in the app and on invoices.

Legal name

Juniper Lane Design LLC

Trade name (DBA)

Juniper Lane Design

Billing email

hello@juniperlane.example

Tax ID / EIN

12-3456789

How Your Business Files Taxes

Reports → Taxes and the accountant packet follow the form you file.

Sole proprietor or single-member LLC· Schedule CProfit goes on your personal return, on Schedule C.

S corporation with one owner, or a single-member LLC taxed as one· Form 1120-SYou're paid a salary through payroll; the profit passes to your personal return.

C corporation with one owner, or a single-member LLC taxed as one· Form 1120The business pays its own tax. You're paid a salary through payroll, and dividends.

Partnership or multi-member LLC· Form 1065TeamsEach partner's share goes to them on a Schedule K-1.

Individual with rental property· Schedule EYou own rentals in your own name, with no business. Rent and its costs go on Schedule E of your personal return.

Tax-exempt organization (501(c))· Form 990The organization pays no income tax on its mission. It files Form 990, 990-EZ or 990-N each year, by its size.

Address

Printed under your business name on invoices.

Street

200 Harbor Way, Suite 4

City

Portland

Save Changes

Step 1 of 4PauseStart over

1. 1In Settings → Business, go to How Your Business Files Taxes. Pick by the return you file, not by your business's name.
2. 2Click Save Changes, at the foot of the page.
3. 3Reports → Taxes now lays the year out by line of Form 1120, with Dividends and Distributions apart from your costs.
4. 4On Quarterly, Estimated Taxes follows the corporation's dates: the last installment is due December 15.

1. Open Settings → Business and go to How Your Business Files Taxes.
2. Pick the return your business files. An LLC can be taxed several ways, so pick by the return, not by the name of the business.
3. Click Save Changes, at the foot of the page.

• Sole proprietor or single-member LLC · Schedule C: profit goes on your personal return. It's where every business starts.
• S corporation with one owner, or a single-member LLC taxed as one · Form 1120-S: you're paid a salary through payroll; the profit passes to your personal return.
• C corporation with one owner, or a single-member LLC taxed as one · Form 1120: the business pays its own tax. You're paid a salary through payroll, and dividends.
• Partnership or multi-member LLC · Form 1065: each partner's share goes to them on a Schedule K-1. It's marked Teams and can't be picked on Solo; Teams is coming.
• Tax-exempt organization (501(c)) · Form 990: a charity, foundation or other 501(c) organization. It pays no income tax on its mission and files Form 990, 990-EZ or 990-N each year, by its size.

The Solo plan has one owner. A corporation with one shareholder, a professional corporation such as a California APC among them, and a single-member LLC that elected corporate tax treatment file the same return, so they share a choice.

Changing it changes how everything is named and laid out, past years included. Nothing you recorded changes.

What changes#

Pick each one to see what it changes in EscBooks:

How the numbers are counted, cash or accrual, is a setting of its own, Accounting method, on the same page: see Cash or accrual. Reports and estimated taxes are in Reports and taxes.

Sole proprietor or single-member LLC#

• Reports → Taxes lays the year out by Schedule C line, and its expenses spreadsheet has a Schedule C line column. Gain or loss on equipment sold or retired goes on Form 4797, not Schedule C, and is listed after the lines.
• There's no salary and no Officer salary category. What you take out is an Owner draw on Owner, and Taxes lists the year's in its Owner Draws card. A draw isn't a cost: you're taxed on the business's profit whether you draw it or not.
• Owner money is Owner contribution, Reimbursement to owner and Owner draw. Loans aren't offered: you can't lend to your own business.
• Other income (on Income): Other income goes on Schedule C line 6, and a Sale without an invoice is gross receipts, line 1. Business bank interest is reported on Schedule B of your Form 1040, not Schedule C, so Taxes lists Interest income after the lines, marked as such.
• Estimated tax is yours, on your personal return: due Apr 15, Jun 15 and Sep 15, and Jan 15 of the next year. It's never a cost of the business, so it's in no profit and loss. Paid from the business's account, it's an owner draw: it's in the year's Owner Draws total on Owner and Taxes, with the tax shown on its own line. In the General Ledger, tax payments are Owner draws: estimated tax, an equity sub-account rolled into the draws' total, and their memos read Owner's federal estimated tax or Owner's state estimated tax.

S corporation#

• Taxes lays the year out by Form 1120-S line.
• Your salary goes in Expenses as Officer salary: line 7, Compensation of officers. The Payroll category goes on line 8, Salaries and wages.
• Owner money is named for a shareholder: Capital contribution, Shareholder loan and Shareholder loan repayment, with Reimbursement to owner and Owner distribution. Taxes has an Owner Distributions card.
• Other income: Other income goes on line 5, Other income (loss). Interest is portfolio income, reported on Schedule K (line 4) and passed to you, not in the corporation's ordinary business income, so Taxes lists Interest income after the lines, marked as such.
• The profit passes to your personal return, so estimated taxes keep the same dates as a sole proprietor's. The tax is yours, not the corporation's: tax payments are in no profit and loss. Paid from the business's account, each is an owner distribution, in the year's distributions total; in the General Ledger they're Owner distributions: estimated tax, equity, rolled into the distributions' total.

C corporation#

A C corporation is taxed apart from you: it files Form 1120 and pays its own income tax. What changes:

• Taxes lays the year out by Form 1120 line: gross receipts on line 1a, Officer salary on line 12 (Compensation of officers), Payroll on line 13 (Salaries and wages), and anything without a line of its own under line 26, Other deductions, itemized.
• What you take out beyond your salary is a Dividend or distribution: profit paid out to you as the shareholder. Owner and Taxes call the card Dividends and Distributions, and Taxes records one with Record a Dividend or Distribution. It isn't a cost, so it doesn't lower the corporation's profit. Your salary and any dividends are taxed on your personal return.
• Estimated taxes are the corporation's own installments: Apr 15, Jun 15, Sep 15 and Dec 15, so the last is due inside the year instead of in January. The periods they cover are the same as everyone's.
• The Set aside (% of profit) field's hint reads: the federal corporate rate is a flat 21%, plus your state's. The rate is still yours to choose. Why quarterly? on Quarterly explains the corporation's installments.
• Record each payment with Record a Tax Payment, to Federal (IRS) or State: an installment, or what's due with the return. It's the corporation's own income tax, so it's a cost. Every profit and loss (Annual, Quarterly, Advanced and their printouts) ends with Income before income taxes, then Income tax, then Net income. Each payment counts when it was paid, whatever year it's for, on cash and accrual basis alike.
• In the General Ledger they're Income tax expense, with memos Federal income tax or State income tax, so the ledger and the profit and loss agree.
• On the Form 1120 view, state income tax paid in the year is part of line 17, Taxes and licenses. Federal income tax isn't deductible, so it's on no line. The set-aside on Quarterly is worked out on profit before tax.
• Other income: Interest income goes on line 5, Interest, and Other income on line 10, Other income. A Sale without an invoice is gross receipts, line 1a.
• Owner money is named as for an S corporation, with the dividend wording for what you take out.

Withdrawals from a payroll service come in from statements and bank feeds suggested as Payroll. Payroll is wages to your employees; Officer salary is what the corporation pays you as an officer, through payroll. When the payroll is your own salary, as an S or C corporation's owner, change the category to Officer salary so it lands on Compensation of officers. Picking either shows a line saying which is which.

The tax year is the calendar year, January through December, as it is for every report. Money between you and the corporation is in Owner money.

Tax-exempt organization#

A nonprofit has no owners and pays no income tax on its mission. What changes:

• Taxes lays the year out by Form 990-EZ line, Part I: income from invoices is program service revenue on line 2, interest and rents are investment income on line 4, and other income is line 8. Pay, benefits and the employer's payroll taxes go on line 12; professional fees and contract labor on line 13; rent, utilities and upkeep of the space it uses on line 14; postage and shipping on line 15; everything else on line 16, Other expenses, itemized. The full Form 990 asks for the same amounts in more detail.
• Which form it files depends on its size. Form 990-N, the e-Postcard, is for gross receipts normally $50,000 or less, which means on average over three years. Form 990-EZ is for gross receipts under $200,000 and total assets under $500,000 at year end. Anything larger files the full Form 990. Taxes shows the year's gross receipts and which form they point to.
• The profit and loss is a statement of activities, and it ends at the change in net assets: what the year added to (or took from) what the organization holds. Each finished year closes into Net assets without donor restrictions, where a business would have retained earnings.
• There's no estimated tax and no set-aside, so Quarterly has no estimated taxes and Taxes no tax paid. Payroll taxes still apply.
• Nobody puts money in or takes profit out as an owner: money a board member gives is a gift. The Owner page is called Officers: an officer or director can lend the organization money (Loan from an officer or director), be paid back (Loan repaid to an officer or director), and be paid back for expenses they paid for it (Reimbursement to an officer or director). A contribution or distribution recorded before the change stays as it was.
• Officers' and directors' pay through payroll is Officer salary, so it can be listed apart: Form 990-EZ asks for each one's pay.

A tax-exempt organization also has gifts, funds and functions, each with a guide:

• Record a gift: money, goods or services, anonymous gifts, gala tickets and giving platforms.
• Thank donors: receipts, and each donor's year-end giving statement.
• Restricted gifts and grants: funds, releases from restriction and grant reports.
• Programs and functional expenses: program services, management and general, and fundraising.
• Splitting salaries by time: each payroll split by the hours logged.
• The Form 990 worksheet: which form applies, and the year's numbers for your organization's accountant.