Business Tax Services
Business taxes are more complex than personal taxes — and the stakes are higher. The wrong entity structure, a missed quarterly payment, or an error on a payroll tax deposit can cost thousands in penalties and interest. Myung Keon Kim CPA prepares business returns for every entity type common in the New York small business landscape: sole proprietorships, partnerships, S-Corps, C-Corps, and nonprofits.
Entity Types and Their Returns
Sole Proprietors and Single-Member LLCs
Sole proprietors report business income and expenses on Schedule C, attached to their Form 1040. All net profit is subject to self-employment tax (15.3% on the first $184,500 of net earnings, 2.9% on amounts above that). The SE tax deduction (50% of SE tax) and the QBI deduction (§199A, up to 20% of qualified business income) can partially offset this burden. Single-member LLCs are disregarded entities for federal tax purposes — they file on Schedule C unless they elect corporate taxation.
Partnerships (Form 1065)
Partnerships file Form 1065 as an informational return — the partnership itself pays no federal income tax. Income, deductions, and credits flow through to partners on Schedule K-1 (Form 1065), which each partner reports on their individual return. We prepare both the partnership return and the partners' individual returns, ensuring K-1 information is coordinated correctly. New York State requires a separate partnership return (Form IT-204) plus a New York K-1 for each partner who is a New York resident or has New York-source income.
S-Corporations (Form 1120-S)
S-Corps are popular for small business owners because they allow the separation of salary (subject to payroll taxes) from distributions (not subject to self-employment tax). But the IRS requires S-Corp shareholders who work in the business to pay themselves a "reasonable salary." Underpaying salary to avoid payroll taxes is an audit red flag. We help S-Corp clients determine a defensible reasonable salary, run payroll through that salary, and optimize the salary-to-distribution ratio. The S-Corp files Form 1120-S; each shareholder receives a Schedule K-1 (Form 1120-S) reporting their share of income and deductions.
C-Corporations (Form 1120)
C-Corps file Form 1120 and pay tax at the flat 21% federal rate (after the Tax Cuts and Jobs Act of 2017). New York State taxes C-Corps under Article 9-A (Corporate Franchise Tax), with a rate of 6.5% for most small businesses (businesses with entire net income over $5 million pay 7.25%). New York City also imposes a General Corporation Tax (GCT) on C-Corps doing business in NYC. C-Corps face potential double taxation — corporate tax when the corporation earns income, and individual tax when dividends are paid to shareholders. Careful planning around salary, dividends, and retained earnings can minimize this.
Nonprofits (Form 990)
Tax-exempt organizations under §501(c)(3) and other §501(c) categories must file Form 990 (or 990-EZ or 990-N depending on gross receipts). Form 990 is a public document — it discloses executive compensation, program expenses, and governance information. Late or failed filings result in a daily penalty capped at a maximum that is adjusted annually for inflation, and failure to file for three consecutive years automatically revokes the organization's tax-exempt status. We prepare 990s for churches, foundations, community organizations, and Korean-American civic groups.
Quarterly Estimated Tax Payments
Business owners who do not have taxes withheld through payroll must make quarterly estimated payments. The IRS imposes an underpayment penalty under §6654 if you don't pay enough throughout the year. The safe harbor rules: pay 100% of last year's tax liability (or 110% if prior year AGI exceeded $150,000), or 90% of the current year's tax liability. We calculate estimated payments for clients each quarter, factoring in business income fluctuations, deductions, and credits, so you're not surprised at year-end.
Payroll Tax Compliance
Employers are responsible for withholding federal income tax, Social Security (6.2% employee share), and Medicare (1.45% employee share) from employee wages, matching the employer's share, and depositing all amounts to the IRS on a semi-weekly or monthly schedule. Form 941 (Employer's Quarterly Federal Tax Return) reports these withholdings quarterly. Form 940 (Federal Unemployment Tax Return) covers FUTA, which funds federal unemployment benefits. The Trust Fund Recovery Penalty — which makes business owners personally liable for withheld payroll taxes that were not deposited — is one of the IRS's most aggressive collection tools.
Entity Selection and Restructuring
The entity structure you started with may not be optimal for where your business is today. A sole proprietor who grows to $150,000 in net profit is paying roughly $21,000 in self-employment tax annually — electing S-Corp status could cut that significantly. A family-owned business preparing for succession may benefit from a family limited partnership structure. We model the tax impact of restructuring before recommending it, and we handle the IRS election filings (Form 2553 for S-Corp election, Form 8832 for entity classification election).
Frequently Asked Questions
Which entity type should I choose for my business?
The right entity depends on your net profit level, how many owners you have, your long-term goals, and your tolerance for administrative overhead. Sole proprietorships are the simplest but expose all income to self-employment tax (15.3% on the first $184,500 of net earnings). LLCs taxed as S-Corps can save self-employment tax once net profit exceeds roughly $60,000–$80,000 per year, but require running a reasonable salary through payroll. C-Corps have a flat 21% federal rate and are often used for businesses seeking outside investment. We model the numbers for your specific situation before recommending a structure.
When are quarterly estimated tax payments due?
For individuals and sole proprietors: April 15, June 15, September 15, and January 15 of the following year (Form 1040-ES). For C-Corporations: April 15, June 15, September 15, and December 15 (Form 1120-W). New York State estimated payments follow the same federal calendar (Form IT-2105 for individuals, CT-400 for corporations). Underpayment of estimated taxes triggers a penalty under §6654 — generally you must pay at least 90% of the current year's tax or 100% of last year's tax (110% if prior year AGI exceeded $150,000).
Do you handle multi-state tax filing?
Yes. New York businesses with employees, inventory, or sales in other states may have nexus — and therefore filing obligations — in those states. After the South Dakota v. Wayfair decision, economic nexus thresholds (typically $100,000 in sales or 200 transactions) can trigger registration and filing obligations even without a physical presence. We identify nexus exposure, register with the appropriate state tax authorities, and prepare state income and franchise tax returns. We work with businesses that operate in New York, New Jersey, Connecticut, and other states.
What about sales tax?
Sales tax is separate from income tax and administered by the New York State Department of Taxation and Finance. New York businesses selling taxable goods or services must collect and remit sales tax — returns are due monthly, quarterly, or annually depending on volume (Form ST-100 or ST-101). We can help you register for a Certificate of Authority, determine which of your products and services are taxable, set up collection procedures, and file returns. E-commerce sellers face additional complexity — marketplace facilitator rules mean platforms like Amazon often collect on your behalf, but direct sales may still require your own collection.