Electronic payments required if business had at least:
MinnesotaCare taxes
$10,000 in tax All electronic $10,000 in tax
Petroleum tax
Sales and use taxes
Withholding tax $10,000 in tax Example: If a business collects more than 120,000 dollars in sales tax in a year and also owes 10,000 dollars in employee withholding tax, both the sales tax and the withholding tax must be paid electronically. For this rule, the Department of Revenue measures tax for the period July 1 through June 30, not the calendar year. Any business that exceeds one of these thresholds will receive a letter from the Department of Revenue, usually in November, stating that as of the next January 1, all of its Minnesota business taxes must be paid electronically. Payments are made through the department’s e‑Services system.
BUSINESS INCOME TAX RETURNS
Different business entities file different federal and Minnesota income tax returns. In addition, many businesses must make estimated tax payments and may qualify for certain tax credits and incentives discussed later in this section.
SOLE PROPRIETORSHIP Federal Income Tax Returns
A sole proprietor reports business income and expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). The net profit or loss from Schedule C flows onto the owner’s Form 1040, U.S. Individual Income Tax Return. The owner uses Schedule SE (Form 1040), Self-Employment Tax to compute and report self‑employment tax (Social Security and Medicare)
on net self‑employment income. Minnesota Income Tax Returns
The proprietor uses Form M1, Individual Income Tax return. A copy of the Form 1040, U.S. Individual Income Tax Return, Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship) and other supporting schedules, must be attached to Form M1.
PARTNERSHIP Federal Income Tax Returns
A partnership files Form 1065, U.S. Return of Partnership Income, which is an information return; the partnership itself generally does not pay federal income tax. Partners receive Schedule K‑1 (Form 1065) showing their share of income, deductions, credits, and other items, and they report these on Schedule E (Form 1040), Supplemental Income and Loss and, if applicable, other schedules attached to their Form 1040. Partners with net self‑employment income use Schedule SE, (Form 1040), Self-Employment Tax to compute self‑employment tax.
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