Any business exceeding one of the above thresholds is notified by a letter from the Minnesota Department of Revenue in the November following the end of the measuring period. The letter will indicate that as of the next January 1 all of that business’s taxes must be filed electronically. See e-Services , Minnesota Department of Revenue’s electronic file and pay system. Electronic Payment Requirements - Federal For federal tax purposes, many businesses will be required to file tax payments electronically, through the Electronic Federal Tax Payment System (EFTPS). See the section of this Guide titled “Business Taxes – Income Tax Withholding – Withholding Tax Deposit and Filing Requirements”. Certain mid-sized corporations, with assets between $10 million and $50 million, are required to e-file their Forms 1120 or 1120S for tax years ending on or after December 31, 2006. Large corporations with assets of $50 million or more were required to start e-filing with their 2005 Forms 1120 or 1120S. Corporations required to e-file are those that meet the asset threshold and that file 250 or more federal returns a year, including excise tax, employment tax and information returns such as Forms W-2 and 1099. Refer to the IRS information, e-file for Business and Self-Employed Taxpayers .
BUSINESS INCOME TAX RETURNS
This section describes the federal and state income tax returns that must be filed by various business entities. Businesses may also be liable for estimated tax payments, sales and use tax, and other taxes.
SOLE PROPRIETORSHIP
Federal Income Tax Returns The sole proprietor reports income and expenses from the business on Schedule C (Form 1040) and any related forms and schedules. The net income or loss from the business is then reported on proprietor’s individual Form 1040. The proprietor uses Schedule SE (Form 1040) to report net self-employment income to compute the Social Security and Medicare self-employment taxes. Minnesota Income Tax Returns The proprietor uses Form M1, Individual Income Tax Return. A copy of the Form 1040, Schedule C and other supporting schedules, must be attached to Form M1.
PARTNERSHIP Federal Income Tax Returns
The partnership files Form 1065, which is an information return. Generally, no tax is paid by the partnership with this return. Other forms and schedules may be required, including Schedules K and K-1.
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