Cut Your Taxes With Form 1065 Now!

Tax season is upon us. In the United States, people file their taxes starting in January, which gives you about four months before the deadline ends mid-April.

If you’re a business owner, tax season may prove to be an even greater headache. After all, you want to make sure you’re reporting all of your expenses and income properly, but also in the most efficient way possible. When it comes to businesses and partnerships, IRS Form 1065 often comes to mind.

You may be wondering—what exactly is Form 1065? In this guide, you’ll learn about why Form 1065 is important and its benefits, how to fill it out, and how you can save money. Let’s get started.

What Is Form 1065?

To start, it may be helpful to first cover what Form 1065 is. Form 1065 is a way for business partnerships to file an information return through the International Revenue Service (IRS). In other words, Form 1065 allows you to report your income, gains, losses, and deductions.

The types of partnerships that benefit from filing Form 1065 include foreign partnerships, domestic partnerships, and even nonprofit religious groups. Essentially, Form 1065 gives the IRS a financial snapshot of the company’s performance for the year.

Why is this important? As with individuals, you are required, by law, to report all means of income to the IRS. This is so the IRS can track your spending, income, losses, gains, and other financial history.

Who Must File Form 1065?

If you’re still not sure whether your business needs to file Form 1065, this section’s for you. In plain terms, all partnerships must file Form 1065, also known as US Return of Partnership Income.

This applies to general partnerships, limited partnerships, and limited liability corporations (LLC). Any business that involves two or more people is defined as a partnership. For most of these types of partnerships, you will file a single IRS Form 1065, but you will not have to pay income tax on your business.

Foreign partnerships must also file Form 1065, although the rules for these groups are a bit different. For example, if you earn less than $20,000 annually as a foreign partnership, you may not need to file.

When it comes to nonprofit groups like religious organizations, the rules also vary. This group has to show that profits were allocated to members as dividends, no matter if they were distributed.

How to Fill Out Form 1065

To start, you’ll need to locate the form off of the IRS’s website. Then, decide whether you want to fill it out by hand or whether you’d like to download tax software and fill it out online.

One thing to note: If your business partnership has more than 100 associates, you’ll have to fill out Form 1065 online. However, if there are less than 100 partners, you may be able to file the form by mail.

Now, it’s time to fill the form out. You’ll want to have all of your financial documents and information handy when starting this process to make it as efficient as possible. Examples of the types of information you’ll want on hand include any documents that reflect your business’s financial performance, like a profit and loss statement, balance sheet, costs of goods sold, and gross receipts.

Depending on the amount of information you have or the size of your business, you may also want to work with an accountant or tax associate to make the process smoother.

When you first get to the form, you’ll notice a general information section that spans boxes A through K. Start by filling this information out. After this, you’ll get to the more detailed, in-depth sections that require you to pull out your financial documents.

This includes the remainder of Page 1, Schedule B, Schedule K, Schedule L, and Schedule M-1 and M2. These sections cover items like partnership property, capital accounts of partners, differences between net income on the financial statement and on the tax return, and balance sheets. 

What Is the Employee Retention Credit?

It’s important to know whether you qualify for the Employee Retention Credit because if you do, it may be able to save you money when you’re filing your taxes. The Employee Retention Credit is a refundable tax credit for businesses that paid employees during the COVID-19 pandemic.

This applies to you if your business had to shut down during the pandemic and you still paid employees. Or, this may apply to you if you had significant declines in gross income from March 2020 to December 31st of 2021.

The Employee Retention Credit lives under the broader CARES Act, which provides relief and aid to businesses affected by COVID-19. The pandemic caused many businesses to suffer, so if you think you qualify for the Employee Retention Credit, it’s important to apply ASAP before you file your business’s taxes.

Businesses that don’t qualify for ERC include federal, state, and local government organizations. Additionally, if you’re self-employed, you likely won’t qualify for ERC unless you fit one of the nuances. However, you may qualify for another program, which is why it’s helpful to apply regardless.

Get Assistance With Your Taxes Today!

Hopefully, you now understand what Form 1065 is, why it matters, and how to fill it out. Remember that Form 1065 applies to all business partnerships, foreign and domestic, and must be filed with your yearly taxes.

Taxes don’t have to be hard or burdensome. ERC Today is a group of expert accountants and tax specialists who help companies receive the Employee Retention Credit. Whether you’re unsure if you qualify or simply looking for assistance, ERC Today can help. 

To see if you qualify for ERC, apply on their website today!