Yes, you can do your own business taxes. No federal law requires a CPA, Enrolled Agent, or any other credentialed preparer to sign a business return for it to be valid.1Office of the Law Revision Counsel. 26 USC 6011 – General Requirement of Return, Statement, or List A sole proprietor, a partner, or a corporate officer can sign and submit the entity’s return directly. What changes when you self-file is not the legal standing of the return but who carries the risk if something on it is wrong.
When you sign, you personally certify the return is correct and complete. If the IRS later finds errors, omissions, or unsupported deductions, the notice comes to you. There is no professional liability insurance sitting between you and the penalty. The Internal Revenue Code does impose specific duties on paid preparers, which implicitly confirms unpaid self-preparation is the baseline the system was built around.2Office of the Law Revision Counsel. 26 USC 6107 – Tax Return Preparer Must Furnish Copy of Return to Taxpayer and Must Retain a Copy or List So the real question is not whether you may, but whether your situation is one you can handle cleanly.
Pick the Right Form for Your Entity
The biggest branching decision in DIY business taxes is your entity type. Each structure has its own primary form, and using the wrong one is one of the fastest ways to trigger an IRS notice.
- Sole proprietorship. Report business income and expenses on Schedule C, which attaches to your personal Form 1040. The business itself has no separate federal return. Each sole proprietorship you run gets its own Schedule C.3Internal Revenue Service. About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)4Internal Revenue Service. Publication 334 (2025), Tax Guide for Small Business
- Partnership or multi-member LLC. The entity files Form 1065, an informational return, and generally owes no federal income tax itself. Each partner receives a Schedule K-1 showing their share of income, deductions, and credits, which flows to their personal return.5Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income
- S corporation. The entity files Form 1120-S. Income passes through to shareholders on Schedule K-1, and the corporation itself typically owes no federal income tax on that income.6Internal Revenue Service. Instructions for Form 1120-S (2025)
- C corporation. The entity files Form 1120 and pays its own corporate income tax. This is the only common small-business structure where the entity itself has a standalone federal tax bill.7Internal Revenue Service. About Form 1120, U.S. Corporation Income Tax Return
Single-member LLCs are treated as sole proprietorships for federal tax purposes unless the owner has elected otherwise, so they file on Schedule C. If your LLC elected S-corp treatment, you file Form 1120-S instead.
What You Need Before You Start
Every business return requires a taxpayer identification number. Sole proprietors without employees can use their Social Security Number, but any business with employees, any partnership, and any corporation needs an Employer Identification Number.8Internal Revenue Service. Taxpayer Identification Numbers (TIN) You can get an EIN instantly on the IRS website at no cost.9Internal Revenue Service. Get an Employer Identification Number
You also need organized records of income and expenses for the year. Income means bank statements, payment processor records, and invoices. Expenses means receipts, canceled checks, credit card statements, and mileage logs. Keep these for at least three years after filing, and for four years if you have employees.10Internal Revenue Service. Topic No. 305, Recordkeeping
The basic profit calculation on Schedule C or Form 1120 starts with gross receipts. If you sell products, subtract cost of goods sold (beginning inventory plus purchases minus ending inventory) to get gross profit. From there, subtract operating expenses like rent, utilities, supplies, insurance, and depreciation to reach net income.
Self-Employment Tax and Quarterly Estimates
Two things routinely surprise first-time self-filers. The first is self-employment tax. If your net self-employment earnings exceed $400, you owe it on top of regular income tax.11Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The combined rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. The Social Security portion applies only to the first $184,500 of net earnings in 2026.12Social Security Administration. What Is the Current Maximum Amount of Taxable Earnings for Social Security Medicare has no cap, and an additional 0.9% Medicare surtax kicks in on earnings above $200,000 for single filers or $250,000 for joint filers.
As an employee, your employer paid half of these taxes. Self-employed, you pay both halves. You can deduct the employer-equivalent portion (half of your self-employment tax) as an adjustment to income on your personal return, which lowers your adjusted gross income.
S-corporation shareholders who work in the business handle this differently. The corporation pays the shareholder a reasonable salary subject to regular payroll taxes, and remaining profits distributed as dividends are not subject to self-employment tax. The IRS closely scrutinizes S-corp returns where officers take no salary or an unreasonably low one.13Internal Revenue Service. S Corporation Employees, Shareholders and Corporate Officers
The second surprise is quarterly estimates. If you expect to owe $1,000 or more in federal tax for the year, you generally need to make quarterly estimated payments rather than waiting until the annual deadline.14Internal Revenue Service. Estimated Taxes Individual filers (including sole proprietors, partners, and S-corp shareholders) use Form 1040-ES.15Internal Revenue Service. About Form 1040-ES, Estimated Tax for Individuals
For the 2026 tax year, the quarterly due dates are April 15, 2026 (for income earned January through March), June 15, 2026 (April and May), September 15, 2026 (June through August), and January 15, 2027 (September through December).
To avoid an underpayment penalty, your total payments (estimates plus any withholding) must equal at least 90% of your 2026 tax or 100% of the tax shown on your 2025 return, whichever is smaller. If your 2025 adjusted gross income exceeded $150,000 ($75,000 if married filing separately), the prior-year figure rises to 110%.16Internal Revenue Service. Form 1040-ES, Estimated Tax for Individuals The prior-year safe harbor is easier for most owners because it does not require you to predict current-year income accurately.
Deductions Self-Filers Commonly Miss
Deductions are where DIY filers leave the most money on the table. A few categories are worth checking before you submit.
Home Office
If you use part of your home regularly and exclusively for business, you can deduct a portion of your housing costs. The simplified method allows $5 per square foot of dedicated office space, up to 300 square feet, for a maximum of $1,500.17Internal Revenue Service. Simplified Option for Home Office Deduction The regular method calculates the actual business-use percentage of your home and applies it to expenses like mortgage interest, property taxes, utilities, and insurance. It takes more recordkeeping but often produces a larger deduction.
Vehicle Use
For business use of a personal vehicle, you can either track actual expenses (gas, maintenance, insurance, depreciation) or use the standard mileage rate, which is 72.5 cents per mile for 2026.18Internal Revenue Service. 2026 Standard Mileage Rates Either way, you need a contemporaneous log with date, destination, business purpose, and miles for each trip. Commuting from home to a regular office does not count.
Health Insurance
Self-employed individuals not eligible for employer-sponsored coverage through a spouse’s job can deduct 100% of health insurance premiums for themselves, their spouse, and dependents. This is an above-the-line deduction that reduces adjusted gross income even if you do not itemize. You need a net profit from self-employment for the year to qualify.19Internal Revenue Service. Topic No. 502, Medical and Dental Expenses
Section 179 Expensing
Rather than depreciating equipment over several years, Section 179 lets you deduct the full purchase price of qualifying assets in the year you buy them. For 2026, the maximum deduction is $2,560,000, phasing out when total equipment purchases exceed $4,090,000. Most small businesses fall well below those thresholds, so this works as an immediate write-off for computers, furniture, vehicles, and machinery.
Qualified Business Income
Owners of pass-through entities (sole proprietorships, partnerships, and S corporations) may deduct up to 20% of qualified business income under Section 199A. The deduction was made permanent in 2025 and continues for the 2026 tax year. For specified service businesses like law, accounting, or consulting, the deduction begins phasing out once taxable income exceeds roughly $203,000 for single filers or $406,000 for joint filers. Below those thresholds, the calculation is usually straightforward: 20% of net business income.
2026 Filing Deadlines
Different entities have different annual deadlines, and the IRS moves any date that falls on a weekend or holiday to the next business day.20Internal Revenue Service. Publication 509 (2026), Tax Calendars
- Partnerships (Form 1065) and S corporations (Form 1120-S): March 16, 2026. The statutory deadline is March 15, but that date falls on a Sunday in 2026. These returns are due earlier because the K-1 information flows to individual partners’ and shareholders’ personal returns.21Office of the Law Revision Counsel. 26 USC 6072 – Time for Filing Income Tax Returns
- Sole proprietors (Schedule C with Form 1040): April 15, 2026.
- C corporations (Form 1120): April 15, 2026 for calendar-year filers.
If you need more time, sole proprietors file Form 4868 for an automatic six-month extension of their individual return.22Internal Revenue Service. About Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return Partnerships, S corporations, and C corporations use Form 7004.23Internal Revenue Service. About Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns An extension gives you more time to file the paperwork, not more time to pay. You still need to estimate what you owe and pay by the original due date to avoid interest and penalties.
How to File and Pay
The IRS encourages electronic filing, and most business tax software walks you through the Modernized e-File process. E-filing produces an electronic confirmation of receipt that serves as legal proof your return was submitted on time.24Internal Revenue Service. E-File for Business and Self Employed Taxpayers
Sole proprietors filing Schedule C on their personal return may qualify for IRS Free File if their adjusted gross income is $89,000 or less. Free File offers guided tax software from partner companies at no cost and can handle self-employment income and business deductions.25Internal Revenue Service. E-File: Do Your Taxes for Free Above that income level, Free File Fillable Forms are still available but provide less guidance. Entity returns like Form 1065 and Form 1120 are not covered by Free File and typically require commercial software or manual preparation.
If you file on paper, send the return by certified mail with return receipt to the IRS service center listed in the form instructions. The postmark date counts as your filing date.
For payment, businesses typically use the Electronic Federal Tax Payment System, which requires a one-time enrollment.26Internal Revenue Service. EFTPS: The Electronic Federal Tax Payment System Individual taxpayers, including sole proprietors, can also use IRS Direct Pay, which pulls directly from a bank account with no enrollment required.27Internal Revenue Service. Direct Pay with Bank Account EFTPS is the better choice for recurring payments like quarterly estimates, because you can schedule payments up to 365 days in advance.
Late-Filing and Late-Payment Penalties
The IRS imposes separate penalties for filing late and paying late, and they stack.
The failure-to-file penalty is 5% of the unpaid tax for each month or partial month your return is late, capping at 25%. If you are more than 60 days late, the minimum penalty is the lesser of $525 or 100% of the tax you owe.28Internal Revenue Service. Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges
The failure-to-pay penalty is 0.5% of the unpaid tax per month, also capping at 25%.29Internal Revenue Service. Failure to Pay Penalty When both apply in the same month, the filing penalty drops by the amount of the payment penalty, so the combined monthly hit is 5% rather than 5.5%. Interest on unpaid tax compounds daily at the federal short-term rate plus three percentage points.
If you cannot pay in full, file on time anyway. Doing so eliminates the much steeper failure-to-file penalty and cuts your exposure by roughly 90% compared to doing nothing.
State Returns Are Separate
Filing your federal return does not cover your state obligations. Most states impose their own business income tax, franchise tax, or gross receipts tax, each with its own forms, deadlines, and payment procedures. A few states have no business income tax, but most require a separate filing. State penalties run entirely independent of federal ones. Check your state’s department of revenue website, because the deadlines do not always align with federal due dates.
When to Stop DIY and Hire Someone
You have the legal right to file every business return yourself, but that is not always the smartest financial decision. There is a point where the complexity of your situation makes a professional cheaper than the deductions you would miss or the penalties you would trigger.
Consider hiring a tax professional if your business has employees (payroll tax compliance involves its own deposits, forms, and deadlines), you operate in multiple states, you have significant inventory or cost-of-goods calculations, or you are navigating a major event like converting your entity type, bringing on a partner, or selling the business. S-corporation returns in particular carry compliance traps around reasonable compensation that the IRS actively targets.
For a straightforward sole proprietorship with clean records and manageable revenue, self-filing is entirely realistic. The IRS publications for each form are thorough, and modern tax software handles most of the math. The honest test is simple: if you find yourself guessing on a line item, that is the signal to get help before you file, not after the IRS sends a notice.