How Much Can Your Business Make Before Paying Taxes?

June 14, 2025
Published by Gonzales Group CPA

As you start your small business, it’s important to keep up to date on all tax requirements. Unfortunately, there’s no one simple answer as to how much you need to make before you start paying, as it depends on your type of business. This is one of the many reasons people turn to an experienced CPA in San Antonio TX, such as the Gonzales Group, to help make sure the appropriate payments – and deductions and credits – are made.

The IRS requires all businesses to report income, regardless of the amount. However, how much tax you owe – or if you owe any at all – depends largely on your net profit, not just gross revenue.

For sole proprietors and single-member LLCs, you must file taxes if your net earnings are $400 or more in a year. This is tied to self-employment tax, which covers Social Security and Medicare. Even if you don’t owe income tax, you’re still responsible for this self-employment tax once you have earned $400.

If your business is set up as a corporation (C-corp or S-corp), the tax rules differ. Corporations file their own tax returns, and owners typically pay themselves a salary or dividends. S-corporations can pass income through to the owner’s personal tax return, but all income must still be reported, even small amounts.

However, most small businesses can deduct a variety of business expenses, such as equipment, office supplies, and mileage, which can significantly reduce your taxable income. Thanks to deductions, your final net income can potentially lower your tax burden or eliminate it entirely.

Ultimately, while there’s no minimum gross income that exempts you from taxes, $400 in net income is a key benchmark for triggering federal tax obligations. Therefore, in order to stay compliant, it’s  vital to track all income and expenses. Starting smart with taxes can save you time, stress, and money in the long run.

To make sure you’re counting all income, tracking expenses, and taking advantage of any available deductions, working with a respected CPA in San Antonio TX can take a lot of the stress out of the process. If you’re starting or growing a small business, reach out and contact the Gonzales Group for sound tax preparation and planning so you can focus on building your business.

Categorised in: Business Tips, Finance Info, How Much Can Your Business Make Before Paying Taxes?

This post was written by Gonzales Group CPA