Personal vs. business tax returns: what's the difference?

Personal and business tax returns report different things and are filed separately. A personal return covers an individual's income, deductions and credits; a business return reports the entity's income and expenses.

Depending on how your business is structured, its profit may also flow through to your personal return, while other structures are taxed as separate entities with their own filing.

Because the two interact, keeping personal and business finances separate — with their own accounts and records — makes both returns more accurate and easier to prepare.

If you are unsure which returns apply to you, a short conversation with your tax preparer at the start of the year avoids surprises at filing time.