Just a few more days and Tax Season will be over!! Here are a few tips for last minute..
Whether you own an Etsy shop, sell products through a direct sales company like Mary Kay or Pampered Chef, or decorate birthday cakes on the side , you want to make sure your business is on the right side of the IRS. These 7 small business tax tips are essential for any woman working from home to know!
1. Know How You Should File
There are a ton of filing or “classification” options to consider when you start a business. Are you a sole proprietorship? An LLC? A Corporation? There’s pros and cons to all of these, and we’re not going to cover all of them today, but here’s pretty much what you need to know:
- If your net income {after all expenses}, is $400 or above, then congrats! You’re in business. The best option for you is to start as a sole proprietorship and file a Schedule C in addition to your personal taxes. Most small businesses start out this way, and it is the easiest, and less painful route to go.
- If your net income is, or expected to be above $10,000, you may want to consider a single-member LLC. This separates your business assets from your personal so you are protected in case of a legal battle. You also file a Schedule C in addition to your personal taxes and you’ll have to pay self-employment taxes on top of everything else. This cost can get pretty hefty if you start making even more money.
- If your net income is, or expected to be $20,000 or above, you will probably want to classify your LLC as an S-Corp. This requires a lot more paperwork, but you don’t pay self-employment taxes. Instead, you put yourself on the payroll, and only your wages are subject to employment tax. Instead of a Schedule C, you will need to fill out the list of forms mentioned here.
Read The remaining 6 essential steps here...
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