business advice

The best tax form for an LLC depends on several factors, including the number of owners (members), how the LLC elects to be taxed, and the business’s financial situation. Here are the main options for LLC tax forms… Single-Member LLC (Disregarded Entity) – If the LLC has only one owner (member), it is typically treated as a “disregarded entity” for federal tax purposes. This means that the IRS does not recognize the LLC as a separate entity, and the owner reports business inc

Setting aside funds for small business taxes is essential for managing your cash flow and ensuring that you can meet your tax obligations when they become due. The amount you should set aside for taxes depends on various factors, including your business structure, income level, tax rates, deductions, credits, and tax planning strategies. Here are some general guidelines to help you determine how much to set aside for small business taxes… Estimated Tax Payments –  If you expe

The amount of taxes paid by small businesses can vary widely depending on factors such as the business structure, income level, deductions, credits, and tax planning strategies. There is no one-size-fits-all answer to how much most small businesses pay in taxes, as tax liabilities are highly individualized and can fluctuate from year to year. Here are some general considerations… Business Structure –  The structure of the business (e.g., sole proprietorship, partnership, LLC,

Whether it’s better to pay yourself from your business depends on various factors, including your business structure, financial goals, tax implications, and personal circumstances. Here are some considerations to help you decide… Business Structure –  The structure of your business (e.g., sole proprietorship, partnership, LLC, S corporation, C corporation) can affect how you pay yourself. Each structure has different tax implications, liability protections, and requirements f

You can typically pay for various business-related expenses out of your business account, as long as they are necessary and ordinary expenses incurred in the ordinary course of conducting business. Here are some common types of expenses that you can pay out of your business account… Operating Expenses –  These are expenses necessary to keep your business running smoothly on a day-to-day basis. This category includes: Rent or lease payments for office space, retail space, or o

The amount of money you should keep in your business account depends on various factors, including your business’s financial needs, cash flow patterns, and long-term goals. Here are some considerations to help you determine an appropriate amount to keep in your business account… Operating Expenses –  Ensure you have enough funds to cover your ongoing operating expenses, such as rent, utilities, payroll, supplies, insurance premiums, and other regular business costs. Maintaini

The IRS obtains information about business ownership through various sources and mechanisms. Here are some of the primary ways the IRS may learn about who owns a business… Tax Returns –  Business entities are required to file tax returns with the IRS, which typically include information about the business’s ownership structure. For example, partnerships and S corporations must file Form 1065 and Schedule K-1, which report the ownership interests and allocations of profits and

Yes, the IRS can pursue tax liabilities owed by a business entity. Here are some ways in which the IRS can come after a business for unpaid taxes… Tax Liens and Levies –  If a business fails to pay its tax liabilities, the IRS may file a tax lien against the business’s property and assets. A tax lien is a legal claim against the business’s property to secure payment of the tax debt. The IRS may also issue a levy, which allows it to seize and sell the business’s property or as

Yes, the IRS can come after you personally for business taxes under certain circumstances. Here are some scenarios in which the IRS may pursue individual business owners or officers for business tax liabilities… Sole Proprietorships and Single-Member LLCs –  In a sole proprietorship or a single-member LLC, the business owner is personally responsible for all business debts and liabilities, including taxes. This means that the IRS can pursue collection actions against the indi

Yes, the IRS can pursue tax liabilities owed by a Limited Liability Company (LLC). However, the extent to which the IRS can collect on those liabilities depends on the structure of the LLC and the circumstances surrounding the tax debt. Here’s a breakdown… Pass-Through Taxation –  Most LLCs are treated as pass-through entities for tax purposes, meaning that the income, deductions, credits, and liabilities of the business “pass through” to the individual owners’ tax returns. I

Monthly expenses for a business can vary widely depending on factors such as the industry, size of the business, location, and specific operational needs. However, here are some common types of monthly expenses that many businesses incur… Rent or Lease Payments –  Monthly rent or lease payments for office space, retail space, or other facilities. Utilities –  Monthly bills for electricity, gas, water, sewer, trash removal, internet, and telephone services. Payroll –  Salaries

Yes, you can typically deduct the cost of gasoline used for business purposes as a business expense on your tax return. However, there are some important considerations to keep in mind… Business Use –  The gasoline must be used for business purposes to be deductible. This includes driving for business-related travel, such as visiting clients, suppliers, or conducting other business-related activities away from your primary place of business. Documentation –  It’s essential to

If a business doesn’t make a profit, it means that its expenses exceed its revenue during a particular period. While operating at a loss is not uncommon, especially for new or growing businesses, it’s essential to understand the implications and take appropriate actions. Here’s what can happen if a business doesn’t make a profit… Tax Implications –  If your business is structured as a sole proprietorship, partnership, or S corporation, business losses can generally be passed

The amount of business loss you can write off depends on several factors, including your business structure, your level of involvement in the business, and tax laws and regulations. Here are some key considerations… Business Structure –  The rules for deducting business losses vary depending on the legal structure of your business. For example: Sole Proprietorship and Single-Member LLCs –  Business losses are reported on Schedule C of your personal tax return (Form 1040). You

If you make mistakes on your business taxes, the consequences can vary depending on the nature and severity of the errors. Here are some potential outcomes if you mess up your business taxes… Penalties and Interest –  The IRS or relevant tax authority may assess penalties and interest for late filings, underpayments, or inaccuracies on your tax return. Penalties can vary depending on the type of error and whether it was intentional or due to negligence. Audits and Investigati

As an owner of a Limited Liability Company (LLC), you generally have flexibility in how you pay yourself, but there are important considerations to keep in mind… Operating Agreement –  The operating agreement of the LLC typically outlines how profits will be distributed among the owners (members). This agreement may specify the method and frequency of owner distributions, including whether members will receive regular salaries, periodic distributions, or a share of profits ba

The frequency with which a business needs to file taxes depends on several factors, including its legal structure, income level, and tax obligations. Here’s a general overview… Annual Tax Filing –  Most businesses are required to file an annual tax return with the Internal Revenue Service (IRS) or relevant tax authority. The deadline for filing annual tax returns for businesses is typically March 15th for calendar year taxpayers (or the 15th day of the third month after the e

While business expenses incurred by a Limited Liability Company (LLC) can generally be deducted from the company’s taxable income, not everything can be written off as a business expense. The IRS has specific rules and guidelines regarding what expenses are deductible. Here are some important points to consider… Ordinary and Necessary –  To be deductible, an expense must be both ordinary and necessary for the operation of the LLC’s business. “Ordinary” means common and accept

Business owners can face taxation at both the business level and the individual level, depending on the structure of their business and how profits are distributed. This concept is often referred to as “double taxation.” You should understand that not all business structures are subject to double taxation. Pass-Through Entities –  Many small businesses, including sole proprietorships, partnerships, limited liability companies (LLCs), and S corporations, are pass-through entit

If your Limited Liability Company (LLC) has more expenses than revenue, resulting in a net loss, it’s not an uncommon situation, especially in the early stages of business development. Here’s what you should consider… Tax Treatment – If your LLC is a pass-through entity (taxed as a sole proprietorship, partnership, or S corporation), the net loss will flow through to the owners’ personal tax returns. This means that the owners can potentially offset other income on their per