You can start deducting business expenses as soon as your business is operational and actively engaged in income-generating activities. The IRS allows businesses to deduct ordinary and necessary expenses incurred in the course of conducting business to generate income or profit. Here are some key points to consider regarding the timing of deducting business expenses… Business Operation Start Date –  Business expenses incurred after your business begins operations are generall

Yes, an LLC (Limited Liability Company) can use TurboTax to file its taxes, depending on the LLC’s tax classification and filing requirements. TurboTax offers various software products tailored to different types of tax situations, including those for individuals, self-employed individuals, businesses, and corporations. Here’s how an LLC can use TurboTax… Single-Member LLC (Disregarded Entity) – If the LLC has only one owner (member) and has not elected to be taxed as a corpo

The Internal Revenue Service (IRS) looks for various indicators or “red flags” that may trigger closer scrutiny or an audit of a taxpayer’s return. While the IRS does not disclose an exhaustive list of red flags, here are some common ones… High Income –  Tax returns with high incomes are more likely to be scrutinized, especially if they are significantly higher or lower than the taxpayer’s previous returns or the average for their income bracket. Unreported Income –  Failure

The terms “self-employed” and “business owner” are often used interchangeably, but they refer to different aspects of entrepreneurship and business ownership. Here’s a breakdown of the key differences between being self-employed and being a business owner… Self-Employed – Definition –  Being self-employed means working for oneself rather than being an employee of another individual or company. Self-employed individuals are typically sole proprietors, independent contractors,

Deciding whether an LLC or an S corporation (S corp) is better for taxes depends on various factors, including your business’s specific circumstances, financial goals, and tax considerations. Both LLCs and S corps offer advantages and disadvantages from a tax perspective, so it’s essential to evaluate each option carefully. Here’s a comparison of some key tax-related factors for LLCs and S corps… Tax Treatment – LLC –  By default, LLCs are treated as pass-through entities for

Certain groups of taxpayers may be more likely to be audited by the IRS due to various factors. Here are some categories of taxpayers who may face a higher likelihood of being audited… High-Income Individuals –  Taxpayers with high incomes are more likely to be audited because there’s a greater potential for substantial tax liabilities. The IRS may focus on high-income earners to ensure compliance with tax laws and to prevent tax evasion. Self-Employed Individuals and Small B

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