Running a business without paying taxes is illegal and can lead to severe consequences. All businesses, regardless of size or structure, are required to comply with tax laws and regulations. Here are some important points to consider… Tax Obligations –  Businesses are subject to various taxes, including income tax, employment taxes (such as Social Security and Medicare taxes), sales tax, and possibly other local taxes. The specific taxes a business owes depend on factors such

Yes, failing to file taxes for an extended period, such as five years, can lead to significant consequences and legal trouble. Here are some potential repercussions… Penalties and Interest – The IRS imposes penalties for late filing and late payment of taxes. The failure-to-file penalty is generally more severe than the failure-to-pay penalty. Interest accrues on any unpaid taxes from the due date of the return until the taxes are paid in full. Loss of Refunds –  If you’re e

The IRS 6-year rule refers to the time limit the IRS has to audit a tax return when a taxpayer substantially understates their income. Specifically, under Internal Revenue Code Section 6501(e)(1)(A), if a taxpayer omits from their tax return income that is more than 25% of the gross income reported on the return, the IRS has six years from the date the return was filed to assess additional taxes. Here’s a breakdown of the rule… Substantial Understatement –  The rule applies w

The average tax return for a single person making $50,000 can vary significantly based on several factors, including deductions, credits, and other individual circumstances. A tax return refers to the document filed with the government to report income, and deductions, and calculate tax liability, whereas a tax refund is the amount returned to the taxpayer if they overpaid their taxes throughout the year. For a single person earning $50,000, their tax liability will depend on

The minimum income for filing a self-employed tax return depends on various factors including your filing status, age, and the type of income you earn. As of 2022, for most self-employed individuals, you generally need to file a tax return if your net earnings from self-employment are at least $400. This includes income earned as an independent contractor, freelancer, sole proprietor, or member of a partnership. However, even if your net earnings are below $400, you may still

The percentage you should save for taxes as an LLC owner depends on several factors, including your business income, your tax bracket, your state’s tax laws, and any applicable deductions or credits. Here are some general guidelines… Estimate your tax bracket –  Determine which tax bracket you fall into based on your LLC’s income and your personal circumstances. Tax brackets can vary from year to year and depend on your filing status (single, married filing jointly, etc.). Fe

Choosing the best business entity for tax purposes depends on your income level, liability concerns, and long-term goals. From sole proprietorships and LLCs to S corporations and C corporations, each structure has unique tax advantages, flexibility, and obligations. Understanding these differences helps you make informed financial decisions for your business.

As an LLC owner, determining how much to save for taxes depends on several factors, including your business’s profitability, tax deductions, credits, and the tax rates applicable to your situation. Here are some general guidelines to help you estimate how much to save for taxes as an LLC owner… Estimate Your Taxable Income –  Start by estimating your LLC’s taxable income for the year. This includes the profits earned by the business, minus any deductible expenses, credits, an

Yes, you can use TurboTax if you own a small business. TurboTax offers several products designed specifically for small business owners and self-employed individuals. Here are some TurboTax products suitable for small business owners… TurboTax Home & Business –  TurboTax Home & Business is designed for individuals who operate a small business, including sole proprietors, freelancers, contractors, and single-member LLCs. This version of TurboTax helps you report business incom

If you have an LLC, the specific TurboTax product you should use depends on several factors, including the tax treatment of your LLC and your individual tax situation. Here are some options to consider… TurboTax Home & Business –  TurboTax Home & Business is suitable for individuals who operate a small business, including single-member LLCs or multi-member LLCs taxed as partnerships. This version is designed to handle both personal and business income, expenses, and deduction