I started a small business in 2023, and I have been paying state taxes on my sales. When I upgrade to TurboTax Small business, is there a way to let the system know that?

[xmasbaby0]

There is no program called "Small Business"--- so determine what kind of business you have.  If you are a sole proprietor you can use online Self-Employed or the CD/download for Home and Business.   If you have a Scorps, Ccorps or multi-member partnership, you will need a download program called TurboTax Business which only works on Windows.

When you prepare your tax return you will be prompted to enter all of your business expenses and any tax you have already paid.

[xmasbaby0]

Actually---if you use the CD/download, you can use any version to prepare a Schedule C.  The Home and Business will just give you more help.

[Carl]

There is no program called "TurboTax Small Business". There is a program called "TurboTax Business" though.

TurboTax Business - Only available on CD and only for the Windows operating system. Used to complete a tax return for an S-Corp, C-Corp, Partnership, Estates, and Trusts. TurboTax Business can not be used to file a personal 1040 tax return or a SCH C for a sole proprietorship or single member LLC.
TurboTax Self-Employed.  Available online only until the middle of October each tax year. This program can be used to file a personal 1040 tax return which can include a SCH C for a sole proprietorship or single member LLC. The CD "twin" of this program is called TurboTax Home & Business.

TurboTax Home and Business - This program, and all other versions below this version *ON CD* that you physically install on your Windows or MAC computer can be used to file a personal 1040 tax return, which can also include a SCH C for a sole proprietorship or single member LLC.

[Anonymous_]

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@Carl wrote:

........Only available on CD....TurboTax Self-Employed....The CD "twin" of this program is called TurboTax Home & Business........This program, and all other versions below this version *ON CD* 

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You need to edit whatever file you use for copy and paste, @Carl.

The desktop products are available on CD and download. Further, there is no more "Self-Employed"; it is now called "Premium". 

[SirDouglasB12]

If I'm understanding your question correctly - The sales tax is not something you would include, since it is not part of your revenue. You sold a product for X dollars, but you got paid X plus sales tax. The sales tax is paid to the state, not you.  When you enter your income, you only enter what you got paid, NOT including the sales tax.

For example, I sell a product for $1164.15, but my state sales tax is 0.07375%, so I collect from the buyer a total of $1250.  When I report my income, I only report the 1164.15 because the sales tax (85.85) got paid to the state.

[VolvoGirl]

You probably should report the total income you got including the sales tax.  Then you enter the  sales tax you paid to the state or county as an expense.  

[SusanY1]

You will enter the total you collect from customers as your income, as indicated in @VolvoGirl's response above.  You will then enter all of the sales tax you paid before the end of the year in TurboTax as tax expense. 

Your tax expense could include other items such as business property tax.  

TurboTax will ask for this expense in the interview.   Note that TurboTax small business prepares forms 1120, 1120S and 1065 for your small business entity.

If you file only Schedule C, you will use TurboTax Home & Business (download) or TurboTax Premier (online).  

[AmeliesUncle]

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@SirDouglasB12 wrote:

The sales tax is not something you would include, since it is not part of your revenue. You sold a product for X dollars, but you got paid X plus sales tax. The sales tax is paid to the state, not you.  When you enter your income, you only enter what you got paid, NOT including the sales tax.

For example, I sell a product for $1164.15, but my state sales tax is 0.07375%, so I collect from the buyer a total of $1250.  When I report my income, I only report the 1164.15 because the sales tax (85.85) got paid to the state.

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In most states, yes.

In most states, the sales tax is imposed on the buyer, not the seller.  So you do NOT report your income including the sales tax.  You only include income that does NOT include the sales tax.

From IRS Publication 535:

Do not deduct state and local sales taxes imposed on the buyer that you must collect and pay over to the state or local government. Also, do not include these taxes in gross receipts or sales.

https://www.irs.gov/publications/p535#en_US_2022_publink100013838