Hi, @EK241 , thanks for the questions!
1) Not really a tax question, but you're not penalized per se. If you have business expenses, just make sure you have documentation of some kind, e.g. receipts. However, all accountants (including me) are going to tell you to make business purchases from your business account. Commingling business and personal expenses is just not a best practice.
2) Sole proprietors do no really "pay themselves" per se. From a tax perspective, you and the business are the same entity. You just have the choice of what to do with your profits: spend on business expenses, spend on personal expenses, or don't spend at all. The only thing I would say, related to what I said above, is that I would move the money from the business account to a personal account if I wanted to use it on personal expenses. But it makes no difference from a tax perspective.
3) As a general rule, you have to pay state tax in any state that you do work in.
4) "Tax deductible" refers to an expense that decreases your taxable income. For example, if I have $10,000 in business income, but had $1,000 in business expenses, then the net taxable income is only $9,000.
Hope this helps, please let me know if not!
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