Hi Yawo23,
As a Sole Proprietor LLC, you would be considered a disregarded entity for IRS purposes. But you would be considered an entity for the Ohio CAT Tax. With that in mind:
1. For federal purposes, you would only submit ES payments if you had income not covered by withholding. Since your business is having a loss for 2023, you would have no requirement for making an ES payment. My understanding for Ohio, the CAT tax has a minimum tax of $150 for 2023 (I understand that this changes in 2024), so you would need to pay that. Here is the website for the Ohio Department of Revenue https://tax.ohio.gov/business This can give you details on the Commercial Activity Tax in Ohio.
2. For federal purposes, you would just file your 1040. You would put your income and expenses for your new Cafe business on Sch C. For CAT, you can just check with the website above. That tax is based on gross income.
3. Not necessarily. For federal purposes, your loss on your Sch C would be netted against all your other 2023 income to produce your 2023 taxable income. If you income is zero or less, you would likely create a net operating loss to carry forward, but the rules on the exact calculation are complex. But if you are either married and your spouse earns wages, or you earn wages, the Sch C loss first offsets that other income.
4. You can make draws any time from a Sch C business. Payments that you make are related to the net income of the business for the years, NOT the draws. If you are able to make draws because your business is making money, then yes, you would want to make estimated tax payments to cover the net income from the business (assuming any wages or other income is covered by withholding), plus you would need to make estimated payments for your self-employment tax (the equivalent of employer and employee social security and medicare). This tax is about 15.3% of net income (over and above your income tax).
5. No 1099s necessary for any draws from a Sch C business
6. The quarterly payment is ONLY for you personally. Your single member LLC is considered a disregarded entity (does not exist) for federal income tax purposes.
I hope this helps,
Marty
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