Taxes when Independent

Forum|Forum|3 years ago
November 16, 2022
1 reply
14 views

Feb 2022 my Business Partner and I created an LLC based in Florida. We have worked this year and want to make sure we pay the correct taxes for FY 2022. So the calculations are:

(Money that is paid to us by customers) - (Cost of setting up the business) - (Overhead costs) - (work-related deductibles) = Net.

We pay taxes on the Net. Is this calculation correct?

CatherineR

Level 4

Since your LLC is set up as a multi member entity, it will be required to file a form 1065 Partnership return which will in turn generate K-1s for each partner to include their net profit share on their respective individual form 1040 tax returns. Here is more information about LLC taxes:

Turbo tax LLC taxes

The net profit is calculated as:

Net profit = Total Revenue - Total Expenses

Total expenses represents all expenses—cost of goods sold, operating expenses, income taxes, interest expenses on loans and debt, depreciation of fixed assets, and SG&A (selling, general, and administrative expenses). Be aware there are special rules and limitations for start up expenses as explained at this link:

Start up costs

Keeping good books and records will make tax reporting more manageable and I recommend our Quick Books system. More information is located here Quick Books

Good luck on your new venture!

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