Self-Employed Filing

[sing-may]

I have lots of questions! I have a new business but I have not yet filed for sole proprietorship. The income I expect from this business will NOT equate to a full-time job; it is very leisure. I've used TurboTax in the past for filing and used by W-2s, so I am comfortable with that process. But, 1)  how do I file with this new business? 2) Do I need to have sole proprietorship in order to file? 3) Do I need to file regardless of the amount of money I make? The forum that I will use to do business will calculate the sales tax for me, do I need to do anything else to file the taxes? Please help, thank you!

[Jackstar221]

Hi,

The threshold for filing your taxes for self-employment income is $600. If you made $600 in revenue (money received) annually,  then you must report the income.

1.If it is just a regular LLC,  you can use the self-employed version of TurboTax, to report your income and expenses. As long as it is not a partnership, S corp, or C corp, you can use the self-employed version.

2.You don't necessarily have to have a sole proprietorship to file, but we recommend getting all your requirements to get the paper work done for the business, as soon as you can, if you have not already.

3.As indicated, the threshold for filing your taxes for self-employment income is $600. If you made $600 in revenue (money received) annually,  then you must report the income. Here is a link for self-employed taxpayers that may be helpful to you: https://turbotax.intuit.com/personal-taxes/self-employment-taxes/ 

If you owe taxes, you should make quarterly estimates, and if you have employees you need to file quarterly 941s and annual 940 returns for payroll. Here is a link you can use to make those payments electronically. https://www.eftps.gov/eftps/ 

Feel free to contact TurboTax at 1-800-446-8848, we can walk you through your questions.

Thank you,

John 

CPA

[VolvoGirl]

Actually The threshold for filing your taxes for self-employment income is only $400 not 600.  The 600 is the amount someone has to issue you a 1099NEC.   And you have to report all your income whether or not you get the 1099.  

You don't file to get a sole proprietor unless you want to be a LLC.  You just file your self employment income on schedule C in your personal tax return.  Sole Proprietor/Freelance/Independent Contractor are all the same thing.  

Sales tax is a separate thing you file with your state or county.  Turbo Tax does not do Sales Tax returns.  

Some general info on self employment on Schedule C.......

You will need to keep good records. You may get a 1099NEC or 1099K at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small. You might want to use Quicken or QuickBooks to keep track of your income and expenses.

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed return....
https://quickbooks.intuit.com/self-employed

When you are self employed you are in business for yourself and the person or company that pays you is your customer or client.

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You will need to use the Online Self Employed version or any Desktop program but the Desktop Home & Business version will have the most help.

Turbo Tax Beginners Tax Guide for the Self Employed
https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed...

What is form 1099NEC?
https://turbotax.intuit.com/tax-tips/irs-tax-forms/what-is-form-1099-nec/L5fbwIFSn

Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

Publication 334, Tax Guide for Small Business
https://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses
https://www.irs.gov/pub/irs-pdf/p535.pdf

You pay Self Employment tax on $400 or more of net profit from self-employment in addition to any regular income tax. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire.