Better to file separately or jointly? I own a single member LLC and my spouse has a FT job w/higher income (for now)

[First-time schedule C filer]

I own a single-member LLC mobile food stand and my husband, who volunteers to assist with certain non-administrative aspects of my business, currently makes low six figures at his own FT job (a lot more than I do as I just started this business in 2023). To be clear: my husband is not a registered member of my business; he is just helping me get it off the ground. No shared assets (other than a car) and no kids yet. He pays rent/utilities and we both get medical through his paycheck. My questions as a first-time Schedule C filer:

1) For the most tax savings, should we file separately or jointly? (see other related questions below)

2) Can I deduct my home office if I'm not the person of record paying the rent?

3) Can I deduct business use of my family cell phone plan for both my husband and I even though he is not a registered member of the business? (I pay the cell phone bill)

4) I heard that you can deduct your health insurance premiums regardless of who pays it (as long as you're on the plan). Is this true? If so, where would I make this deduction?

5) Anything big I should know right now as a first-time Schedule C filer?

THANK YOU!

[RobertB4444]

1.  Jointly is almost always a better choice.

2. Yes.  For tax purposes you and your husband are one person.

3. Phone and utility bills are pro-rated.  So you need to figure out what percentage of the time the phone is used for your business by you or your husband and then you can deduct that percentage of the phone bill as an expense of your business.

4. You can take a self-employed health insurance deduction if you are filing a schedule C.  When you are entering the expenses for your business into TurboTax "Self-Employed Health Insurance Premiums" is one of the options.  Enter them there.

5. Yes.  You should create a corporation and file a separate tax return for your business.  You can convert your business to an S-Corp and have a potential to save a lot of money on taxes.  Get out of the schedule C.

@First-time schedule C filer 

[First-time schedule C filer]

Thanks for the response! I have a few follow-up questions:

1. I know that jointly is almost always the better option, but given my specific situation (I own a low-profiting business, we have no shared assets, my husband makes more money), does filing jointly make sense? (Clarification of this point would likely affect the other questions I'd asked, no?).

2. If we don't file jointly - and file married filing separately instead - are we still considered one person in the eyes of the IRS? Can you clarify if your original responses to my questions 2-4 still stand?

3. Regarding ditching the Schedule C - can you provide more information as to why it makes sense for my specific current situation? I've only been in business for 6 months. I'm not making a lot. No employees. I thought it didn't make sense to become an S-Corp until I was making a certain threshold.

[AmyC]

1. There is a difference between federal and state.  See Is it better for a married couple to file jointly or separately? For some states, you may want to file separately and that may be together on the same return or completely separate as each state has different rules. Some states require the same as federal.

2. You or your husband can pay bills while your business claims the deduction since a good spouse supports their partner in their endeavors.  You are a team working together whether you file MFJ or MFS.

3.  I personally believe in a business being off the ground and firm before switching to an S corp as there are many more rules plus the expenses of starting and dissolving (if it fails). Each person and situation is different. I suggest you do what works best for you the tax center lists all the business options and requirements. For now, you are a schedule C.  Here are some helpful links:

• Small Business and Self-Employed Tax Center - complete guide
•  About Schedule C (Form 1040), Profit or Loss from Business ...    
• Publication 535, Business Expenses
• Publication 583, Starting a Business and Keeping Records