Business sales tax questions for new LLC formed in CA 2022

[x12179x]

I formed a new LLC in 2022 (CA-based) through a company which went out of business; they set up my tax resale form but weren't able to answer many questions. It turns out the accountant I spoke with was from abroad (in the Middle East). So even though it was a US-based company, they weren't helpful for CA tax questions about my quarterly sales tax.

I was also told by an accountant that I didn't need to pay quarterly taxes as I wasn't making much profit at the beginning; but the company that did my LLC/paper went out of business. And now I am making more sales revenue and need information on how to report it for CA tax.

How should I handle business sales tax from 2022? Is there a field in Turbotax to report business sales tax that I collected? And are there any forms I should know about for the LLC I formed in 2022?

[Cynthiad66]

We'd love to help you complete your tax return, but need more information. Can you please clarify your question?

Is this a Single member LLC if so then it is a disregarded entity and you would file all of your information as a Schedule C.  All of your expenses will be on the Sch C Self Employed return.

The forms you would need would depend on the LLC.

California Online Sales Tax Payment Service

[x12179x]

Yes this is a Single Member LLC.

My CPA told me I didn't need to report quarterly sales tax because I wasn't making any profit at the time. But towards the end of the 2022 year I started making more profit. Where do I need to report this business sales tax that I collected in 2022 (what form or where in turbotax)?

[Cynthiad66]

Sales taxes you incur operating your business are deductible on your Schedule C.  Every expense relating to the LLC will go on the form Schedule C - Self Employment.

If a single-member LLC does not elect to be treated as a corporation, the LLC is a "disregarded entity," and the LLC's activities should be reflected on its owner's federal tax return. If the owner is an individual, the activities of the LLC will generally be reflected on:

• Form 1040 or 1040-SR Schedule C, Profit or Loss from Business (Sole Proprietorship) 

In order to complete a Schedule C in TurboTax you will need TurboTax Self-Employed or TurboTax Live Self-Employed to file a Schedule C.

Once you have the correct version of TurboTax you can complete the Schedule C by following these steps:

1. Open or continue with your return.
2. In the Search box type schedule c. 
3. Click the “Jump to schedule c” link in.
4. Answer Yes to Did you have any self-employment income or expenses?
5. Follow the onscreen instructions to enter your Schedule C information.

Please note: An employer tax ID number is not needed for a Schedule C, choose your social security number.

[x12179x]

So does that mean the sales tax paid by my customers that goes to me doesn’t get sent to the IRS? Do I need to report this sales tax somewhere? If I have business deductions, does the sales tax the customers pay to me lower my overall tax?

[ThomasM125]

The sales tax you collect from your customers needs to be paid over to the state. It is not a federal tax issue. You simply collect it and then pay it over to the state that you are doing business in. It is not deductible on your income tax return since it is not your money, you just collect it from the customer and then pay it over to the state.

TurboTax does not support sales tax collection and payment procedures, as it is not related to income taxes. However, if you use Intuit's QuickBooks software to maintain your accounting records, that software does include a sales tax module that you can use to prepare and submit your sales tax payments and returns.

Here is a link for information on QuickBooks: QuickBooks

[x12179x]

Ok, so I can get QuickBooks to prepare my sales tax. Is that software able to connect to my webstore like Etsy and get all past sales tax I received?

Also, do I need to pay sales tax quarterly?  Or can I pay the sales tax for 2022 all at once (since I have not yet paid it early in the year)?

[DawnC]

Retailers engaged in business in California must register with the California Department of Tax and Fee Administration (CDTFA) and pay the state's sales tax, which applies to all retail sales of goods and merchandise except those sales specifically exempted by law.   You can take care of your sales tax by filing a return through the state of CA.   You will need to register first.