Confused regarding taxation for freelance business and LLC

[mickaelc]

Hi, I have a few questions regarding a very particular situation.

Let's assume that I do business as a freelancer under my own name. (consulting services with no business registered - taxed as a sole proprietorship)  but I also have an LLC (single member and taxed as a sole proprietorship with no employees) for other services I offer.

Here are my questions:

1) How would I report my income and expenses? Under one form for both my freelance activity and LLC?

2) How would I go about making quarterly tax payments for those two activities? I assume I need to somehow differentiate those payments? I mean I need to make tax payments for the freelance activity but also for the LLC

3) How to go about tax deductions? Should I report everything on one form for both activities?

4) From my understanding, the LLC doesn't need an EIN as it's considered a sole proprietorship? 

Thanks in advance for your help!

[VolvoGirl · Accepted solution]

You can fill out 2 schedule C forms, one for each business.  Are you filling out a schedule C for the LLC?  Or is it a Single Member LLC that is a S corp?

For estimated payments, they go under your ssn so you can make one payment to cover both.   Quarterly estimated payments apply to the total tax due on all your income.

[Critter-3 · Accepted solution]

Here are my questions:

1) How would I report my income and expenses? Under one form for both my freelance activity and LLC?

You will file separate Sch Cs ... one  for each business. 

2) How would I go about making quarterly tax payments for those two activities? 

Estimated payments are made on the basis of your total income tax due on your single tax return that you file which takes into consideration income from all sources ... you don't pay the estimated payment separately for each business. 

I assume I need to somehow differentiate those payments?  Wrong assumption.

3) How to go about tax deductions? Should I report everything on one form for both activities?  Again separate businesses so you file separate Sch C forms.

4) How would the above differ if the LLC has an EIN? Would that be the preferred way to go to differentiate both activities?   An EIN  makes no difference ... with or without an EIN it is still reported on the Sch C as usual for a single member LLC  UNLESS you incorporate ... then that is a totally separate situation. 

[mickaelc]

Thank you so much for your replies!

If I may, I'd like to ask two follow up questions:

1) If I have two Schedule Cs, how to determine on which of them to include expenses such as health insurance for my and my family that I pay myself? I know this is eligible for a tax deduction but not sure on which Schedule C to include it? The one for the freelance business or the one for the LLC activities? 

2) On the same topic as above, what if I use a software or have a subscription expense used for both businesses?  On which Schedule C should I include it? 

3) If I understand you correctly, even if I apply for an EIN (while staying in the same scenario for the LLC meaning single owner, no employees and taxed as a sole proprietorship), I won't have to indicate it anywhere when filing Schedule C for that business?

Thanks again for your replies!

[mickaelc]

Thanks a lot for your answer. Super helpful. I would keep the LLC as a single member LLC taxed as a sole proprietorship. 

[VolvoGirl · Accepted solution]

Self-employed health insurance deduction goes on Form 1040 Schedule 1 line 16 which flows to 1040 line 8a as long as the expense is not greater than your Net Profit on Schedule C individually.  If the insurance is more than your Net Profit on each of your Schedule Cs you can split it up and enter part on each Schedule C so you don't go over the Net Profit on either one.

Self-employed health insurance deduction goes on Form 1040 Schedule 1 line 16 then to 1040 line 8a, as long as the expense is not greater than your net self-employment income. If it does exceed your net self-employment income it gets split automatically. An amount equal to your net self-employment income goes on Form 1040 Schedule 1 line 16, and the remainder gets added in to medical expenses on Schedule A.

BUT do not enter any Health Care Marketplace insurance you bought.  If you enter the 1095-A and select the "Self-employed and bought a Marketplace plan" box, it will automatically include those premiums in the SE Health Insurance section.  So you shouldn't enter it again on schedule C.

[mickaelc]

Excellent, that's very clear thanks.

Would it pull out all premiums bought on the marketplace? For me, my wife and my child?

Will I have to indicate our 3 social security numbers to pull them all?

[Critter-3 · Accepted solution]

It will work with the 1095-A you enter ... if it is for everyone then that is all you need to do.  When you use the program is will become clear ... if you have questions after you enter everything then post back for clarification.