How does having a small business affect my taxes?

This depends on what type of entity your small business is:

 

Sch C or Sch F....depends on your other income and follows the filing requirements of 1040...but, if net income from the business is over $400, filing is required for SE tax, regardless of other income and filing requirement

 

Corporation...must be filed

https://www.irs.gov/pub/irs-pdf/i1120.pdf

 

Elected 1120S status

https://www.irs.gov/pub/irs-pdf/i1120s.pdf

 

If a partnership

https://www.irs.gov/pub/irs-pdf/i1065.pdf

 

Hi, YWebb:

Yes, the IRS requires you to report self-employment income if your net income (business income minus business expenses) from your business is $400 or more since you are also required to pay self-employment taxes on your net income.   Also, you (and the IRS) will receive some 1099 forms based upon other criteria:

• Beginning with tax year 2022 if someone receives payment for goods and services through a third- party payment network, their income will be reported on Form 1099-K if $600 or more was processed as opposed to the current Form 1099-K reporting requirement of 200 transactions and $20,000. This change could impact people working in the gig economy, online sellers, independent contractors, and other self-employed business owners.
• If you received payments totaling $600 or more from any one of your side jobs during the tax year a company or individual paid you, they should supply you with a Form 1099-NEC for the nonemployee compensation.

Generally speaking, worldwide income is reportable (although not all of it is taxable). This article can get you started on understanding self-employment income.  One big thing many new entrepreneurs miss is the need to pay self-employment taxes.  You can read more about that in the same article.

 

Good luck and congratulations on the new small business!

 

Cheers!