How does starting a business affect my taxes?
Congrats on the new business! This exciting venture changes your tax situation a bit, but we’re here to guide you every step of the way and help whenever you need it. Now that you’re a business owner, there are certain liabilities you’re responsible for, but there are also exemptions and deductions you can claim that employed individuals can’t. Here are some ways your taxes will now change.
1. You can file your Schedule C using TurboTax Premium
If you’re a sole proprietor or the only member of an LLC, you’ll report all of your business income and expenses on a Schedule C attached to your personal return. We can help you with that in TurboTax Premium. Tell us about you and your business, and we’ll guide you through entering all your income, expenses, and find the deductions that will maximize your refund.
2. Your business income is subject to self-employment tax
When you're an employee, you and your employer both pay Social Security and Medicare tax with each paycheck. But when you're self-employed, or are the sole owner of a business, you have to pay that tax by yourself. It’s a total of 15.3% – 12.4% for Social Security and 2.9% for Medicare. Just enter all of your income forms, and we’ll calculate the tax for you. And if you have any 1099-NECs, you can easily snap a pic and upload them in TurboTax.
3. You can deduct numerous business expenses
As a business, you have the potential to reduce your taxable income by claiming related expenses and deductions. Things like rent, car payments and maintenance, supplies, and employee compensation are all deductible expenses. Tell us about your business and we’ll customize your experience to feature common expense types for your industry. You’ll be guided through entering all of your expenses and claiming any relevant deductions.
