You’ve probably heard of TurboTax Self-Employed if you own a small business or work as a freelancer. It’s a well-liked choice for tax preparation software for people who are self-employed and must file their taxes. What happens, though, if you have an LLC? Can you also do it with TurboTax Self-Employed? Yes, but there are a few things you should be aware of first.
It’s crucial to first comprehend that an LLC is a pass-through entity for taxation. This indicates that the LLC’s earnings and costs are transferred to its owners, or “members,” who then report them on their individual tax returns. In contrast to a corporation, where the profit is taxed by the company, this is not the case.
For this reason, if you own an LLC, you can utilize TurboTax Self-Employed to file your personal tax return, which will contain the revenue and outgoings of your company. However, you might need to utilize a different version of TurboTax that is made for partnerships if your LLC has numerous members.
Let’s respond to some similar queries now: How much revenue must a company generate in order to file taxes?
The response to this query relies on a number of variables, such as your filing status and the kind of your company entity. For instance, if your self-employment net earnings total $400 or more and you are a sole proprietor (the IRS’s classification of single-member LLCs), you are required to submit a tax return. If your LLC is treated as a partnership for tax purposes, the partnership must file a tax return if it earns $1,000 or more, or if any of its partners are nonresident aliens. Businesses use a W9 form to ask for the taxpayer identification number and other details from the suppliers they pay. If you are an LLC, you must complete a W9 with the name of your company and your tax identification number, which should be either your Social Security number or, if applicable, an Employer Identification Number. The type of entity you are (such as a “sole proprietor,” “partnership,” or “LLC taxed as a corporation”) should also be included.
Which pays less in taxes, an LLC or a S Corp?
There is no simple solution to this challenging question. Although both LLCs and S corporations have tax advantages, the optimal choice for you will depend on the particulars of your company’s operations. S corporations are preferable for companies with large profits that can benefit from the tax savings, in general. LLCs are preferable for companies that need more administrative flexibility.
Can my LLC cover the cost of my phone? Yes, if you use your phone for business activities, your LLC may pay for it. To just claim the business portion of your mobile phone charges on your tax return, you will need to keep thorough records of your company use in comparison to your personal use. You must divide the costs appropriately if you use your cell phone for both personal and professional purposes.