This episode is brought to you by my new FREE Masterclass, "The Most Common Legal and Tax Mistake at Each Stage of Business and How to Avoid Them." In this Masterclass you will learn if it's time to go from a sole proprietorship to an LLC, an LLC to a S-Corp, and how to properly run an S-Corp. You'll learn how to get more profitable in a snap and put your taxes on auto-pilot as well as how to manage the growth of your business without fear or IRS hate mail or lawsuits. Click here to sign up for the Masterclass.
This week on Facebook Live I answered the following questions:
1. I have a business that was recently registered as an S-corp under the advice of my accountant. I registered my business in my home state of TX. Due to my husband's work in the military, we move every few years. What's the point of registering my company in my home state when apparently I need to register it in whatever current state we're living in as well? - submitted by Jen H
As a military person you have a home state of record, that's where you're going to file your income taxes but when we register our LLCs (you don't form an S-corp, you either form an LLC or a corporation. Typically you'll form an LLC and you'll elect for that to be taxes under subchapter S which is when we say you have an S corporation). If your home state of record is Texas, you would need to register your LLC in the states you live in which is called operating a foreign corporation and paying that state's franchise fees.
For more info check out my blog post Answers to 6 Key Legal & Tax Questions for Military Spouse Small Business Owners.
2. Am I supposed to claim gifted money? I do my own taxes via TurboTax and I don't see that as an option.
It depends. If Grandma gave me $50 when I visit, no. If your followers send you Venmo money or a "pay what you want" contribution for a service, I would consider that business income.
3. Needing to upgrade my phone...and switch to iPhone so I can be on Clubhouse with my clients. Can I write my phone off? Or part of my phone bill? - submitted by Natasha S
Yes, the rule is you write off what you use for your business, a lot of us say 50%.
4. When is the right time to change my business from sole proprietor to an LLC...or an SCorp? What is an S Corp? -submitted by Cindy G
For more info on sole props, LLCs, S-Corps, and more check out my book, Unf*ck Your Biz
5. Is a business a good thing to start for a tax break? - submitted by Terri K
No. When you have a business you need to pay business taxes and self-employment taxes.
6. What’s the best way to establish business credit? - submitted by Melissa A
First you want to get a business EIN and it operates as your business's social security number. Based on my own personal experience, it helps to separate your business credit from your personal credit. Once you get a businses credit card that will effect just the business credit
7. Can I deduct clubhouse time at end of year? - submitted by Maricela M
No, we cannot take a deduction for promotional/business activities.
8. If I only make $7,000 in a year doing a side business, and I don’t have another full time job, does the standard deduction mean I won’t owe any taxes since it reduces my taxable income? - submitted by Takeshia S
Yes and no. For income taxes, if you profit $7,000 and your standard deduction is $12,200 for income taxes your taxable income is negative and you would owe no income tax. Your self-employment tax (your share of medicare and social security) is based on profit so if your net income is $7,000 you would owe roughly 15.3% self-employment tax. If that is all your income you would possibly get an Earned Income Credit
Join the Braden's Bestie's Facebook group to have your questions answered on the podcast.
Have a follow up questions or want to meet some fellow kickass biz owners who also are trying to get their shit legit? Come be a bestie and join us in the Facebook Group.
You'll learn: what the three mistakes are; how to fix them; and also how to work with me to get your legal & tax shit legit.