12/02/2024
📌📌 Self Employed Individuals 📌📌📌
The IRS rules state anyone making income in a business/ side hustle/gig work and makes $400 in income MUST report the income on their tax return.
Misconceptions :
🚫I started the business, and we/I ain’t make no money (aka no profit), so I didn’t file
🚫I didn’t make any money. I only spent money to get it started. (Only expenses)
🚫If I am cash-based and do not receive a tax form or 1099, I do not need to report the income.
🚫I don’t have an EIN, so I don’t have to file my business income.
🚫I can open a business, get an LLC, and write off all my expenses because I don’t withhold enough taxes on my 9-5 job.
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The facts :
✅ To start a business, you must spend money (formation, articles of organization, websites, etc.). Therefore, you have what the IRS calls “activity,” and any business with activity must report it, even you S-Corp folks.
✅ Your idea of making money is not what the IRS defines. If you have sold a product or service but have expenses that exceed that amount, you must report. You don’t get to decide to file taxes ONLY when you are making “money.” 💰
✅ Cash-based businesses are required to file whether you receive a tax form or not. It’s called revenue less expenses (bookkeeping). You must, by IRS rule, keep a record.
✅ An EIN is not required to file business income; however, it is strongly suggested but not mandatory.
✅ Creating a fake business solely to write off personal expenses, and you do not provide services or products to people to generate income is FRAUD!
There is a BIG reason why you need to hire a professional.
Online software :
❌ Will not answer your questions concerning business formation
❌ will not make sure you are filing the correct forms for your business according to your business tax election with the IRS
❌ will not assist with audit letters, tax resolution, payment plan options
❌ Will not answer questions not directly related to the forms in the system under the “free” packages asking you to upgrade.
❌ will not help you calculate fixed asset value; it will assist you in determining which depreciation method provides the more significant deduction.
❌ Will not offer tax advice for the upcoming year.
❌ Will not help you prepare for retirement by assisting with gross income calculations with receiving SSA and pension income.
CPR TAX SERVICE LLC provides FULL TAX SERVICES to our clients.
If you’re a small business owner who needs help, there's no need to suffer in silence 🤫 we don’t judge.
