Question re: Taxes for self-employed

DaddyTorgo · 03-31-2011, 08:15 AM

So I've never filed taxes as self-employed before...what's the deal?

I'm a partner in a LLC...I don't have a W2 because I just take a monthly draw from the LLC.

No house, no kids, nothing complicated like that.

Am I still able to just file a 1040 using say TurboTax or something, or is it markedly more complicated and I should consider having someone do it for me?

Figured there's got to be others here in this situation.

Swaggs · 03-31-2011, 08:29 AM

I'd spend an evening (soon) playing with this: TurboTax® Home & Business - Tax Software for Self Employment and Personal Taxes

If it seems like it is going to be too complicated, get to an accountant soon, as it is getting kind of late in the game.

The rough thing about being self-employed is that you have to pay the self-employment tax (where you pay both the employer's and the employee's portion of the taxes). Hopefully, you have saved a bit up to cover this.

DaddyTorgo · 03-31-2011, 10:16 AM

Quote:

Originally Posted by Swaggs

I'd spend an evening (soon) playing with this: TurboTax® Home & Business - Tax Software for Self Employment and Personal Taxes

If it seems like it is going to be too complicated, get to an accountant soon, as it is getting kind of late in the game.

The rough thing about being self-employed is that you have to pay the self-employment tax (where you pay both the employer's and the employee's portion of the taxes). Hopefully, you have saved a bit up to cover this.

Yeah - it's definitely late in the game...I know. Haha. Just wasn't sure if any other self-employed folk had any tidbits of wisdom so I thought I'd check on here.

I was aware of the self-employment tax fucking me over (my partner clued me in when he made me a partner), so I actually budgeted to save for that as well as the rest of my taxes (since nothing was withheld), so I'm easily able to cover what my rough estimate of my tax bill is.

Doug5984 · 03-31-2011, 10:58 AM

(Taking a break from my tax returns to read the FOFC boards and sadly I was drawn to this thread...)

Edit to add: Is it a single member LLC? If that is the case everything below doesn't apply...

Is an accountant preparing the return for the partnership? If so you will recieve a K-1 with the profits / losses of the business and you'll slap that on a return and be done with it. You will have to pay self employment taxes on the profits as well, so just be aware that if it starts making money you will need to set aside, and pay estimated taxes so you aren't hit to hard at the end of the year- and you don't get hit with an underpayment penalty.

If you don't have a CPA to prepare the partnership return- I guess you could do it on turbo tax, I've never used their software. If you are familiar enough with everything- give it a shot, if not hire someone. It'll cost a little extra but save you a lot of head ache down the road if it wasn't done right the first time. I just started a clients file that I'm going to have to go back and amend who knows how many years because whoever did his taxes did not know what they were doing- and made some typos (30,000 instead of 3,000) on expenses

Autumn · 03-31-2011, 12:08 PM

Quote:

Originally Posted by DaddyTorgo

So I've never filed taxes as self-employed before...what's the deal?

I'm a partner in a LLC...I don't have a W2 because I just take a monthly draw from the LLC.

No house, no kids, nothing complicated like that.

Am I still able to just file a 1040 using say TurboTax or something, or is it markedly more complicated and I should consider having someone do it for me?

Figured there's got to be others here in this situation.

Feel free to PM me with questions, I've been filing both our partnership taxes, and our own taxes for a number of years.

Yes, you can do a 1040 and can probably do TurboTax as well, but will have some extra schedules to fill out and some additional things to be keeping in mind. Did you receive a K-1 from the LLC?

DaddyTorgo · 03-31-2011, 12:33 PM

Quote:

Originally Posted by Doug5984

(Taking a break from my tax returns to read the FOFC boards and sadly I was drawn to this thread...)

Edit to add: Is it a single member LLC? If that is the case everything below doesn't apply...

Is an accountant preparing the return for the partnership? If so you will recieve a K-1 with the profits / losses of the business and you'll slap that on a return and be done with it. You will have to pay self employment taxes on the profits as well, so just be aware that if it starts making money you will need to set aside, and pay estimated taxes so you aren't hit to hard at the end of the year- and you don't get hit with an underpayment penalty.

If you don't have a CPA to prepare the partnership return- I guess you could do it on turbo tax, I've never used their software. If you are familiar enough with everything- give it a shot, if not hire someone. It'll cost a little extra but save you a lot of head ache down the road if it wasn't done right the first time. I just started a clients file that I'm going to have to go back and amend who knows how many years because whoever did his taxes did not know what they were doing- and made some typos (30,000 instead of 3,000) on expenses

Hehe. It's a two-person LLC.

I have the K-1. I should probably talk to someone though, as I haven't done it before and I'm sure it can get complicated with the percentage of the LLC that I own and what-not.

DaddyTorgo · 03-31-2011, 12:34 PM

Quote:

Originally Posted by Autumn

Feel free to PM me with questions, I've been filing both our partnership taxes, and our own taxes for a number of years.

Yes, you can do a 1040 and can probably do TurboTax as well, but will have some extra schedules to fill out and some additional things to be keeping in mind. Did you receive a K-1 from the LLC?

Cool. I'll PM you at some point this weekend.

Autumn · 03-31-2011, 12:35 PM

I can answer some questions for you then. But yeah, it doesn't hurt to have someone else do it the first time at least, then you have something to look at next year if you want to figure it out yourself. It shouldn't be complicated though, the K-1 lays out exactly what you need to report.

britrock88 · 03-31-2011, 12:39 PM

Yeah, refer to the K-1 if you are in an arrangement legally deemed a partnership. If you're not in that section, you'll end up in Schedule C.

Doug5984 · 03-31-2011, 12:41 PM

Quote:

Originally Posted by DaddyTorgo

Hehe. It's a two-person LLC.

I have the K-1. I should probably talk to someone though, as I haven't done it before and I'm sure it can get complicated with the percentage of the LLC that I own and what-not.

If you already have the K-1 you can take a shot at turbo tax, if their software is anything like ours it's almost like paint by number - enter the information from box 1 here, box 3 here, what type of entity, the EIN, etc.

You could also get someone to do it- if that's all you have it shouldn't be too expensive. We'd prolly charge $200-ish

Edit to add: It can get complicated with basis issues and losses, but assuming the K-1 is right and nothing to out of the ordinary it shouldn't be too bad. Go to the accountant that prepared the K-1, it'll be easy for them to do the return because most programs allow export of the K-1 directly to the individual return making it quick and cutting out human error there.

DaddyTorgo · 03-31-2011, 02:29 PM

Quote:

Originally Posted by Doug5984

If you already have the K-1 you can take a shot at turbo tax, if their software is anything like ours it's almost like paint by number - enter the information from box 1 here, box 3 here, what type of entity, the EIN, etc.

You could also get someone to do it- if that's all you have it shouldn't be too expensive. We'd prolly charge $200-ish

Edit to add: It can get complicated with basis issues and losses, but assuming the K-1 is right and nothing to out of the ordinary it shouldn't be too bad. Go to the accountant that prepared the K-1, it'll be easy for them to do the return because most programs allow export of the K-1 directly to the individual return making it quick and cutting out human error there.

I just talked to my partner about this actually, and I think I'm going to just use the CPA who prepared the K-1. It's a bit complicated as I essentially had gaurenteed payments this year that exceeeded my ownership % of the company's net profits, so he did some stuff on the K-1. Easiest for him just to bang it out probably.

Doug5984 · 03-31-2011, 02:35 PM

Quote:

Originally Posted by DaddyTorgo

I just talked to my partner about this actually, and I think I'm going to just use the CPA who prepared the K-1. It's a bit complicated as I essentially had gaurenteed payments this year that exceeeded my ownership % of the company's net profits, so he did some stuff on the K-1. Easiest for him just to bang it out probably.

Yeah once you start getting into basis issues, guaranteed payments, or other complicated issues- its best to get a CPA involved, and in this case the one who prepared it all makes it easiest for you- he already knows that side of the story so doing yours will be quick.

CrimsonFox · 03-31-2011, 05:04 PM

Quote:

Originally Posted by DaddyTorgo

So I've never filed taxes as self-employed before...what's the deal?

I'm a partner in a LLC...I don't have a W2 because I just take a monthly draw from the LLC.

No house, no kids, nothing complicated like that.

Am I still able to just file a 1040 using say TurboTax or something, or is it markedly more complicated and I should consider having someone do it for me?

Figured there's got to be others here in this situation.

You will fill out the SE as well as the 1040. There are lots of credits and expenses you can claim. anything workrelated. YOu can claim mileage for business car trips food during business travel (it gets cut in half) and other things that are used for your business.

You can't claim your home as business unless you have a specified separate office that is NEVER used for home activity.

Keep lots of records of course.

RainMaker · 03-31-2011, 05:57 PM

I also recommend just using a CPA. They aren't horribly expensive and at least you'll know it's done right. Also don't have to deal with the headache of figuring it all out and you're less likely to be audited.

03-31-2011, 08:29 AM	#2
Swaggs Coordinator Join Date: Oct 2000	I'd spend an evening (soon) playing with this: TurboTax® Home & Business - Tax Software for Self Employment and Personal Taxes If it seems like it is going to be too complicated, get to an accountant soon, as it is getting kind of late in the game. The rough thing about being self-employed is that you have to pay the self-employment tax (where you pay both the employer's and the employee's portion of the taxes). Hopefully, you have saved a bit up to cover this. __________________ DOWN WITH HATTRICK!!! The RWBL Are you reading In The Bleachers?

03-31-2011, 10:58 AM	#4
Doug5984 College Benchwarmer Join Date: Oct 2000 Location: Louisiana	(Taking a break from my tax returns to read the FOFC boards and sadly I was drawn to this thread...) Edit to add: Is it a single member LLC? If that is the case everything below doesn't apply... Is an accountant preparing the return for the partnership? If so you will recieve a K-1 with the profits / losses of the business and you'll slap that on a return and be done with it. You will have to pay self employment taxes on the profits as well, so just be aware that if it starts making money you will need to set aside, and pay estimated taxes so you aren't hit to hard at the end of the year- and you don't get hit with an underpayment penalty. If you don't have a CPA to prepare the partnership return- I guess you could do it on turbo tax, I've never used their software. If you are familiar enough with everything- give it a shot, if not hire someone. It'll cost a little extra but save you a lot of head ache down the road if it wasn't done right the first time. I just started a clients file that I'm going to have to go back and amend who knows how many years because whoever did his taxes did not know what they were doing- and made some typos (30,000 instead of 3,000) on expenses Last edited by Doug5984 : 03-31-2011 at 11:16 AM.

03-31-2011, 12:35 PM	#8
Autumn Head Coach Join Date: Feb 2003 Location: Bath, ME	I can answer some questions for you then. But yeah, it doesn't hurt to have someone else do it the first time at least, then you have something to look at next year if you want to figure it out yourself. It shouldn't be complicated though, the K-1 lays out exactly what you need to report.

03-31-2011, 12:39 PM	#9
britrock88 Pro Starter Join Date: Jan 2011 Location: Madison, WI	Yeah, refer to the K-1 if you are in an arrangement legally deemed a partnership. If you're not in that section, you'll end up in Schedule C.

03-31-2011, 05:57 PM	#14
RainMaker Hall Of Famer Join Date: Jun 2006 Location: Chicago, IL	I also recommend just using a CPA. They aren't horribly expensive and at least you'll know it's done right. Also don't have to deal with the headache of figuring it all out and you're less likely to be audited.

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