Let’s set the stage: You’ve been self-employed for a while, and you’re a pro at doing your small business taxes by now. You hustled and worked hard last year — business has been booming. As you fill out your tax return for the year, you start to realize that Schedule C is looking a bit more crowded than you’re used to. Is it time for a change? Eventually, self-employed taxpayers might find themselves outgrowing their roles as small-scale sole proprietors and decide they’re ready to graduate to something a little more official, like a limited liability company (LLC). But how do you know you’re ready to make the switch? Here are some signs you might be ready to create an LLC and what steps you should take once you’ve decided to make the leap. When to switch from sole proprietor to LLC When thinking about turning your business into an LLC, ask yourself one simple question: Are things getting serious? And by “serious,” we mean: Is your business growing? Are you earning, or do yo...
The value of Bitcoin and other cryptocurrencies has undoubtedly seen better days. But there’s a small silver lining — if you sold crypto at a loss in 2022, you might be able to save on your tax bill this year. What is the definition of cryptocurrency? Cryptocurrency differs from traditional currency, like the U.S. dollar, because it doesn’t have any intrinsic value. It is a decentralized currency, meaning it isn’t issued by an authority such as the government but instead distributed by a peer-to-peer network. This allows crypto investors to trade their coins almost instantly without relying on a payment processor as the middleman. Cryptocurrency generally exists on a blockchain platform — a shared public ledger that records crypto transactions. Its value is highly volatile and depends on various factors, like the supply and demand of a particular digital currency. How does the IRS define cryptocurrency? For tax purposes, the IRS defines cryptocurrency as a digital asset and tre...
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