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...
Did you receive a 1099-K tax form this year? If you’ve never seen this form before and are unsure what to do with it, don’t freak out — we can help you understand your Form 1099-K and guide you through reporting any necessary income. How do I use my 1099-K when filing my tax return? TaxAct ® takes accurate tax reporting seriously. That’s why we’ve spent much time and care optimizing our 1099-K reporting this year. We’ve added more detailed questions about what your 1099-K was for so we can help pull the proper tax forms for you. First, we’ll ask you for information about what types of income you’ve earned this year: As you can see from the screenshot above, Form 1099-K appears in more than one place — typically, this form is used for those who are self-employed, operate a side hustle, or sell personal items online. You could also receive a 1099-K for real estate rentals and royalties or farming. If you received a 1099-K for goods you sold as a hobby, there is also a third opti...
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