1099 Contractor vs S-Corp; When Should You Make the Switch If you earn income as a 1099 contractor, you may have heard that forming an S-Corporation can reduce taxes. That statement is often true in the right situation, but it is not a one-size-fits-all strategy. The benefit depends on how much you earn, how your business is structured, and whether the added administrative requirements make sense for you. To understand when a switch is appropriate, it helps to first understand how each structure is actually taxed. What It Means to Be a 1099 Contractor (Schedule C) A 1099 contractor is someone who works for themselves rather than as an employee. Instead of receiving a W-2, you receive a Form 1099 showing how much you were paid by clients or companies during the year. From a tax perspective, this income is reported on Schedule C, which is simply the section of your personal tax return that tracks business income and expenses for self-employed individuals. In simple terms, Schedule C works like this: you report all the money your business earned, subtract your business expenses, and the remaining amount is your profit. That profit is then taxed on your personal
Question: How can small business owners prepare for quarterly estimated taxes? Quarterly Estimated Taxes: Who Must Pay Them and How Small Business Owners Can Prepare When taxes aren’t withheld from your income, the IRS expects you to pay as you go. That’s where quarterly estimated taxes come in. For many small business owners, freelancers, and individuals earning income outside a traditional job, understanding these payments is essential to avoiding penalties and staying on track financially. Who Needs to Pay Quarterly Estimated Taxes Quarterly estimated taxes apply to anyone who expects to owe at least $1,000 in federal tax for the year and doesn’t have enough withholding to cover it. This most commonly includes self-employed individuals such as freelancers, gig workers, sole proprietors, and single-member LLC owners. Because no employer is withholding taxes for them, they must pay throughout the year. Partners and S-corporation shareholders also need to plan ahead. Even if profits stay in the business, owners are taxed on their share of income reported on Schedule K-1. S-corporation owners who receive wages may have some withholding through payroll, but additional pass-through income often requires separate estimated payments. Real estate investors frequently owe estimates too,
Question: Just started a business, what expenses can I deduct? What Business Expenses Are Fully Deductible vs. Partially Deductible? If you’re a business owner, you’ve probably asked yourself this at least once: “Can I write this off?” As a tax professional, I hear it all the time. While it may seem like a simple yes or no answer, the truth is that not all business expenses are treated equally when it comes to deductions. Some expenses are fully deductible, meaning you can write off 100% of the cost. Others are only partially deductible due to IRS limitations. And then there are a few that might surprise you with how little (or how much) you can actually claim. Fully Deductible Expenses: The Everyday Essentials Many of the expenses you incur while running your business are completely deductible. These are your bread-and-butter costs—necessary, ordinary expenses that keep your operations going. Some examples include the following: Office supplies, internet bills, software subscriptions, and utility costs tied to your workspace Professional services like bookkeeping, legal help, or tax preparation fees Paying employees along with your share of payroll taxes and benefits Renting an office or leasing equipment exclusively for your business
Question: Should I hire a tax professional to do my business taxes or do them myself? It’s a question every business owner asks at some point: should I handle my own business taxes or bring in a professional? While doing it yourself might seem like a cost-saving move, hiring a tax professional could save you far more in the long run — in both money and stress. Let’s look at both sides of the decision so you can make the best choice for your business. Doing Your Own Business Taxes At first glance, doing your own taxes feels like the simplest route. You already know your business inside and out — so why not take control of your filings, too? The Upside The main advantage is cost savings. You won’t be paying preparation fees, and if your business is small or straightforward — say, a sole proprietorship or single-member LLC — using accounting software like QuickBooks or TurboTax Business can make the process manageable. You’ll also gain a deeper understanding of your financials. Handling your own taxes helps you see where your money is going, how much profit you’re really making, and what deductions you can
Did you ever wonder about some of the mistakes made when filing old taxes? I mean, what do people commonly mess up on? Well in this video we talk about two mistakes that are commonly made: Filling All Unfiled Returns Not Reporting All Your Income Making mistakes on your tax return can cost you money. You may miss out on a larger refund than you claimed, wind up owing more taxes (plus interest and penalties) or invite an audit from the Internal Revenue Service (IRS). The best defense against results like these is a good offense: avoiding making errors on your return in the first place! Now, at the end of that video we mention that we have a FREE DOWNLOAD for those who want it. The download? 5 Mistakes People Make When Filing Old Tax Returns. It discusses not only the two mistakes mentioned in this video, but 3 others, one of which could get you audited by the IRS! To grab your FREE copy of the download simply head on over to the courses page OR click on the image above.