Turbotax for LLC business [Explained]

Last updated : Aug 27, 2022

Written by : Bud Otar

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Which TurboTax should I use for business?

TurboTax has two products to serve business ownersâ€”TurboTax Home & Business is designed for sole proprietors and 1099 contractors, while TurboTax Business helps you prepare taxes for corporations, partnerships and LLCs.

What is the best tax option for an LLC?

Benefits of Corporation Taxation Classification LLC owners are sometimes reluctant to choose corporation tax status out of fear of double taxation or more complicated filings. However, corporation status is the best option for some LLCs and should be considered.

Can I write off TurboTax as a business expense?

Yes, you can deduct the difference you paid between the version you would normally get and the TurboTax Self-Employed version. You can enter it in the Business Expenses area under Miscellaneous Expenses.

How do I file taxes for my LLC?

If the LLC is a corporation, normal corporate tax rules will apply to the LLC and it should file a Form 1120, U.S. Corporation Income Tax Return. The 1120 is the C corporation income tax return, and there are no flow-through items to a 1040 or 1040-SR from a C corporation return.

Can I file my LLC and personal taxes separate?

The IRS disregards the LLC entity as being separate and distinct from the owner. Essentially, this means that the LLC typically files the business tax information with your personal tax returns on Schedule C. The profit or loss from your businesses is included with the other income your report on Form 1040.

How does an LLC avoid paying taxes?

A general Corporation making a Subchapter â€œSâ€ Election or an LLC with or without a Subchapter S Election pays no federal tax on its taxable income and no employment taxes on its distributions to stockholders.

What are the 3 types of LLC?

Single-member LLC for the sole-proprietorship (solo entrepreneur)
Multi-member LLC (member-managed LLC or manager-member LLC)
Domestic LLC and Foreign LLC.
Series LLC.
L3C Company (low-profit LLC)
Anonymous LLC.
Restricted LLC.
PLLC and LLC.

How are LLCs taxed IRS?

A Limited Liability Company (LLC) is an entity created by state statute. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, partnership, or as part of the owner's tax return (a "disregarded entity").

What is deductible for an LLC?

What expenses can you write off as an LLC? There is a long list of expenses that you can deduct as an LLC. Some of the main operating costs that can be deducted include startup costs, supplies, business taxes, office costs, salaries, travel costs, and rent costs.

What deductions can I claim without receipts?

Maintenance.
Loan interest.
Registration.
Insurance.
Fuel.

How much business expense can you write off?

In 2022, you can deduct up to $5,000 in business start-up expenses and another $5,000 in organizational expenses in the year you begin business. Additional expenses must be amortized over 15 years.

Does TurboTax do LLC returns?

And we have you covered at tax time, with TurboTax Home & Business for single-member LLCs, and TurboTax Business for multiple-member LLCs.

Can LLC Get Tax Refund?

Do LLCs get tax refunds? Generally, no. However, LLCs can elect to be treated like C corporations for tax purposes by filing Form 8832. If an LLC elects C corporation status and makes quarterly estimated payments higher than its tax liability for the year, the LLC can receive a tax refund.

What are the 2 main advantages of having an LLC?

Limited Personal Liability.
Less Paperwork.
Tax Advantages of an LLC.
Ownership Flexibility.
Management Flexibility.
Flexible Profit Distributions.

What is the downside of an LLC?

Disadvantages of creating an LLC Cost: An LLC usually costs more to form and maintain than a sole proprietorship or general partnership. States charge an initial formation fee. Many states also impose ongoing fees, such as annual report and/or franchise tax fees. Check with your Secretary of State's office.

Do you have to file taxes your first year in business?

In the initial year(s) of business, U.S. partnerships do not need to file a federal return if the business hasn't received income or incurred any expenses treated as deductions or credits for federal income tax purposes.

How does owning a business affect my taxes?

For a sole proprietorship, your business income is reported directly on your personal federal income tax return, which means your business doesn't owe taxes separately. Instead, you'll pay taxes on your business's earnings at your individual federal income tax rate.

Is LLC income taxed twice?

Your LLC profits are taxed at your individual income tax ratesâ€”just like when your LLC is taxed like a sole proprietorship. No double taxation and you can qualify for the pass-through deduction.

Is it better to be self employed or LLC?

You can't avoid self-employment taxes entirely, but forming a corporation or an LLC could save you thousands of dollars every year. If you form an LLC, people can only sue you for its assets, while your personal assets stay protected. You can have your LLC taxed as an S Corporation to avoid self-employment taxes.

Is it better to be 1099 or LLC?

The biggest difference between an LLC and an independent contractor is the fact that LLCs are required to register with the state and form business documents like articles of organization. LLCs also offer liability protection that independent contractors would not have otherwise.

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Comment by Jeannetta Tyl

how to do yourself employed business taxes how to set up your self-employed business in TurboTax in this video I'll be showing you how to set up your self-employed business taxes in TurboTax Amanda here from the business finance coach where I'm helping self-employed business owners fall in love with their finances and grow their businesses if you're ready to grow yourself employed work and you want clarity around your finances be sure to click the watermark in the bottom right hand corner to subscribe to my channel now into TurboTax we go for setting up your self-employed business in TurboTax I'm in the Mac version for TurboTax home in business now home and business is their desktop addition their self-employed is the online edition now this is a math there is no difference between the Mac and PC software other than how it looks but you have the same options of course with with a Mac I have these options up here whereas you actually have them in the software on a PC but it's the same thing everything's the same so the first step is to click this business tab and then click continue now you can use all of this software through a walk me through everything and the software will ask you questions it's called the interview format but I prefer to choose what I work on and then go through everything but if you're a bit nervous about taxes doing the walk through everything is probably the best way to go you may be answering no to a lot of questions but you kind of have to do that anyways so it may or may not save you time right here business income and expenses click update do you have any income and expenses for your business remember this applies if you just started a business and people paid you for work you do whenever you're paid for work you do you have to file a self-employed business if you're not paid as an employee but you also may have single member LLC and that's why a single member LLC is what I recommend doing for your business because you get this the limited liability for legality purposes and you can treat your business like an actual separate business you have two for the LLC to exist but when it comes to taxes things are much easier for you now if you do have a multi-member LLC or another type of business be sure to check out my other videos for multi-member LLC partnership S corp where i go through other tax softwares including turbo tax their Business Edition which is for separate entity returns when you're self-employed your self-employed income and expenses are recorded on a Schedule C with your personal return so this keeps things simple you cannot file your business separate from your personal taxes so yes so they want to know about the name if you file a DBA with your state you should enter your business has a different name if you're an LLC like I am your business has a different name you can leave your home address which is already on your return a business description on a business coach continue now they want to know if you started this business in 2017 or you stopped the business in 2017 even if you just gave up the business you would check I sold or disposed of and you see you can pick I disposed of it in these ways ok so I'm gonna leave this unchecked because it's on the plight now one thing with TurboTax see we can't uncheck this now ok I think it's unchecked you want to be careful with TurboTax because if you check off something or enter something you have to be sure to get it out of there if you change your mind on the question beforehand otherwise it can get stuck do you have an EIN you only need to enter that if you're paying other people like I mean if you have one you have to enter it here but you don't have to get one unless you're an employer as a single member LLC a lot of lawyers will kind of like tack it on yes I'm well aware now this is a business lookup code so you can search whatever your business does and choose whatever boat most matches your business otherwise you can just put 999 the miscellaneous code now cash versus accrual basis you will basically know if you use accrual cash means you record income when you receive it so in other words if someone pays you for a package that you're delivering a service for over a period of time you're not recognizing income over that time most self-employed people are cash basis it's a lot more work to be accrual I have a separate video that explains cash basis versus accrual you can search for that on my site this is this question about 1099s again they kind of asked about that twice now again these are uncommon situations probably don't apply and that's it here you have it we've completed all of those questions we're in this business profile section and this page is a summary page so that completes setting up your business now in my other videos in this series you'll be able to do these different individual sections I'm going to click continue and you can see what happens see how this business is here you can add another one so if you do different types of work for yourself you could have more than one business or if you and a spouse have different work so now just to show you we can go out I'll choose what I work on and we can go back in and go back into this summary page and this is where we'll add our income and expenses thanks for watching I'll see you in the next video where we'll be going through income and then expenses then assets and depreciation and other issues all right see you next time

Thanks for your comment Jeannetta Tyl, have a nice day.
- Bud Otar, Staff Member

Comment by Geralyn

in this video i'm going to help you identify which version of turbotax you need for your small business um i'm not sure why but in my opinion turbo tax makes this unnecessarily difficult and even furthermore if you've got a mac and not a pc you can't even use some of this software and they don't really clearly identify that for you up front so if you want to make sure you're using the correct software and you don't spend hours preparing your taxes just to find out oh my god you've been using the form this whole time you actually need another piece of software then stay tuned into this video all right with that being said if this is your first time watching my name is navi mirage i'm actually a cpa that produces content all over social media to help you save thousands of dollars in taxes so if you're not subscribed currently and you're watching on youtube i invite you to subscribe or follow me um so let me discuss what we're going to talk about here so it might be best if i just transition over to my computer now and i'll actually just show you what i'm talking about there is a massive difference between turbo tax self-employed and turbo tax business and in my opinion turbo tax doesn't do a good job of kind of letting users know what the differences are between these two so if you look here um and you go to just turbotax.com it's going to transition you to um this page right and so you've got this uh lady here with a beautiful smile on her face that's about to lead you down the wrong path if you're not paying attention okay so let's talk about turbo tax self-employed this is for businesses that are taxed as sole proprietorships alright so if you click file your own taxes and you go to products and pricing and you click for small business owners and freelancers if you were to click there it's going to take you here turbotax self-employed all right so this would be for the person that's you know just started doing business as their own name or maybe they took it one step further and they registered a trade name or sometimes it's called an assumed name or a dba that stands for doing business as this is the version you would use even if you formed a single member llc and you did not and i want to repeat this you did not make the s corp election with the irs for your single member llc then you'll be taxed as a sole proprietorship and you will use turbotax self-employed the self-employed version ultimately when you actually go through the steps and use this software you'll be preparing what's called a schedule c which is part of your individual tax return so let me quickly show you that i pulled up a schedule c um this says profit or loss from business for sole proprietorship and you can see here it's a schedule c which is part of form 1040. 1040 is your individual tax return which even if you're married and you're filing jointly it's still called an individual tax return all right but your filing status is married filing jointly so you could be um a freelancer a uber driver fiverr um you could be a youtuber a realtor plumber handyman an accountant a bookkeeper a landscaper etc this is the product you would use if you're taxed as a sole proprietorship and you can use it online you could start preparing just like it says here start preparing your taxes for free and then pay when you're about to file your tax return so you can kind of get acclimated with the software input all the numbers see how much you're going to owe without actually paying for the software that's turbotax self-employed okay let's move over to turbo tax business so if you're on the home page you would actually have to click cd slash download products click small business taxes and that would load this page uh sorry this page here turbo tax business so if your business is taxed as an s corporation a c corporation partnership or you formed a multi-member llc or a single member llc and you filed paperwork with the irs to have your single member llc or your multi-member llc taxed as an s corporation you want to use turbotax business now this is the software that will allow you to prepare an 1120s which is the tax return for ns corporation or form 1065 which is the tax return for a partnership or form 1120 which is the tax return for ac corporation for whatever reason and i could understand why there's a huge misunderstanding among new business and even old business owners who think they are self-employed right so they use the self-employed uh software when in reality uh they have an s or a c corporation or a partnership you'll notice here that you can't start using this online for free and pay when you're about to file like you can with the self-employed version you actually need to pay for this in advance and actually download the software to your computer now listen carefully if you're a mac user this is important all right turbo tax business is not available for macs it's pc only software so if you have a mac and you have an s corp or a c corp or a partnership don't pay for this turbo tax business is not for you you actually don't have a solution with turbotax and if you scroll down further on this page and you click requirements you'll see that it says down here um turbotax business is windows only if you've got a mac turbo tax business is not available for the mac so don't make that mistake i don't know why turbo tax hasn't figured that out yet why the software is not mac compatible in the year 2022 but it's not and i have a feeling a lot of you are going to make this mistake and might even pay for this and you have a mac and then you're stuck with the software all right now you may still be a freelancer or uber driver realtor plumber landscape or youtuber whatever and use turbotax business software but if you're doing so it's because either you're subscribed to my channel or you're getting good quality information somewhere else which teaches you that basically once your business is producing over 40 000 of profit a year you might want to start considering having it taxed as an s-corporation why because uh the s-corporation sort of strategy is a strategy that can save you thousands of dollars in taxes in specifically social security and medicare taxes i don't want to get into all that here in this video but uh there are many other videos that i've created on my youtube channel as well so if you're watching on youtube check out sort of the video library there um and learn about why you might want to be an s corporation or how it saves you money in social security and medicare taxes um now real quick i will let you know um that you know if you're not watching on youtube you're watching on another social media platform just visit my website it's navi mirage cpa.com and i'll pull it up here this is my website you'll go to it there's many resources here for you right there's a course that teaches you how to save thousands of dollars in taxes i don't really want to talk about that or promote that too much here just know that there's a course available i teach you all the strategies that i teach my very own clients that i work with on a monthly basis you can implement them al

Thanks Geralyn your participation is very much appreciated
- Bud Otar

About the author

Bud Otar

I've studied scoutcraft at Thomas University in Thomasville and I am an expert in comparative law. I usually feel annoyed. My previous job was securities broker I held this position for 4 years, I love talking about cleaning and lapidary. Huge fan of Zack Bia I practice equestrian: dressage and collect phone cards.

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