<p>Many people aspire to be their own boss. Setting their hours and making their own business decisions is liberation for some. You're no longer a tiny cog in the wheel!</p><p>But it also comes with increased pressure and responsibilities, taxes included. Now that you're self-employed, you'll have to pay your taxes directly to the IRS and make quarterly tax payments four times per year. And if you miscalculate, you could open yourself up to penalties and increased IRS scrutiny.&nbsp;</p><p>Read on to understand self-employment taxes, how to calculate them, and when to pay them.</p><h2 class="wp-block-heading" id="h-what-is-self-employment-tax">What is Self-Employment Tax?</h2><p>Self-employment tax refers to taxes paid by an independent contractor that goes to the federal programs of Medicare and Social Security.&nbsp;</p><p>Employers typically pay the Medicare and Social Security tax through FICA on their employees’ behalf. Employers withhold employee wages to pay one part of it, and they pay another portion themselves.&nbsp;</p><p>Self-employed individuals must pay both of those portions on their own.</p><h2 class="wp-block-heading" id="h-self-employment-tax-rate-for-2021-and-2022">Self-Employment Tax Rate for 2022 and 2023</h2><p>The IRS set the self-employment tax rate at 15.3 percent. That rate is the sum of two parts: A 12.4% Social Security tax rate and a 2.9% Medicare tax rate.&nbsp;</p><p>Your self-employment income is subject to the Medicare tax, but higher incomes are not subject to the Social Security portion beyond a set point. In 2022, only your first $147,000 in earnings were taxed at the Social Security rate. For the 2023 tax year, the Social Security tax applies to your first $200,000 in self-employment earnings.</p><h2 class="wp-block-heading" id="h-who-has-to-pay-self-employment-tax">Who Has to Pay Self-Employment Tax?</h2><p>Anyone with $400 or more in earnings from self-employment will be held liable for Social Security and Medicare taxes.&nbsp;</p><p>If you work multiple jobs and have at least one employer withholding income for FICA payments, you may or may not need to pay additional taxes, which will depend on the relative income and the amount paid by your employer.</p><h2 class="wp-block-heading" id="h-how-to-calculate-self-employment-tax">How to Calculate Self-Employment Tax</h2><p>Your self-employment tax total is calculated according to your net income, including wages and tips. Assuming your income doesn't exceed the set thresholds, you will pay 15.3 percent of your net earnings in self-employment tax.&nbsp;</p><h2 class="wp-block-heading" id="h-how-to-pay-self-employment-tax">How to File Self-Employment Taxes</h2><p>You can pay self-employment taxes <a class="link" href="https://www.irs.gov/payments/direct-pay" target="_blank" rel="noreferrer noopener">online through IRS Direct Pay</a>. You can calculate and report your self-employment taxes with IRS Form 1040, Schedule SE.&nbsp;</p><p>However, to make payments online, you must use your Social Security Number or an Individual Taxpayer Identification Number.&nbsp;&nbsp;</p><h3 class="wp-block-heading">Paying with a Social Security Number</h3><p>If you’re eligible for a <a class="link" href="https://www.ssa.gov/ssnumber/" target="_blank" rel="noreferrer noopener">Social Security Number and card</a> but don’t have one, you can apply for a number and card with the Social Security Office online. The government will use this number to identify you and your records for tax purposes.&nbsp;&nbsp;</p><h3 class="wp-block-heading">Paying with an Individual Taxpayer Identification Number</h3><p>For individuals who need to pay taxes but are ineligible for a Social Security Number, you can register for an <a class="link" href="https://www.irs.gov/pub/irs-pdf/fw7.pdf" target="_blank" rel="noreferrer noopener">Individual Taxpayer Identification Number with Form W-7</a>.&nbsp;</p><h2 class="wp-block-heading">Paying Self-Employment Tax with Estimated Taxes</h2><p>When an employer pays taxes on your behalf, they don't wait until the end of the year to make payments. These taxes calculated according to income are supposed to be paid throughout the tax year as you earn the income.&nbsp;</p><p>For independent earners, that means <a class="link" href="https://1800accountant.com/blog/quarterly-estimated-taxes">paying quarterly estimated taxes</a>. You can pay quarterly estimated taxes online and calculate your estimated payments using IRS Form 1040-ES. 1-800Accountant created an easy-to-use <a href="https://1800accountant.com/calculators/quarterly-tax-calculator" target="_self">quarterly estimated tax calculator</a> that you can use to see estimated year-to-date quarterly tax payment liability.</p><p>If you want to avoid fines or penalties for underpayment, you should make your estimated payments according to these quarterly deadlines in 2023:&nbsp;</p><ul><li>First Quarter Payment: April 18, 2023</li><li>Second Quarter Payment: June 15, 2023</li><li>Third Quarter Payment: September 15, 2023</li><li>Fourth Quarter Payment: January 15, 2024</li></ul><h2 class="wp-block-heading">Tax Deductions for the Self-Employed</h2><p>Handling these regular tax payments can be a significant financial burden for independent contractors, especially if they're not prepared. On the bright side, a wide variety of tax deductions available can help you increase your savings and balance some of the money you've lost to taxes.&nbsp;</p><p>If you’re self-employed, you are legally operating your own business, which means you can claim many legitimate costs as <a class="link" href="https://1800accountant.com/blog/maximize-small-business-tax-deductions">small business tax deductions</a>.&nbsp;&nbsp;</p><h3 class="wp-block-heading">Self-Employment Tax Deductions</h3><p>While being self-employed subjects you to extra taxes, you can claim some tax payments as deductible business expenses. You can deduct the portion of your self-employment taxes that an employer typically pays from your adjusted gross income.&nbsp;</p><h3 class="wp-block-heading">Home Office Deduction</h3><p>Many people work from home, but not everyone can claim a deduction for their home office. You can claim and deduct expenses related to your home office if it is your principal place of business. You must use a specific area of your home exclusively and regularly for work purposes.&nbsp;</p><p>If you meet those requirements, you can count a proportional amount of your home costs as a business expense, including utilities, internet, and rent or mortgage payments.&nbsp;</p><h3 class="wp-block-heading">Health Insurance Premiums</h3><p>Anything your employer would generally pay is likely eligible to be claimed as a tax deduction, including health insurance premiums.</p><p>As long as a spouse’s insurance plan cannot cover you, you can deduct the premiums for your health insurance or HMO from your taxable income using the <a class="link" href="https://1800accountant.com/blog/4-things-know-claiming-self-employment-health-insurance-tax-deduction">self-employment health insurance tax deduction</a>.&nbsp;</p><h3 class="wp-block-heading">Internet and Phone</h3><p>Depending on what you do, your internet and phone use may be essential for your work. You can deduct a portion of the costs for those services according to their proportional business usage.&nbsp;</p><h3 class="wp-block-heading">Meals or Travel</h3><p>If you travel exclusively for business purposes, you can claim all your lodging and travel costs as business expenses.&nbsp;</p><h3 class="wp-block-heading">Vehicle</h3><p>If you use your vehicle for a business purpose other than driving to and from a workplace, you can deduct related costs according to its use. With careful records, you can keep track of all your vehicle costs and deduct the qualifying portion.&nbsp;</p><p>A simplified option for deducting vehicle costs is to add up the miles you drive for business and deduct them according to the IRS’s standard mileage rates.&nbsp;</p><h3 class="wp-block-heading">Interest</h3><p>While the principal on many loans can’t be deducted, you can deduct the interest on loans, including your home mortgage, even if you don’t have a home office.</p><h3 class="wp-block-heading">Education</h3><p>The IRS sees continuing education as a regular and necessary part of the job. Any money you spend to help you do your job better or keep up with industry developments is money you can deduct for education expenses.&nbsp;</p><p>This also covers any fees you pay for professional publications or association memberships.&nbsp;</p><h3 class="wp-block-heading">Insurance</h3><p>Do you have a separate insurance policy covering a workplace or work-related need? If so, you can claim those premiums as tax deductions as well.&nbsp;&nbsp;</p><h3 class="wp-block-heading">Workplace Operation</h3><p>For those with an office separate from their home, you can deduct the rent and utilities for that office as work expenses. You can also remove any other costs related to maintaining your workplace.&nbsp;</p><p>Whether you have a separate office or not, you can deduct costs for office supplies, software, or technology used exclusively for your business and most costs related to employees and staff.&nbsp;&nbsp;</p><h3 class="wp-block-heading">Startup Costs</h3><p>The IRS also allows new businesses to claim deductions for startup costs. This includes many one-time expenses involved in setting up your workplace and establishing your work infrastructure.</p><h2 class="wp-block-heading">Self-Employment Taxes Made Easy with 1-800Accountant</h2><p>There are many opportunities to minimize your tax burden, and we urge you to take advantage of all that apply to you. Unfortunately, few self-employed individuals have the time or expertise to claim the savings they deserve.&nbsp;If that sounds like you, your best option to save money and avoid penalties is to work with the professionals at 1-800Accountant, America's leading virtual accounting firm for <a class="link" href="https://1800accountant.com/services/small-business-taxes">small businesses</a> and <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">self-employed individuals</a>. We'll provide financial advisory, calculate your quarterly estimated taxes, and more, so you can focus on growth.</p>

Many people aspire to be their own boss. Setting their hours and making their own business decisions is liberation for some. You&#8217;re no longer a tiny cog in the wheel! But it also comes with increased pressure and responsibilities, taxes included. Now that you&#8217;re self-employed, you&#8217;ll have to pay your taxes directly to the IRS [&hellip;]

A woman working at a desk with a computer, papers, and a coffee cup, with text overlay about "self-employment tax what to know for 2023.

self-employment-tax

Self-Employment Tax: What Is It, How to Calculate It, and When to Pay in 2023

<p>As a small business owner, you'll have questions about your business, business procedures, and taxes. You may have entity-specific or business tax questions, making receiving the correct answers urgently.</p>



<p>When tax season arrives, small business owners will have questions but only a little time to receive proper answers, assistance, and next steps. Here are answers to small business tax questions that small business owners are asking.</p>



<h2>Top 10 Small Business Tax Questions</h2>



<p>Here are the top 10 questions and answers to common tax questions that small business owners have:</p>



<h3>1. Can I Use Scanned Copies of Receipts for Tax Purposes?&nbsp;</h3>



<p>Scanned copies of receipts are okay to save and submit for tax purposes, and the IRS allows this as long as your receipts are identical to the original receipts. Your scanned receipts should also contain identical information to your original copies.</p>



<p>If you experience a tax audit but have scanned copies of your receipts, you'll want to save these records. With an audit, the IRS may require you to submit paper copies of your scanned receipts.</p>



<h3>2. How Do Taxes Work with a Small Business?</h3>



<p>Small businesses will<a class="link" href="https://www.sba.gov/business-guide/launch-your-business/choose-business-structure" target="_blank" rel="noreferrer noopener"> file and pay</a> their taxes based on their business entity. Businesses can choose their tax year when they file taxes for the first time.</p>



<p>Federally:</p>



<ul>
<li>Corporations pay income tax on their profits, and their shareholders pay personal income tax from the corporation's dividends.</li>



<li>Partnerships and sole proprietorships pay personal income tax and self-employment taxes.</li>



<li>S corporations pay taxes as pass-through entities, and their shareholders pay personal income tax.</li>



<li>Sole proprietors pay both personal taxes and self-employment taxes.</li>



<li>Multiple-member LLCs can elect to pay taxes as a corporation, partnership, or S corp. Single-member LLCs can pay taxes as sole proprietors.</li>
</ul>



<p>Depending on where you operate your business, your business may also have local and state taxes. If so, you may also have to pay employment taxes and state income taxes.</p>



<h3>3. How Much Can a Small Business Make Before Having To Pay Taxes?</h3>



<p>A small business's exact amount before paying taxes depends on its entity. Corporations can use Form 1120 to determine how much they'll pay in taxes.</p>



<p>Other business entities, such as LLCs, partnerships, S Corporations, and sole proprietorships, have different considerations for determining their income. These entities require their business owners to report income on their personal income tax returns, which means you'll have both business and nonbusiness income on your tax return.</p>



<p>Independent contractors and sole proprietors will have to pay taxes if they earn $400 or more.&nbsp;</p>



<h3>4. What Business Expenses Can You Claim On Taxes?</h3>



<p>The IRS <a class="link" href="https://www.thebalancemoney.com/deductible-business-expenses-3192959" target="_blank" rel="noreferrer noopener">has two requirements</a> for what business owners can claim as their business expenses.&nbsp;</p>



<p>Business expenses must be both ordinary and necessary. Ordinary expenses are expenses similar businesses or trades commonly pay for, and necessary expenses assist you in doing your business.</p>



<p>You can claim considerable business expenses as tax deductions:</p>



<ul>
<li>Advertising</li>



<li>Automobile expenses&nbsp;</li>



<li>Entertainment and meal expenses&nbsp;</li>



<li>Maintenance and repairs</li>



<li>Home office expenses&nbsp;</li>



<li>Transportation expenses</li>
</ul>



<h3>5. What Information Does a Small Business Need For Taxes?</h3>



<p>Small businesses will need several documents to file their <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business taxes</a>. These documents include the following:</p>



<ul>
<li>Business assets and business expense information</li>



<li>Financial statement</li>



<li>Home office expenses for business owners using their home as their primary business site.</li>



<li>Vehicle use information if you’re seeking a tax deduction for business vehicles.</li>
</ul>



<h3>6. What Is The Easiest Way To Pay Estimated Taxes?</h3>



<p>The easiest way to pay estimated taxes is to use the Electronic Federal Tax Payment System (EFTPS). Businesses and individuals can use EFTPS to make estimated tax payments weekly, bi-weekly, monthly, or on a different schedule.</p>



<h3>7. What Is The Penalty For Not Paying Quarterly Taxes?</h3>



<p>The penalty for not paying quarterly taxes is 0.5% of the amount not paid for each month or part of the month that the quarterly tax remains unpaid. There's a maximum penalty of 25% for not paying quarterly taxes.</p>



<h3>8. What Will Trigger an IRS Audit?</h3>



<p>Although IRS audits are infrequent, there are red flags that <a class="link" href="https://aofund.org/resource/top-10-irs-audit-triggers-and-what-do-if-audited/" target="_blank" rel="noreferrer noopener">trigger an audit</a>. Small businesses may experience an IRS audit for:</p>



<ol>
<li>Undergoing significant changes in business expenses and business income.</li>



<li>Filing an incomplete tax return.</li>



<li>File a tax return with errors.</li>



<li>Mixing business expenses with personal expenses.</li>



<li>Not making a business profit for several years.</li>



<li>Not filing a tax return if a business experiences a financial loss.</li>



<li>Operating a business that deals with a lot of cash.</li>
</ol>



<h3>9. Which Receipts Can I Claim on My Taxes?</h3>



<p>As you collect your <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep" target="_blank" rel="noreferrer noopener">business receipts</a> throughout the year, it may become difficult to know which receipts to keep for taxes.</p>



<p>&nbsp;You can claim receipts related to the following:</p>



<ul>
<li>Expenses&nbsp;</li>



<li>Gross receipts&nbsp;</li>



<li>Purchases</li>
</ul>



<p>Receipts related to expenses will show costs your business incurs other than purchases. You can claim expense receipts, including:</p>



<ul>
<li>Account statements</li>



<li>Canceled checks</li>



<li>Cash register tape receipts</li>



<li>Credit card receipts and statements</li>



<li>Invoices</li>
</ul>



<p>There are additional receipts related to business expenses that you should keep to claim as a tax deduction. The IRS requires you to prove these expenses to claim entertainment, gifts, transportation, and travel.&nbsp;</p>



<p>Gross receipts are another receipt type you can claim on your taxes. You can claim gross receipts, including:</p>



<ul>
<li>Cash register tapes</li>



<li>Deposit information&nbsp;</li>



<li>Form 1099-MISC</li>



<li>Receipt books</li>



<li>Invoices</li>
</ul>



<p>Purchases are the last receipt type that you can claim on taxes. You may use information from your purchases to claim credits or deductions on your tax return from:&nbsp;</p>



<ul>
<li>Canceled checks</li>



<li>Cash register tape receipts&nbsp;</li>



<li>Credit card receipts and statements</li>



<li>Invoices</li>
</ul>



<h3>10. Who Has To Pay Quarterly Taxes?</h3>



<p>There are three groups of people who have to make <a class="link" href="https://1800accountant.com/services/quarterly-estimated-taxes">quarterly tax payments</a>:&nbsp;</p>



<ol>
<li>Corporations</li>



<li>People without enough tax withheld&nbsp;</li>



<li>Self-employed workers</li>
</ol>



<p>Corporations may need to pay quarterly taxes if they expect to owe at least $500.</p>



<p>Second, if you need more taxes withheld, you should make quarterly tax payments. There are two criteria the IRS has for who needs to pay quarterly taxes for those not withholding enough taxes, and you'll need to meet both requirements to pay quarterly taxes in this group.</p>



<p>The first criterion is that you'll owe at least $1,000 in federal taxes after adding your tax credits and withholding. The second criterion is that your refundable credits and withholding cover the following:</p>



<ul>
<li>Less than 90% of your tax liability for the current year</li>



<li>100% of your liability for last year</li>



<li>110% for taxpayers with an adjusted gross income of $150,000 for taxpayers filing individually, or $75,000 for taxpayers who are married and filing jointly</li>
</ul>



<p>Third, self-employed workers, including freelancers and independent contractors, should pay their quarterly taxes if they owe $1,000 or more in taxes.</p>



<h3>Work with Expert Accountants To Help Navigate Small Business Taxes&nbsp;&nbsp;</h3>



<p>Small business taxes encompass different requirements for different entities. Federal, local, and state tax requirements and multiple business entities make it critical to get your small business questions answered.<br>When you need to answer small business tax questions, it's best to work with experts. Work with the expert accountants at <a class="link" href="https://1800accountant.com/services/business-tax-advisory">1-800Accountant</a> for your small business tax needs.</p>

As a small business owner, you&#8217;ll have questions about your business, business procedures, and taxes. You may have entity-specific or business tax questions, making receiving the correct answers urgently. When tax season arrives, small business owners will have questions but only a little time to receive proper answers, assistance, and next steps. Here are answers [&hellip;]

Text overlay reading "common tax questions from small business owners" on a background of scattered paper slips with tax-related terms.

Common-Tax-Questions

10 Common Small Business Tax Questions Owners Are Asking

<p>If you’ve been building a side hustle as an Etsy seller, and you’re wondering, “do I have to report Etsy income on my taxes?” you’ve come to the right place. Etsy is home to many artists and craftspeople selling their goods online – but you need to remember to report Etsy income when it’s time to file your returns. Some people work full-time as online sellers, making and distributing their products through online marketplace facilitators like Etsy, while others may only do it as a hobby in their spare time.</p><p>Whichever of those categories you fall into, you should be proud of yourself for the work you’ve put into becoming a small business owner. It’s not easy to find an audience and carve out a niche in the crowded world of internet commerce.</p><p>Whether you’re aware of it or not, you’re running a small business! That’s not a simple feat. And all of the money you make through selling your goods is income you’re earning as a self-employed <a class="link" href="https://1800accountant.com/blog/business-entity-sole-proprietorship">business owner of your sole proprietorship</a>.&nbsp;</p><p>Of course, running a business and earning income carry their own obligations, unfortunately. If you haven’t made very many Etsy sales yet, or if most of your income overall comes through an employer, your Etsy income is unlikely to have any effect on your situation for the tax year. However, you are required to report Etsy income to the IRS.&nbsp;</p><p>Do your due diligence to make sure you’re following the rules and avoiding any potential pitfalls! Here’s the process for reporting this income.</p><h2 class="wp-block-heading" id="h-lookout-for-form-1099-k-to-report-etsy-income"><strong>Lookout for Etsy Form 1099-K to Report Business Income</strong></h2><p>As the platform is processing your sales, Etsy is required to report those sales and give you a record of your overall income if you meet certain minimum sales amounts. Etsy will create and provide this report to you on form 1099-K. Receiving this tax form is the first important indicator that you will need to file all of your Etsy income on your tax return.&nbsp;</p><h2 class="wp-block-heading" id="h-what-is-a-1099-k">What is a 1099-K Form?</h2><p>The <a class="link" href="https://www.irs.gov/businesses/understanding-your-form-1099-k" target="_blank" rel="noreferrer noopener">IRS form 1099-K</a> is simply a report of the total gross sales that were paid to you on a platform. You might not have seen that same number released to you, depending on what the platform takes.&nbsp;</p><p>Etsy and similar platforms are required to create a 1099-K if you made more than a certain amount of online sales or received more than a set amount of money in business income. When they submit a 1099-K, they submit it simultaneously to you, the marketplace seller, and to the government. That means both you and the IRS are informed about the income you should be reporting on your taxes.</p><h3 class="wp-block-heading" id="h-can-you-deduct-business-expenses-when-you-report-etsy-income">Can you Deduct Business Expenses When You Report Etsy Income?&nbsp;</h3><p>You're required to report Etsy income on your income tax return. However, the good news is that you can claim deductions for business expenses as well. Because your Etsy shop is effectively a small business, you can deduct from your taxable income costs associated with operating your business.</p><p>Here are a few <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">self-employment deductions</a> you may be able to claim as an Etsy merchant:&nbsp;</p><ul><li>Platform fees</li><li>Marketing costs</li><li>Supplies and materials used for making your products or running your business</li><li>A portion of rent/mortgage/utility costs if you <a class="link" href="https://1800accountant.com/blog/home-office-deduction">qualify for a home office deduction&nbsp;</a></li><li>Other professional fees and subscription costs, including continuing education and skill development&nbsp;</li><li>Healthcare premiums if you are not eligible for healthcare through an employer or a spouse&nbsp;</li><li>Retirement savings contributions&nbsp;</li><li>Self-employment taxes for Social Security and Medicare</li></ul><h2 class="wp-block-heading" id="h-what-taxes-do-etsy-sellers-pay">What Taxes Do Etsy Sellers Pay?&nbsp;</h2><p>Everything explained so far above has to do with income tax, which is the largest tax you’re responsible for as an individual taxpayer in the United States. However, there are a couple of separate but related taxes and tax issues that you should be aware of.&nbsp;</p><h3 class="wp-block-heading" id="h-self-employment-tax">Self-Employment Tax</h3><p>If you earn wages through an employer, you’re probably used to having a part of your salary withheld to pay for income taxes and something called FICA. Employers withhold 7.65% of your income to pay into Social Security and Medicare on your behalf, and then they pay another 7.65% of your income out of their money but in your name.&nbsp;</p><p>The self-employment tax refers to this second 7.65% which is usually paid by the employer. If you are in business for yourself, then you are responsible for paying both halves for a total of 15.3%.&nbsp;&nbsp;</p><h3 class="wp-block-heading" id="h-quarterly-estimated-taxes">Quarterly Estimated Taxes</h3><p><a class="link" href="https://1800accountant.com/services/quarterly-estimated-taxes">Quarterly estimated taxes</a> are actually a part of your taxable income obligations, but they’re also something you might not be used to if you’re accustomed to working for an employer.&nbsp;</p><p>Income taxes in the United States must be paid as you earn throughout the year and not at the end of the year. Employers usually handle this on their employees’ behalf. However, if you make most or all of your money as an independent small business, you will need to do this yourself.&nbsp;</p><p>You can pay your taxes as you go by making quarterly estimated tax payments. You estimate the total taxes you will owe, and then you pay a quarter of it at a time. The IRS sets four annual deadlines for these four tax installments. The four quarterly estimated tax deadlines are:&nbsp;</p><ul><li>First quarter tax deadline: April 15</li><li>Second quarter tax deadline: June 15</li><li>Third quarter tax deadline: September 15</li><li>Fourth quarter tax deadline: January 15 of the following year&nbsp;</li></ul><h3 class="wp-block-heading" id="h-sales-tax">State Sales Tax</h3><p>On top of the income and income-related taxes, Etsy sellers also have to be concerned about state sales tax. This is a tax on the customer transactions themselves, and the laws on these are set entirely at the state level.&nbsp;</p><p><a class="link" href="https://1800accountant.com/blog/etsy-store-sales-tax">Etsy store sales tax rules are complicated</a> because it depends on where each customer is located and the relationship your business has with that state. You must pay sales tax on purchases made in states where your business has a significant presence or “nexus” of business activity.&nbsp;</p><p>This means that if a single customer from a state buys a product of yours, and you aren’t located there, you probably won’t owe sales tax there. However, if you start selling to more customers there, you will likely have to remit some sales tax money to that state. Exact minimum requirements and sales tax percentages vary depending on the state.&nbsp;</p><p>Etsy and other similar online platforms have the infrastructure to collect and remit sales tax, but they don’t always do it automatically if you don’t instruct them to. Make sure you’re getting the right taxes taken out of your sales.&nbsp;&nbsp;</p><h2 class="wp-block-heading" id="h-1-800accountant-makes-reporting-etsy-income-a-breeze">1-800Accountant Makes Reporting Etsy Income a Breeze</h2><p>There are numerous requirements and challenges that come with <a class="link" href="https://1800accountant.com/services/small-business-taxes">doing small business taxes</a> and reporting Etsy income, but you don’t have to figure it out on your own. Work with a professional from 1-800Accountant and ensure that you’ll be prepared when tax season comes around.&nbsp;</p><p>An expert ecommerce tax accountant can make filing your tax return a simple and efficient process, and you’ll be able to rest easy knowing that you’re saving as much money as possible. Get help from an <a class="link" href="https://1800accountant.com/services/industry/ecommerce">Etsy accounting professional</a> and focus on the creative work you do that earned you this income in the first place!</p>

If you’ve been building a side hustle as an Etsy seller, and you’re wondering, “do I have to report Etsy income on my taxes?” you’ve come to the right place. Etsy is home to many artists and craftspeople selling their goods online – but you need to remember to report Etsy income when it’s time [&hellip;]

A person in a yellow sweater packaging a handmade soap bar at a craft table surrounded by various natural ingredients and materials.

report-etsy-income

How to Report Etsy Income to the IRS

<p>For business owners, equity is a vital tool that you can use to your advantage. There are different equity types that serve different purposes within your business. Here’s an overview of what equity is and how to calculate equity in a business.</p>



<h2>What does equity mean in business?&nbsp;</h2>



<p>Equity comprises the net value of a business; it’s the result of a company's assets minus its liabilities. The bookkeeping term <a class="link" href="https://1800accountant.com/blog/common-bookkeeping-terms">equity</a> is important because it gives you an idea of:&nbsp;</p>



<ul><li>How much the shareholders would receive if they sold their stake in the company&nbsp;</li><li>Money left over for shareholders following asset liquidation and debt repayment</li><li>The net value of a business</li></ul>



<p>For businesses, equity can have multiple meanings for the value of their finances. Equity can refer to:&nbsp;</p>



<ul><li>Balance sheet</li><li>Liquidation</li><li>Real estate&nbsp;</li><li>Stocks&nbsp;</li></ul>



<p>When referencing the<a class="link" href="https://1800accountant.com/blog/bookkeeping-101-what-is-a-balance-sheet"> balance sheet</a>, equity refers to the total of common stock, paid-in capital, preferred stock, and retained earnings. This form of equity is shareholders’ equity.</p>



<p>Equity from liquidation is what remains following a business's bankruptcy and liquidation.&nbsp;</p>



<p>This form of equity is ownership equity. If your business is in a poor financial state before liquidation, there’s a chance that there won’t be ownership equity following debt repayment.</p>



<p>The third variation of equity in business is real estate. In this instance, equity is what remains after deducting the fair market value of your property from the balance you owe on your mortgage.</p>



<p>Finally, when referring to stocks, equity refers to the ownership interest that a business has. Investors can buy equity shares either as common stock or preferred stock. With stocks, equity represents the amount investors can receive as cash for the share.</p>



<h2>What are the different types of equity?</h2>



<p>Businesses use different types of equity, which illustrate what business owners, investors, and shareholders can learn about your company.&nbsp;</p>



<p>There are <a class="link" href="https://www.investopedia.com/ask/answers/012115/what-are-components-shareholders-equity.asp" target="_blank" rel="noreferrer noopener">multiple equity types</a> that a business may use to determine its value:</p>



<ul><li>Common stock&nbsp;</li><li>Negative equity</li><li>Positive equity</li><li>Preferred stock</li><li>Retained earnings&nbsp;</li><li>Treasury stock</li></ul>



<p>Common stock indicates that a person owes shares in a corporation. These shareholders represent an ownership stake in a company that allows them to receive profits from its operations.&nbsp;</p>



<p>Common stock shareholders receive distributions made by the company through dividends or stock repurchases. As a common stock shareholder, you can:&nbsp;</p>



<ul><li>Elect board members with one vote per share&nbsp;</li><li>Meet with other investors to elect board members</li><li>Vote on major decisions affecting your business, including who sits on its board and what projects it pursues&nbsp;</li></ul>



<p>Preferred stock differs from common stock with dividends and voting procedures:</p>



<ul><li>Preferred stock has a set dividend rate, which can be fixed or variable based on company performance&nbsp;</li><li>These shareholders aren’t able to vote to elect a board of directors or for major company decisions</li><li>This type of stock also allows you to participate in distributions made by the company through dividends or stock repurchases</li></ul>



<p>Businesses can experience positive equity or negative equity. Negative equity is an indicator that a company has more liabilities than assets. Positive equity indicates that a company has sufficient assets to pay its liabilities.</p>



<p>Retained earnings are the percentage of net earnings not paid to shareholders as a dividend. Businesses can use these earnings to pay debts or to reinvest.</p>



<p>Treasury stock represents the number of shares that a business repurchases from investors. On a balance sheet, you’ll list this stock as a negative number within the equity section.</p>



<h2>How To Calculate Business Equity in Accounting</h2>



<p>Businesses can calculate equity accounting in a few steps:&nbsp;</p>



<ul><li>Calculate your total assets&nbsp;</li><li>Calculate your total liabilities&nbsp;</li><li>Subtract your total assets from your total liabilities&nbsp;</li></ul>



<p>To calculate what is equity in business, you first need to determine the value of all the assets:</p>



<ul><li>This includes current assets and long-term assets&nbsp;</li><li>Current assets are assets you can convert to cash in a year or less</li><li>Long-term assets are assets that can’t be converted to cash within one year</li></ul>



<p>Next, you’ll subtract assets from all of your liabilities:&nbsp;</p>



<ul><li>This includes current liabilities and long-term liabilities&nbsp;</li><li>Current liabilities are debts owed within one year</li><li>Long-term liabilities are debts that can’t be paid within one year</li></ul>



<p>The resulting number is equity.</p>



<p>Here’s an example of equity: A small business has total assets of $3 million and total liabilities of $500,000. From this, you would deduct the $3 million in total assets from the $500,000 in total liabilities to get an equity of $2.5 million.</p>



<h2>How Can You Use Equity To Grow Your Business</h2>



<p>If you want to grow your business, but don't have access to the capital required, then equity is an option. As a business owner, <a class="link" href="https://www.forbes.com/sites/forbesbusinesscouncil/2021/09/15/how-private-equity-can-help-build-your-business/?sh=6f6e115068b6" target="_blank" rel="noreferrer noopener">there are ways</a> you can use equity for business growth, or you can work with private equity investors for business growth.</p>



<p>Equity allows you to give away part of the ownership of your company for investing. You can then use this money to invest in a new product or service to make more money for both parties involved.</p>



<p>The next way you can use equity for business growth is to work with private equity investors. These investors can work with businesses to propel business growth, and there may be business advantages in doing so. By partnering with private equity investors, you’ll get liquidity. You can also choose to remain invested in your business as well.</p>



<h3>Work with a Professional&nbsp;</h3>



<p>Equity can be a useful tool for growing and sustaining business growth over time. It has several uses and provides a good overview of your business value.&nbsp;</p>



<p>When it’s time to determine your business equity, or receive help for your small business bookkeeping needs, work with the professionals. Work with an accounting professional at <a class="link" href="https://1800accountant.com/services/bookkeeping">1-800Accountant</a> for all of your bookkeeping and accounting needs.&nbsp;</p>

For business owners, equity is a vital tool that you can use to your advantage. There are different equity types that serve different purposes within your business. Here’s an overview of what equity is and how to calculate equity in a business. What does equity mean in business?&nbsp; Equity comprises the net value of a [&hellip;]

An equity chart displaying an increase over time.

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What Is Equity in Business and How to Calculate It

<h2>What is Small Business Saturday?</h2>



<p>Small Business Saturday is part of a trio of events that kick off the holiday shopping season. It's meant to encourage consumers to take a break from the Walmarts and Amazons of the world and embrace the businesses that make up the backbone of their communities. Small Business Saturday always happens on the Saturday after Black Friday, which falls on November 26th this year.</p>



<p>Small business owners should be prepared to maximize opportunities during this critical day. The additional revenue helps businesses end the holiday season strong, propelling them toward a fruitful new year. If you have yet to prepare or are searching for additional tips, check out these great Small Business Saturday ideas to help get the word out and engage your new customers!</p>



<h2>How to Promote Small Business Saturday</h2>



<h3><strong>1. Get the Word Out</strong></h3>



<p>Ramp up your communications with existing customers, so they remember not to spend their entire gift budget during Black Friday! Encourage word of mouth among them and reward their loyalty with a discount. Here are some other ideas to help you raise awareness among customers and prospects.&nbsp;&nbsp;&nbsp;&nbsp;</p>



<ul>
<li>Let them know you’ll be fully stocked with popular items.</li>



<li>Cross-promote your products with other small businesses.</li>



<li>Invest in paid social media campaigns.&nbsp;&nbsp;</li>



<li>Build an <a class="link" href="https://www.campaignmonitor.com/blog/email-marketing/2020/03/how-to-build-an-email-marketing-funnel-for-conversions/#:~:text=An%20email%20funnel%20is%20a,right%20time%20to%20elicit%20action." target="_blank" rel="noreferrer noopener">e-mail marketing funnel campaign</a> that leads up to Small Business Saturday.</li>
</ul>



<h3><strong>2. Extend Store Hours</strong></h3>



<p>Small Business Saturday takes place during a busy holiday weekend, so accommodate your customers and prospects by extending store hours. Make sure to display signage with the modified hours and let your customers know via every touchpoint available, including social media and email. They'll appreciate the heads-up.&nbsp;</p>



<h3><strong>3. Make Direct Contact with Customers</strong></h3>



<p>Most of the foot traffic you receive on Small Business Saturday will be local. A great way to raise awareness is to mail coupons and specials to consumers who live within a few miles of your business.</p>



<p>And if you have an existing mailing list, consider providing exclusive deals and discounts to your most loyal customers who support you throughout the year.&nbsp;</p>



<h3><strong>4. Invest in Extra Advertising</strong></h3>



<p>There are many ways to<a class="link" href="https://www.thebalancesmb.com/small-business-marketing-ideas-2951688" target="_blank" rel="noreferrer noopener"> advertise</a> before Small Business Saturday. We've identified great options for every budget. You can advertise via these impactful methods:&nbsp;</p>



<ul>
<li>Billboards&nbsp;</li>



<li>Online ads</li>



<li>Social media campaigns</li>



<li>Newspaper&nbsp;</li>



<li>Radio&nbsp;</li>



<li>TV</li>
</ul>



<h3><strong>5. Offer Special Discounts or Promotions</strong></h3>



<p>Everyone loves a deal, and your customers and prospects are no different. You can offer discounts and promotions that are good for a certain period during the holidays or are only valid during Small Business Saturday.<br><br>If you've run special discounts and promotions, look back to see what worked and amplify that approach. And make sure you keep track of what moves the needle in the aftermath of your efforts for Small Business Saturday 2022.&nbsp;&nbsp;</p>



<h3><strong>6. Reward Participation&nbsp;</strong></h3>



<p>Offer something special to your customers that is so irresistible that they have no choice but to stop in! Whether it’s doorbusters, a gift with a purchase of a certain amount, or a giveaway, you can find many ways to reward shopper participation. And word gets out fast. Make this a tradition, and customers will reward you with their loyalty.&nbsp;&nbsp;</p>



<h3><strong>7. Hold Contests</strong></h3>



<p>Contests build excitement and intrigue, especially if you're giving away a unique prize. Hold contests on Small Business Saturday or tease a grand prize that will be given away at the end of the holiday shopping season.&nbsp;&nbsp;</p>



<h2>Work With The Pros</h2>



<p>We hope these Small Business Saturday promotion ideas help! The right strategy for Small Business Saturday will increase profits and help you grow your business. The right <a class="link" href="https://1800accountant.com/services/small-business-taxes">tax strategy and services</a> can help you go even further. Schedule a call with <a class="link" href="https://1800accountant.com/">1-800Accountant</a>, America's leading virtual accounting firm, to learn what our suite of services can do for you!</p>

What is Small Business Saturday? Small Business Saturday is part of a trio of events that kick off the holiday shopping season. It&#8217;s meant to encourage consumers to take a break from the Walmarts and Amazons of the world and embrace the businesses that make up the backbone of their communities. Small Business Saturday always [&hellip;]

Small Business Saturday promotion ideas for 2022

Small-Business-Saturday-Promotion-Ideas-for-2022_blog-header

7 Small Business Saturday Promotion Ideas for 2022

<p>If you drive trucks, sell trucks, or run any trucking-related business, you need to be familiar with all the taxes and fees associated with trucks. For truckers just starting, you may need to budget for these tax responsibilities ahead of time.&nbsp;</p>
<p>Truck drivers who drive big rigs on the highway must&nbsp;<a class="link" href="https://www.irs.gov/help/ita/do-i-need-to-pay-the-heavy-highway-vehicle-use-tax" target="_blank" rel="noreferrer noopener">pay the Heavy Highway Vehicle Use Tax</a>&nbsp;for their use of the highway each year. But the first tax a new truck driver will encounter is the federal excise tax on trucks.&nbsp; &nbsp;</p>
<h2>What is Federal Excise Tax on Trucks?</h2>
<p><a class="link" href="https://www.investopedia.com/terms/e/excisetax.asp">Federal Excise taxes</a> are taxes imposed on specific goods&nbsp;or products like gasoline or cigarettes. They are usually paid at the point of purchase and are usually included in the product's price.&nbsp;</p>
<p>The federal government imposes a specific excise tax on the sales of trucks and tractors. For the government's purposes, a truck is defined as a highway vehicle primarily designed to transport its load on the same chassis as the engine, even if it's equipped to tow a vehicle, such as a trailer or a semitrailer. That definition includes smaller trucks, but only trucks of a certain size require paying this tax.</p>
<p>Meanwhile, a tractor is defined as a highway vehicle designed to tow a vehicle, such as a trailer or a semitrailer. A tractor may carry incidental items of cargo when towing or limited amounts of cargo when not towing. A truck, truck trailer, or semitrailer is considered a sale of a chassis and a body.</p>
<p>The seller is liable for the tax. The seller may accept a statement from the buyer in good faith, stating that under penalties of perjury and executed in good faith, the purchaser intends to resell or lease on a long-term basis. The purchaser will be liable for the tax when the article is ultimately sold to a new buyer who will use it for its intended purpose.&nbsp;</p>
<h2>When Do You Pay Federal Excise Tax (FET) on Trucks?</h2>
<p><a class="link" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p510.pdf" rel="noreferrer noopener">IRS Publication 510 on Excise Taxes</a>&nbsp;says that the Federal Excise Tax (FET) is imposed on the "first retail sale," meaning the first sale for a purpose other than resale or leasing in a long-term lease, after manufacture, production, or importation.</p>
<p>Form 720 must be filed with the IRS for each quarter if you were liable for or responsible for collecting Federal Excise Tax. The due date is on or before the end of the month following the close quarter.</p>
<div class="rte-table-container">
  <table>
    <thead>
      <tr class="table-data-container">
        <td class="cell-0">Quarter</td>
        <td class="cell-0">Period</td>
        <td class="cell-0">Due Date</td>
      </tr>
    </thead>
    <tbody>
      <tr class="table-data-container">
        <td>Q1</td>
        <td>January-March</td>
        <td>April 30</td>
      </tr>
      <tr class="table-data-container">
        <td>Q2</td>
        <td>April-June</td>
        <td>July 31</td>
      </tr>
      <tr class="table-data-container">
        <td>Q3</td>
        <td>July-September</td>
        <td>October 31</td>
      </tr>
      <tr class="table-data-container">
        <td>Q4</td>
        <td>October-December</td>
        <td>January 31</td>
      </tr>
    </tbody>
  </table>
</div>
<h2>How to Calculate Federal Excise Tax On Trucks</h2>
<p>Internal Revenue Code Section 4051 imposes a 12 percent federal excise tax on the first retail sale of the following: trucks chassis and bodies, truck trailer and semitrailer chassis and bodies, and tractors used mostly for highway haulage in combination with a trailer or semitrailer.</p>
<p>The FET does not apply to truck chassis and bodies suitable for use with a vehicle with a gross vehicle weight of 33,000 pounds or less. The FET also does not apply to a truck trailer and semitrailer chassis and bodies suitable for use with a trailer or semitrailer with a gross vehicle weight of 26,000 pounds or less.&nbsp;</p>
<p>Tractors with a gross vehicle weight of 19,500 or less and a gross combined weight of 33,000 pounds or less are excluded from the 12% FET.</p>
<h2>Do You Pay Excise Tax on Used Trucks?</h2>
<p>The FET is paid on the initial sale or use of the truck. If the truck were bought and used previously, an excise tax would usually be unnecessary.&nbsp;</p>
<p>However, there may be some instances where a used truck may be subject to FET. If the truck were exported to another country, the export would be exempt from FET. However, when imported back to the US, and there is a subsequent sale, FET would be triggered as if it were an initial sale or use.&nbsp;</p>
<p>These sales are also ordinarily <strong>exempt from federal excise taxes</strong>:</p>
<div class="rte-table-container">
  <table>
    <tbody>
      <tr class="table-data-container">
        <td>Sales to a state or local government for its exclusive use.</td>
      </tr>
      <tr class="table-data-container">
        <td>Sales to Indian tribal governments, but only if the transaction involves the exercise of an essential tribal government function.</td>
      </tr>
      <tr class="table-data-container">
        <td>Sales to a nonprofit educational organization for its exclusive use</td>
      </tr>
      <tr class="table-data-container">
        <td>Sales to a qualified blood collector organization (as defined under&nbsp;<a class="link" href="https://www.irs.gov/pub/irs-pdf/p510.pdf" target="_blank" rel="noreferrer noopener">Communications Tax in chapter 4</a>) for collecting, storing, or transporting blood</td>
      </tr>
      <tr class="table-data-container">
        <td>Sales for use by the purchaser for further manufacture of other taxable articles</td>
      </tr>
      <tr class="table-data-container">
        <td>Sales for export or resale by the purchaser to a second purchaser for export</td>
      </tr>
      <tr class="table-data-container">
        <td>Sales to the United Nations for official use</td>
      </tr>
    </tbody>
  </table>
</div>
<h2>What Do Excise Taxes Fund?&nbsp;</h2>
<p>These taxes fund the Highway Trust Fund, and expenditures are generally used to repair and expand the federal highway system of the United States. Trucks and other heavy vehicles create a lot of extra wear and tear on roads, so these excise taxes contribute to ongoing road maintenance and infrastructure repair.&nbsp;</p>
<h2>The Heavy Vehicle Use Tax&nbsp;</h2>
<p>The seller is responsible for the retail FET due to a truck or trailer. The truck owner is responsible for filing and paying&nbsp;<a class="link" href="https://1800accountant.com/blog/form-2290">Form 2290</a> for Heavy Highway Vehicle Use. This is an annual tax on the continuing use of heavy load-bearing vehicles. If the truck isn't used frequently, you may be able to waive the tax.&nbsp;</p>
<p>Only trucks that weigh 55,000 pounds or more require their owners to pay this tax. The deadline to file for the first time is the last day of the next month after the truck's first use. See the form itself to find out how much your tax will be.&nbsp;</p>
<h2>Consult a Professional</h2>
<p>If you're unsure about your obligations as a truck driver or seller, speak to an <a class="link" href="https://1800accountant.com/services/industry/trucking">accountant with expertise in the trucking industry</a>. An accountant can also guide you through the paperwork and smooth out the process for you. It's important to be informed and know your obligations, but sometimes the smartest thing to do is to let an expert help out. Getting someone who knows their way through the system can help you save money and make your business more efficient.&nbsp;</p>

If you drive trucks, sell trucks, or run any trucking-related business, you need to be familiar with all the taxes and fees associated with trucks. For truckers just starting, you may need to budget for these tax responsibilities ahead of time.&nbsp; Truck drivers who drive big rigs on the highway must&nbsp;pay the Heavy Highway Vehicle [&hellip;]

Two trucks driving on a curvy road through a desert landscape with distant snow-capped mountains under a cloudy sky.

trucker-taxes-excise-tax

Federal Excise Tax on Trucks: Everything You Need to Know

<p><strong>What is an LLC?</strong> <strong>Is an LLC a business entity?</strong> A Limited Liability Company can be a great way to grow a small business. It offers limited liability, something that can be helpful to its members.</p><iframe width="560" height="315" src="https://www.youtube.com/embed/ObCZuUXI_bU?si=pRnZBaB0ab3ppUmF" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe><p>While this type of business organization can offer a lot of benefits, like limited liability protection, there are some drawbacks you’ll want to know about. Here’s what you should know, how to form one, and more information.&nbsp;</p><h2 class="wp-block-heading" id="h-what-is-an-llc">What is an LLC?</h2><p>An LLC is a business entity type that offers owners, called members,<a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc" target="_blank" rel="noreferrer noopener"> limited liability</a>. The qualifications are very broad: corporations, foreign entities, individuals, and other LLCs can join a Limited Liability Company.&nbsp;</p><p>It is important to note that an LLC can have an unlimited number of members. It is also possible to have a <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies" target="_blank" rel="noreferrer noopener">single-member LLC</a> as well.&nbsp;</p><h2 class="wp-block-heading" id="h-do-you-need-one">Do You Need One?</h2><p>You may need a Limited Liability Company if you want to form a business entity that:&nbsp;</p><ul><li>Allows you to form as a single member</li><li>Has no maximum number of members</li><li>Has the flexibility to file and pay taxes as other <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/llc-filing-as-a-corporation-or-partnership" target="_blank" rel="noreferrer noopener">business entity types</a></li></ul><h2 class="wp-block-heading" id="h-what-are-the-benefits">What are the Benefits?</h2><p>Forming an LLC has <a class="link" href="https://www.thebalance.com/limited-liability-companies-for-beginners-357531" target="_blank" rel="noreferrer noopener">several benefits</a>, which include:&nbsp;</p><ul><li>A choice between manager-managed or member-managed</li><li>Limited liability</li><li>Fewer paperwork requirements&nbsp;</li><li>Flexible profit and loss allocation</li><li>Tax status flexibility</li></ul><p>LLCs can operate as either a manager-run or member-run company. In manager-managed LLCs, members select managers to operate the business. These managers will conduct work for the company.&nbsp;&nbsp;&nbsp;</p><p>In member-managed LLCs, owners will have a role in daily operations.&nbsp; All members share limited liability, meaning they aren't personally liable if the company experiences legal trouble.&nbsp;</p><p>Another benefit is the paperwork requirements. While other business entities require annual reports, board of director meetings, and state requirements, LLCs don't have as many required forms of upkeep.&nbsp;</p><p>Fourth, profits and losses can be split in several ways. Members will agree to the terms of profits and losses in the Operating Agreement.&nbsp;</p><p>LLCs also have greater flexibility when it comes to tax status. They can experience taxation as a general partnership, meaning members will complete a <a class="link" href="https://www.irs.gov/forms-pubs/about-schedule-k-1-form-1065" target="_blank" rel="noreferrer noopener">Schedule K-1</a> to report profits and losses.&nbsp;</p><h2 class="wp-block-heading" id="h-what-are-the-disadvantages">What are the Disadvantages?</h2><p>Even though there are several benefits, there are also disadvantages.&nbsp;</p><p>In many states, if a member leaves an LLC, it must dissolve. The remaining members can start a new multi-member LLC, but those members will pay a termination fee.&nbsp;</p><p>Members must pay a self-employment tax if they file taxes as a general partnership. These members will be considered self-employed. As a result, these members will pay a self-employment tax.&nbsp;</p><h2 class="wp-block-heading" id="h-how-to-start-an-llc">How to Start an LLC</h2><p>If you want to <a class="link" href="https://www.thebalancesmb.com/how-to-set-up-a-limited-liability-company-llc-1200859" target="_blank" rel="noreferrer noopener">start an LLC</a>, there are a few things that you'll need:&nbsp;</p><ul><li>Articles of Organization (to submit to your Secretary of State)</li><li>Business name (that is both available and unique)</li><li>Licenses and permits (which will vary by industry and state)</li><li>Newspaper notice (not a requirement in all states)&nbsp;</li><li>Operating Agreement&nbsp;</li><li>A registered agent (to receive legal documents)&nbsp;</li><li>Tax registrations</li></ul><h2 class="wp-block-heading" id="h-how-to-convert-to-an-llc">How to Convert to an LLC</h2><p>You can convert your business entity to a Limited Liability Company if your business is:&nbsp;</p><ul><li>A C-Corp</li><li>An S-Corp</li><li>A sole-proprietorship</li></ul><p>First, you can convert your C-Corp by <a class="link" href="https://smallbusiness.chron.com/convert-c-corporation-llc-3772.html" target="_blank" rel="noreferrer noopener">doing the following</a>:&nbsp;</p><ul><li>File Articles of Organization (required in most states)&nbsp;</li><li>File an Operating Agreement (contact your state's Secretary of State)</li><li>Dissolve the C-Corp:<ul><li>File and write the C-Corp's Articles of Dissolution&nbsp;</li></ul></li><li>Transfer assets</li></ul><p>Another option you can consider is converting your S-Corporation to an LLC. To do this, you'll:&nbsp;</p><ul><li>File necessary paperwork<ul><li>The exact paperwork and requirements will vary by state.<ul><li>Some states may want you to send paperwork to the Secretary of State before converting your business.&nbsp;</li><li>Other states may require your LLC to merge with the S-Corp and name your LLC as the surviving company.&nbsp;</li></ul></li></ul></li><li>Liquidate assets for S-Corp and return them to shareholders.<ul><li>After LLC receives state recognition, the S-Corporation shareholders will contribute to LLC's assets.&nbsp;</li></ul></li></ul><p>A third option you can consider is converting your <a class="link" href="https://smallbusiness.chron.com/sole-proprietorship-llc-22296.html" target="_blank" rel="noreferrer noopener">sole proprietorship</a>. You'll do this by:&nbsp;</p><ul><li>Checking the availability of the proposed name&nbsp;</li><li>File Articles of Organization (required in most states)&nbsp;</li><li>File an Operating Agreement&nbsp;</li><li>Obtain an <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online" target="_blank" rel="noreferrer noopener">Employer Identification Number&nbsp;</a></li><li>Transfer assets&nbsp;</li></ul><h2 class="wp-block-heading" id="h-differences-between-llc-s-corp-c-corp-and-partnerships">Differences between LLC, S-Corp, C-Corp, and Partnerships</h2><p>If you want to form an LLC, you may want to know how it <a class="link" href="https://1800accountant.com/blog/6-tricks-to-choosing-the-best-entity-for-your-small-business" target="_blank" rel="noreferrer noopener">compares to other business entities</a>.&nbsp;S-Corps, C-Corps, and partnerships have distinct advantages; learn more about how they stack up.</p><h3 class="wp-block-heading" id="h-c-corps">C-Corps</h3><p><a class="link" href="https://www.thebalancesmb.com/what-is-the-difference-between-an-llc-and-a-corporation-397526" target="_blank" rel="noreferrer noopener">C-Corps and LLCs</a> differ in important ways. First, C-Corps experience double taxation.&nbsp;</p><p>This means that taxation occurs once when the corporation's income experiences taxation and again when members, called shareholders, experience taxation again on individual income.&nbsp;</p><p>LLCs don't pay income taxes, but the members pay self-employment taxes. C-Corps experience double taxation, but shareholders don't pay self-employment taxes.</p><h3 class="wp-block-heading" id="h-partnerships">Partnerships</h3><p>While <a class="link" href="https://www.thebalancesmb.com/which-should-i-form-an-llc-or-a-partnership-398646" target="_blank" rel="noreferrer noopener">LLCs and partnerships</a> may seem similar, there are some crucial differences. LLCs operate under an operating agreement that defines members' percentages of ownership. Members will pay tax individually after profits are passed to its members.</p><p>Partners in a partnership share profits and losses of the business according to the percentage of their share. Partners will complete a partnership agreement before forming their partnership.&nbsp;</p><p>While a domestic LLC offers limited liability to all members, partners in partnerships have personal liability.</p><h3 class="wp-block-heading" id="h-s-corps">S-Corps</h3><p>Finally, while an LLC has few member requirements, an <a class="link" href="https://www.investopedia.com/articles/personal-finance/011216/s-corp-vs-llc-which-should-i-choose.asp" target="_blank" rel="noreferrer noopener">S-Corp</a> is different. An S-Corp must have a board of directors and corporate officers, two things not required with an S-Corp.&nbsp;</p><p>Second, S-Corps have a limit of 100 shareholders. An LLC has no limit to the number of people who can join.</p><p>Another difference is how long the business entities can exist. LLCs dissolve after their member or LLC owner leaves the company. S-Corps will continue if its shareholders leave the corporation.</p><iframe width="560" height="315" src="https://www.youtube.com/embed/Xfg2zOL-ro4?si=Z2YzJHEmo-tFtoDr" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe><h2 class="wp-block-heading" id="h-seek-professional-entity-formation-advice">Seek Professional Entity Formation Advice</h2><p>Forming your new business is an important milestone. Work with the pros at <a class="link" href="https://1800accountant.com">1-800Accountant</a> today for your <a class="link" href="https://1800accountant.com/services/entity-formation">entity formation</a> and <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business</a> needs. Our professional advisers can offer guidance and support on your small business ownership journey!&nbsp;</p>

What is an LLC? Is an LLC a business entity? A Limited Liability Company can be a great way to grow a small business. It offers limited liability, something that can be helpful to its members. While this type of business organization can offer a lot of benefits, like limited liability protection, there are some [&hellip;]

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Business Entity: What Is an LLC?

<p>Unless you’re a licensed CPA or have a deep understanding of tax laws and practices, it’s a good idea to hire a professional during tax season. An <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">accountant for self-employment</a> ensures your taxes are filed properly. They will also advise you on <a class="link" href="https://1800accountant.com/blog/tax-deductions-work">tax deductions</a> and other tax benefits for which you are eligible. </p>



<p>As a self-employed individual, your tax situation will be more complicated than if you filed a standard W-2. (Another reason to hire a trained accountant for self-employed workers!) The relatively small price you pay for an accountant if you're self-employed pales in comparison to the fines you could be subject to if your taxes are filed improperly. </p>



<p>Accounting services can help small businesses with payroll, bookkeeping, and other day-to-day operational responsibilities. Continue reading as we discuss the top reasons to hire an accountant if you're self-employed.</p>



<h2>Do I need an accountant if I'm self-employed?</h2>



<p>You don’t necessarily <em>need</em> an accountant if you’re self-employed. However, you <em>must </em>legally <a class="link" href="https://1800accountant.com/blog/prepare-file-small-business-tax-return">file taxes</a> and maintain other aspects of your company’s books. Unless you truly feel you have the know-how to handle this, you probably want to hire a professional. </p>



<p>Accountants are obligated to follow <a class="link" href="https://www.cpajournal.com/2020/03/30/codifying-the-fundamental-principles-of-professional-behavior/" target="_blank" rel="noreferrer noopener">professional and ethical standards</a>. You can rest assured knowing that you are dealing with dedicated professionals when seeking these services. Your accountant will be happy to answer any questions you have. Furthermore, they’ll do everything within their power to ensure you don’t pay more than you need to and receive the maximum refund to which you are entitled.&nbsp;</p>



<h2>3 Reasons You Need an Accountant for Self-employment</h2>



<p>For your business to succeed, you should know what you don’t know.<em> </em>If you know that you don’t have a deep understanding of accounting, know that hiring a professional will likely save you time, effort, and money. While there are countless benefits to seeking accounting services for self-employed individuals, here are three of those reasons.</p>



<h3>1. An Accountant Will Save You Time</h3>



<p>First, and perhaps foremost, it will save you time to just pay for self-employment accountant services. As a business owner, your time is money. Unless your expertise is in the realm of taxes and accounting, your time will be better spent handling another aspect of your business.&nbsp;</p>



<p>Even if you can do your own taxes, you have to ask yourself if it’s worth your time — especially if it might take you two or three times as long as it takes a trained accountant. Your time and expertise are valuable; it’s important to leverage those two things to do whatever is best for the business.&nbsp;</p>



<h3>2. An Accountant Ensures Efficiency and Accuracy</h3>



<p>Not only can an accountant save you time, but they’ll also ensure efficiency and accuracy. If something is filed improperly, the error is on the accounting service, assuming that you were truthful in all of your disclosures.&nbsp;</p>



<p>However, it’s typically pretty rare for accounting firms to make major mistakes or to be unreliable. You are more likely to make an honest mistake filing on your own. This is one of those aspects where you’re better off leaving it to the professionals and focusing your efforts on other ways you can directly advance your business.&nbsp;</p>



<h3>3. Accountants Save You Money with Write-Offs and Other Tax Benefits</h3>



<p>Your accountant will also know the ins and outs of <a class="link" href="https://1800accountant.com/blog/self-employed-tax-write-offs" target="_blank" rel="noreferrer noopener">tax write-offs and other benefits</a> available to you as a self-employed business owner. You can deduct operating necessities such as your home office, internet, phone bills, and marketing.</p>



<p>It’s important for self-employed individuals to also think about their <a class="link" href="https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people" target="_blank" rel="noreferrer noopener">retirement plans</a>. Remember that your contributions to these funds during a given year may also be tax-deductible. An accountant for self-employed workers will know the best strategy to maximize your retirement contributions.&nbsp;</p>



<h2>Accountants are key to a business's success</h2>



<p>A good accountant can certainly contribute to a business’s success. It takes a stellar product and a lot of work on the front end to start a business. As your business expands, an accountant can play a role in maintaining your financial records and ensuring everything is above board tax-wise.&nbsp;</p>



<p>The more success your business sees, the more crucial it is that your time is spent focused on other aspects of the business. As your time becomes more limited, the clearer your need for professional self-employment accounting services will become.</p>



<h2>How much does an accountant typically cost for the self-employed?</h2>



<p>At this point, you probably see the benefit of hiring a tax professional. But how much will it cost? Rates differ depending on the firm and your business’s specific needs; 1-800Accountant <a class="link" href="https://1800accountant.com/pricing" target="_blank" rel="noreferrer noopener">offers services</a> with transparent pricing that can fit any business’s needs and budget.&nbsp;</p>



<p>Basic accounting support starts at $125 per month. For $225 per month, you can get support for tax filing and planning. If your business grows to the point where it requires full-time accounting support, check out the Enterprise Package. This starts at $375 per month and offers full-service support, which includes maintenance of your bookkeeping and the production of financial reports. This way, you and other stakeholders have a bird’s eye view of your company’s finances.&nbsp;</p>



<p>Just getting started? 1-800Accountant will help you file an LLC for free; you just need to cover the state fee.&nbsp;&nbsp;</p>



<h2>Hire a Professional CPA for Your Small Business</h2>



<p>At the end of the day, you’re going to save yourself a lot of headaches by hiring a <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">self-employment accountant</a>. 1-800Account offers various accounting services with professionals who have <a class="link" href="https://1800accountant.com/services/small-business-taxes" target="_blank" rel="noreferrer noopener">specific expertise in the small business realm</a>.&nbsp;</p>



<p>Our accountants offer unlimited support with no hourly charges, and we guarantee you maximum tax savings. We can help with everything from accounting services and payroll to tax preparation and advisory to audit defense and entity formation.&nbsp;</p>



<p>Chat with one of our reps today. They'll help you discover the best package for you and see what we can do for your business.&nbsp;</p>

Unless you’re a licensed CPA or have a deep understanding of tax laws and practices, it’s a good idea to hire a professional during tax season. An accountant for self-employment ensures your taxes are filed properly. They will also advise you on tax deductions and other tax benefits for which you are eligible.  As a [&hellip;]

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3 Reasons You Need an Accountant for Self-Employment

<p>You can't take anything for granted when you own a small business. If you fail to grow, you’ll fall behind. The market is constantly changing and you won’t expand by sitting on your hands. To grow your small business, you need a thoughtful and strategic plan.&nbsp;</p>



<p>Of course, growing your business isn’t a simple task. You can’t just make more products or hire more staff and expect everything to fall into place. It takes time, effort, and expertise.&nbsp;</p>



<p>There are a lot of different factors involved in growing your company, from the customer base and products to your staffing and marketing costs, and all of them are important. The bright side is that there are many angles you can take to grow your business. Here are 7 key considerations to keep in mind as you develop a growth plan.&nbsp;&nbsp;</p>



<h2>1. Hire the Best People for the Job</h2>



<p>As a business owner, it’s up to you to invest in top talent. Train and take care of your staff so they are empowered to take initiative and add value to your work. They should care about the success of your company and have a voice in its direction.&nbsp;</p>



<p>A business depends on its staff. Doing everything yourself means wasting time and energy and could result in burnout. If you don’t or can’t trust your staff to carry out the work of the business with skill and dedication, whether or not you’re there to supervise, then you need to make a change.&nbsp;</p>



<h2>2. Grow Your Business and Reduce Risks</h2>



<p>Scaling up your operation takes care. There are many things that can go wrong, so do what you can to <a class="link" href="https://www.investopedia.com/articles/personal-finance/072315/top-ways-manage-business-risks.asp" target="_blank" rel="noreferrer noopener">manage the business risks you’re taking</a>. Don’t pour money into a new product without a backup plan in case it doesn’t sell. You should carefully control your cash flow so you don’t find yourself caught on a limb. </p>



<p>Even the healthiest company can be crippled suddenly by the right mix of unforeseen circumstances. As you plan for sustainable growth, you need to plan for stability. Keep a diversified range of product options so you don’t rely on one thing, and make sure you have <a class="link" href="https://www.coverwallet.com/">ample insurance</a> for all your biggest assets. </p>



<h2>3. Outsource Small Business Accounting</h2>



<p>As your business footprint grows, so will your administrative and accounting overhead. Bookkeeping and taxes will become complex and time-consuming once you hit a certain size.&nbsp;</p>



<p>It may be easy enough to do this all yourself while your business is still small, but it will quickly take up more and more of your time. As your business's leader, you should spend your time on big-picture thinking to move your company forward.&nbsp;&nbsp;</p>



<p>You can save time and improve overall efficiency by outsourcing your accounting needs to an external firm. This gets you the dedication and expertise of a full-time professional accountant at a fraction of the cost. Try working with our team here at 1-800Accountant to <a class="link" href="https://1800accountant.com/services/small-business-taxes">file your small business taxes</a> and find out what an accounting expert can offer.&nbsp;</p>



<h2>4. Grow Your Small Business’s Social Media Presence</h2>



<p>To grow, you need to reach more people. What better way to do so than with social media? In the current digital environment, an established website and a consistent social media presence are no longer optional. Over time, you can reach more people by investing in the quality and quantity of your social media posts.&nbsp;</p>



<p>An effective social media presence doesn’t mean posting about your products daily, either. You should develop your brand with truly valuable content that invites engagement on its own merits. <a class="link" href="https://1800accountant.com/blog/creative-content-ideas-business-social-media">Explore creative content ideas for your business social media</a> accounts, and work on developing the identity and voice of your brand online.&nbsp;</p>



<h2>5. Exceed Customer Expectations</h2>



<p>Doing the same thing over and over is not likely to keep your customers engaged or expand your client base. If you want to build loyalty, you need to show your audience that it’s worth sticking around. Don’t settle for satisfactory; try to improve and outdo yourself consistently.&nbsp;</p>



<p>You should always look for ways to improve the customer experience, upgrade your services, and streamline your processes. This will lead to more engaged and committed clients who care about your brand, and their loyalty will naturally expand your reach through word-of-mouth.&nbsp;&nbsp;</p>



<h2>6. Invest in Yourself</h2>



<p>You are your own greatest resource. Every time you acquire a new skill or expand your knowledge on a topic, you are giving that gift to your business. Take the time to invest in yourself and build up your own skills as well, even if sometimes it feels like you can’t afford to step away.&nbsp;</p>



<p>Keep yourself up to date on the competition in your industry, and continually expose yourself to new ideas. When new technologies or skill sets might be useful to your business model, either pay to send a staff member to a training or send yourself. If you use every last bit of your energy doing things the traditional way, you’ll never have the energy to learn any other way.&nbsp;</p>



<h2>7. Adapt, Adapt, Adapt</h2>



<p>There is no sure-fire universal recipe for growth. Every business will eventually face some consistent truisms and logistical problems, but every industry and existing business is unique. Effective and sustainable growth, in the end, will require understanding and harnessing what sets your company and your context apart.</p>



<p>Attend to the developments in your industry and the market, and be prepared to do what it takes to adapt. Having a plan is good, but sometimes the best thing to do is throw out your plan to pursue a new strategy. Stay on the lookout for unique opportunities and sudden shifts, and don’t be afraid to take a risk for a worthwhile reward.&nbsp;</p>

You can&#8217;t take anything for granted when you own a small business. If you fail to grow, you’ll fall behind. The market is constantly changing and you won’t expand by sitting on your hands. To grow your small business, you need a thoughtful and strategic plan.&nbsp; Of course, growing your business isn’t a simple task. [&hellip;]

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Grow Your Small Business: 7 Key Considerations

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<p>“Excellent first call, very informative. This is my third business … this time  I will ease the burden and use 1-800Accountant [for accounting]”</p>

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