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Small Business Tax Questions with Johnny Horta

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  1. Show Notes

Johnny Horta joins us today to discuss small business taxes.

LMM’s resident tax expert schools us on small business taxes for all our side hustlers out there.

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If you run a small business you’ll have more write-offs than if you are an employee.  The downside is, you have to pay all 15.3% of your FICA and social security taxes rather than paying 7.65% while your employer picks up the other half.

If you’re self employed, it’s a good idea to set up a Simple or SEP IRA.  A Simple allows you to defer up to $12,500 and a SEP, up to $53,000.  This can help lower your tax burden while helping you save for retirement.

If you’re just starting out it’s a good idea to schedule a consultation with an accountant or a tax attorney.  Just ask for a certain amount of time, an hour maybe and ask what they charge for that.  Be sure to have a list of questions to make the most of the time.

According to the IRS, you are a business if you make money for three of five years. Otherwise, it’s classified as a hobby.

Lots of people want to use a home office deduction.  But in order to do so, the office has to be “regularly and exclusively used as a home office for the business.”  So if you work on your computer by day and watch Netflix on it by night, sorry, you’re out of luck.

Your home office is a mullet set up. Business in the front, party in the back.

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When you decide how to set your business up, sole proprietorship, LLC etc, the most important thing to consider is the likelihood that you’ll be sued.  If it’s small, a sole proprietorship will probably be suitable.

Remember, Johnny will answer your questions live via our webinar February 2.

Show Notes

Horta Tax and Financial Services:  Connect with Johnny on Facebook.

IRS:  Get some answers here before spending money on an accountant.

LMM Get Involved:  Find out the details for our upcoming tax webinar with Johnny February 2 at 8:30 pm Easter.

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