I flip furniture, which started as a hobby but has grown into something more profitable than I expected. I don’t have an LLC or a business setup, and all transactions have been made through my personal bank account. How should I report this income on my taxes this year?
Please avoid lecturing me about how I should’ve set this up properly; I’m already aware and panicking. I’ve saved 40% of my earnings to pay taxes, but I’m not sure how to report the income and pay them.
You need to file a Schedule C to report your income and any related expenses. You don’t need an LLC for this, you’re considered a sole proprietor just by conducting business activities.
Marin said:
You need to file a Schedule C to report your income and any related expenses. You don’t need an LLC for this, you’re considered a sole proprietor just by conducting business activities.
I also have a part-time job and will receive a W2. Can I file both together? I have no clue about taxes in general
@Dez
Absolutely. Your W-2 wages are reported on your Form 1040, and Schedule C is also part of your 1040. The self-employment income flows through to your 1040 via Schedule C.
I suggest you visit IRS.gov and look up Form 1040 and Schedule C, along with the instructions for each. Even if someone else helps with your tax return, understanding the forms will benefit you.
You just report your income and business expenses on Schedule C along with your 1040 tax return. You don’t need an LLC or separate bank account for this. Just make sure you can identify the transactions related to your business.
I can’t add more to what others have already said, but I recommend opening a separate bank account for your business. It’s important not to mix personal and business finances.