8 Important 税 Issues for a Sole Proprietor
1. You report income and expenses on Schedule C of Form 1040.
The net income is 税able to you regardless of whether you withdraw cash from the 业务. Your 业务 expenses are deductible against gross income and not as itemized deductions. If you have any losses, they’re generally deductible against your other income, subject to special rules relating to hobby losses, passive activity losses, and losses in activities in which you weren’t “at risk.”
2. You may be eligible for the pass-through deduction.
To the extent your 业务 generates qualified 业务 income, you’re eligible to take the 20% pass-through deduction, subject to various limitations. The deduction is taken “below the line,” so it reduces 税able income, rather than being taken “above the line” against gross income. You can take the deduction even if you don’t itemize and instead take the standard deduction.
3. You might be able to deduct 家庭办公室 expenses.
If you work from home, perform management or administrative tasks from a 家庭办公室 or store product samples or inventory at home, you may be entitled to deduct an allocable portion of certain costs. If you have a 家庭办公室, you may be able to deduct expenses of 旅行ing from there to another work location.
4. You must pay self-employment 税es.
For 2022, you pay self-employment 税 (Social Security and Medicare) at a 15.3% rate on your self-employment net earnings of up to $147,000 and Medicare 税 only at a 2.9% rate on the excess. An additional 0.9% Medicare 税 is imposed on self-employment income in excess of $250,000 for joint returns, $125,000 for married 税payers filing separately, 和200美元,000 in all other cases. Self-employment 税 is imposed in addition to income 税, but you can deduct half of your self-employment 税 as an adjustment to income.
5. You can deduct 100% of your health insurance costs as a 业务 expense.
This means your deduction for medical care insurance won’t be subject to the rule that limits your medical expense deduction to amounts in excess of 7.5% of your adjusted gross income.
6. You must make quarterly estimated 税 payments.
For 2022, these are due April 18, June 15, September 15, and January 17, 2023.
7. You should keep complete records of your income and expenses.
Thoroughly record expenses in order to claim all of the deductions to which you are entitled. Certain expenses (such as automobile, 旅行, 餐, and 家庭办公室 expenses) require special attention because they’re subject to special recordkeeping requirements or limits on deductibility.
8. If you hire employees, you need a 税payer identification number and you must withhold and pay over employment 税es.
bet8登录 if you’d like more information or assistance with the 税 or recordkeeping aspects of your 业务 as a sole proprietor.
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