If your self employed, do you have to be a company?

Question

To write off stuff on your taxes? Like business expenses etc.? I sell stuff, and im planning on filing taxes this year. Id like to open an LLC but im a minor. Hows this going to work? If i dont file taxes will they tax my parents for my income? If i file taxes can i still writeoff business expenses? What about inventory costs? Someone told me i cant pay taxes only my parents. But my business just cant afford to be paying taxes for my parents tax bracket without making my parents money!

Answer 1

You certainly can pay taxes and if you are self-employed you should. However, since you are a minor, your parents can claim your income and pay your taxes for you, but they don't have to. What you should do is prepare (with your parents help) your own taxes and have them prepare their taxes 2 ways, with and without your income. See what the increase is in their tax liability and compare that to what you would owe filing your own taxes. Then file in which ever way would cost you less. Either file and pay your own taxes or have your parents include your income on theirs and pay the difference.

If you (or your parents) are unable to do this, you can get assistance for free from your local library (in most places).

Go to the IRS website in December and request publication 17. That has all the information you need about your taxes.

Answer 2

If you are making money, and make over $399 a year, you need to file a tax return and pay tax on any profit. Opening an LLC wouldn't affect your taxes. You'd pay them at your ' - rate, not your parents' - the "kiddie tax" where taxes are paid at the parents' rate is for investment income, not money you are actually earning.

You are considered a sole proprietor, and can write off ordinary and necessary expenses of your business. It is considered a business for tax purposes, LLC or not. As for inventory, the cost of items you sold would be a deduction from the amount you sold them for.

Answer 3

Being self employed you will be filing a 1099 form, and yes you can write off your expenses, business cards etc...I would definitely consult with an account as usually your parents claim you until your 18, Besides are you goiing to be doing your own bookkeeping as well? You do need to make sure you keep all reciepts for EVERYTHING!!! As a bartendar and promoter i had to file as a independent contractor-self employed its a pain..If you make to much then you have to pay back at the end of the year, or set it up quarterly put money away just in case you do have to pay. But talk to someone who can legally give you advice, Talk to your parents as well. Good luck

Answer 4

Okay, it's not that complicated. You can file as self employed, you do not have to be an official company. But keep in mind your parents may not be able to claim you as a dependent. You are probably going to need a CPA to help you with your taxes, even if it's just a consult to help you with the law.

Everything you need to know is on this link from the IRS. It's a wealth of information to guide you. You can also call their number for additional help.

http://www.irs.gov/businesses/small/index.html

Good luck!