Thanks for bringing this up - I hadn't even considered state-specific fees. Do you know if there's an easy way to find out what my state requires without having to navigate through confusing government websites? I'm in Texas if that helps.

Texas is actually one of the better states for LLCs! They don't have the annual franchise tax minimum that California has (the $800 I mentioned). Texas does require you to file a "Public Information Report" annually, but there's typically no fee if your revenue is below certain thresholds. The Texas Secretary of State website is relatively straightforward compared to most states, or you can just Google "Texas LLC annual requirements" for a summary. The main thing you'll need to budget for is the initial filing fee when forming the LLC (around $300 in Texas). Much better than California where you'd be paying $800 every year regardless of profit!

Is Wave really completely free? What's the catch? I've been looking at QuickBooks but the monthly subscription feels steep when I'm not making money yet.

Thanks for bringing this up - I'm a bit confused now. Would it create problems if he specifically wants the money to go toward my business but doesn't want anything in return? He genuinely just wants to help me get started, not become a business partner or lender. What documentation would make the most sense in this case?

If he truly wants nothing in return and is giving the money to you personally (not to your business entity), then a gift is still appropriate. Have him write the check to you personally, not to your business name. Create a simple gift letter that clearly states it's a gift with no expectation of repayment, ownership, or any other benefit. After receiving the gift personally, you then make the decision to invest that money into your business as a capital contribution. This two-step approach makes it clearer that the money was first a personal gift to you, which you then chose to put into your business. Maintain separate documentation for each step - the gift from friend to you, and your capital contribution to your business. This separation helps establish that it was truly a personal gift that you independently decided to use for business purposes.

This happened to my brother! His college roommate "gifted" him $10k to start his landscaping business but then started showing up at client meetings and telling people he was a "partner." Total nightmare that ended their friendship. Definitely get crystal clear documentation.

Thanks for this simple breakdown! So just to confirm - in my case with $10,400 paid, $6,500 deducted, and $1,400 refunded - the refund is completely non-taxable? And would I still get a 1099-G from my state for the refund even though I don't need to report it?

Yes, your $1,400 refund would be completely non-taxable since it's less than the $3,900 difference between what you paid and what you were able to deduct. And yes, you'll still receive a 1099-G from your state because they don't know your specific federal tax situation. You'll need to report it on your federal return, but the tax software or worksheet will help you calculate that the taxable amount is $0. Don't skip reporting it just because the taxable amount is zero - that can trigger a mismatch notice from the IRS.

You'll need to report the state refund on Schedule 1, Line 1. But you should complete the "State and Local Income Tax Refund Worksheet" in the 1040 instructions first to determine how much (if any) is actually taxable. If you're dealing with the SALT cap situation described in this thread, you may well calculate that $0 is taxable, but you still need to work through the worksheet.

Thanks for the advice! Did you use any specific resources to learn about the S-corp requirements when you first started? And approximately how much extra time did it add to your tax preparation compared to just doing personal returns?

When I first started, I found the IRS's "Tax Information For S Corporations" publication really helpful, along with some YouTube videos from CPAs. The Small Business Administration website also has good resources. As for time commitment, my first year doing S-corp returns took about an extra 8-10 hours beyond my normal personal returns. There was a lot of learning and double-checking. Now I can knock it out in about 3-4 extra hours each year. The key is keeping good records throughout the year - that makes tax time so much easier! If your husband's businesses have clean bookkeeping, you're already halfway there.

I had the opposite experience! Paid an accountant $1,800 for S-corp returns that weren't very complicated. Learned how to do it myself the next year and saved a ton. Just needed to read up on the rules first.

Would you recommend attaching some kind of profit projection or business plan to my return? I did have one when I started, showing how I planned to monetize once I hit certain view thresholds. Just wasn't sure if that would help or draw more attention to the loss.

I wouldn't attach the full business plan to your return as that might actually draw unnecessary attention. Instead, keep it with your tax records in case of an audit. What can be helpful is a brief statement with your return explaining the nature of your business, that you operated with an intent to profit, and mentioning that you have documentation of your business plan and efforts. This shows you're aware of the requirements without overwhelming the initial filing with extra documents.

This is actually a common misconception. Schedule C losses don't reduce your Social Security wages from W2 employment. Your W2 income is still fully reported for Social Security purposes regardless of Schedule C losses. The losses might reduce your overall income tax, but your Social Security contributions and credits remain based on your W2 earnings.