Do you think $200/month is worth it at my current size? That seems like a lot when we're only making about $6-7k in revenue (not profit). Did you find that the tax savings offset the bookkeeping costs right away or did it take time?

At your current size, you might look for a more limited arrangement. Instead of full monthly service, you could find someone who does quarterly reviews of your books for less money. I started with quarterly help at about $300 per quarter when my revenue was similar to yours. The value became apparent after the first tax season when she found several deductions I'd missed, like a portion of my home utilities for my home office and some vehicle expenses for deliveries. She also properly categorized some equipment that I could depreciate. The tax savings definitely outweighed the costs, even in the first year. As your business grows, especially in wholesale with inventory tracking, having properly maintained books becomes increasingly valuable.

Yes! This is so important. I'm in NY and got hit with some surprises too. OP, what state are you in? Some states treat pass-through entities very differently than others. Also, does your city have any special business taxes? Local taxes caught me completely off guard.

I'm in Texas, so no state income tax, but we do have franchise tax if the revenue gets above a certain threshold. Thankfully I've already got sales tax permits and exemption certificates for our cafe customers. Good reminder though - there are definitely a lot of moving pieces to keep track of!

Actually, I don't think the Lifetime Learning Credit requires courses to be job-related. That's a requirement for the business deduction for work-related education, but not for LLC. The LLC can be used for any courses that help acquire or improve job skills, even if they're not related to your current job.

22 This is really good advice. I never thought about the difference between shredders. Are there any warning signs that a community shredding event might not be legitimate? I've seen these advertised but wasn't sure if I should trust them.

14 Legitimate shredding events are typically sponsored by local governments, credit unions, banks, or established community organizations. Look for events that are regularly scheduled (like annual community shred days), have been running for multiple years, and are held in public locations with official sponsors. Red flags would include events with no clear sponsoring organization, those held in isolated locations, or operations that don't allow you to watch your documents being shredded. Most legitimate services will shred your documents right in front of you in industrial trucks with viewing screens. They also typically provide a certificate of destruction for your records.

7 Oh wow, that's really good to know! I've been depreciating my laptop for my side gig and was planning to get a new one next year. So I'd need to keep all those receipts and depreciation schedules until 3 years after I file taxes for next year?

9 This is actually really bad advice. Filing an amended return to add income you intentionally left off initially could potentially trigger audit flags. The IRS might wonder what other income you "forgot" to report the first time. Better to just do it right the first time.

3 I think you're right about the potential audit concerns - I didn't consider that. My suggestion was more focused on privacy than tax optimization. A better approach would be what others have suggested - taking control of your own tax filing this year. Tax software makes it pretty straightforward, and it's an important adult skill to develop anyway.

1 I appreciate the suggestion but I'm nervous about even mentioning a medical company. My parents are pretty nosy and would definitely ask a ton of follow-up questions that I'm not prepared to answer convincingly. I think I'm going to go with filing my own taxes this year. It seems like the cleanest solution based on all the advice here. Thanks everyone for the help!

What if I did a direct rollover from my 401k to Roth IRA without going through a traditional IRA first? My 1099-R has code G in box 7 but still has the full amount as taxable. Do I still need Form 8606 in this case?

If you did a direct rollover from a 401k to a Roth IRA, the process is a bit different. Code G indicates a direct rollover, but whether it's taxable depends on whether the 401k portion was pre-tax or after-tax money. If it was after-tax contributions from your 401k going directly to a Roth IRA, then yes, you would still want to override the taxable amount. However, Form 8606 is primarily for tracking basis in IRAs, not 401ks. You'll need to document your after-tax contributions to the 401k separately, usually by providing records from your plan administrator showing which portion was after-tax.

I e-filed with this exact scenario last year and had no issues. As long as you complete Form 8606 correctly, the e-file should go through fine. The IRS systems are built to handle this situation because it's actually pretty common with Roth conversions.