Thanks for this info! I had no idea there were "marketplace facilitator" laws. Do you know if there's an easy way to check what my state requires? I've been collecting and remitting sales tax on the full amount (including their commission) which sounds like it might be wrong.

The easiest way to check is to google your state name plus "marketplace facilitator sales tax law" - most states have published guidance specifically for restaurants dealing with delivery apps. In most states that have these laws, the delivery apps should be giving you reports that show what portion of sales tax they collected vs what you need to collect. If you've been remitting tax on the full amount including their commission, you might actually be overpaying! You might want to look into filing an amended return to get that money back. Some of my restaurant clients have received significant refunds after realizing this mistake.

On the tax-exempt topic - be super careful with catering orders for churches and non-profits. I learned the hard way that in my state, they need to provide their exemption certificate BEFORE the sale, not after. Had to eat the tax cost on a $2000 order because they gave me their certificate a week later!

Do you ever get pushback from clients when suggesting extensions? I have a few who seem to think an extension increases audit risk (though I've told them repeatedly this isn't true). Any tips for convincing stubborn clients?

I definitely get that pushback all the time! The audit risk myth is surprisingly persistent. What works best for me is showing clients the actual IRS data - extensions don't increase audit risk, but amendments definitely can. I explain that filing an extension is a standard, accepted practice that millions of businesses use every year. However, filing an amended return can sometimes trigger additional review. I frame the extension as the more conservative, safer approach that gives us time to maximize their legitimate deductions while ensuring compliance.

Always go with option 2 and file the extension. Part of our job as professionals is educating clients about proper procedure, even when it's not what they want to hear. I explain to clients that while they might be eager for their K-1, receiving an incorrect one that later needs amendment could cause them much bigger headaches - potentially requiring them to amend their personal returns as well. Most clients understand when you frame it as protecting them from future complications.

Thanks for the advice! I ended up filing the extension yesterday and explained to the client that this was the proper approach. They were initially upset but calmed down when I explained how amendments could potentially affect their personal return and possibly increase scrutiny. Will definitely continue taking this approach in the future - better to have a momentarily unhappy client than create a bigger tax mess down the road!

Thanks for breaking down the numbers! So even with the extra costs of payroll processing and additional tax filings, I'd still come out way ahead. Do you recommend using a payroll service or trying to handle it myself?

Definitely use a payroll service. The cost is minimal (usually $50-75/month for just yourself) and the peace of mind is worth it. They handle all the tax deposits, quarterly filings, W-2s, etc. Trying to DIY payroll is asking for trouble - the penalties for missed deadlines or incorrect deposits are steep. I use Gusto for my S corp payroll, but there are plenty of good options like OnPay, QuickBooks Payroll, or SurePayroll. Most accounting software integrates with these services too, making bookkeeping easier.

Wait, I thought QBI applied to S-Corp distributions too? My accountant definitely included my S-Corp distributions in QBI calculations last year...

Yes, that's exactly what I said - QBI applies to S corp distributions but NOT to the salary portion. So if you take $150k salary and $120k in distributions from your S corp, only the $120k would potentially qualify for the QBI deduction. Your accountant was correct to include S corp distributions in QBI calculations. I was just pointing out that when you compare sole proprietorship to S corp, you need to account for the fact that the salary portion of S corp earnings won't qualify for QBI, whereas all net income from a sole proprietorship potentially qualifies.

Thanks for mentioning this! I was leaning toward Section 179 anyway since my business income is pretty healthy this year, but I wasn't aware that bonus depreciation was down to 80% now. Is there any advantage to using bonus depreciation instead of Section 179 in my situation?

Section 179 is probably your best bet in this case. The main difference is that Section 179 is optional on an asset-by-asset basis and limited by your business income, while bonus depreciation is automatic unless you elect out and doesn't have the same business income limitation. The other consideration is that if your business income is relatively small, a large Section 179 deduction could potentially create a loss, which might be limited. Bonus depreciation doesn't have that same restriction. But for a $2,400 laptop, Section 179 is usually the simplest approach unless you have other reasons to preserve income on your return.

Did your accountant have you fill out Form 4797 for the disposition of the old laptop? I'm using TurboTax and it's asking me to complete that form, but it seems complicated for just a laptop trade-in.

That's good to hear! Their accounting department is pretty responsive usually, so hopefully they can fix it quickly. Is there a deadline for when they need to issue a corrected form?

The company technically should issue a corrected form as soon as they discover an error, but there's no strict deadline for corrections like there is for the original forms. If you're filing your return before they send a correction, just make sure you report the income correctly on your Schedule C regardless of what box it appears in on the incorrect form. The important thing is that you're properly reporting all your income and paying the appropriate taxes on it.

I used TurboTax last year with a wrong-box 1099 issue. You just enter the income correctly on your Schedule C as business income. There's no specific place to note the box discrepancy. TurboTax has you enter the total amount from each 1099, but the Schedule C is where you categorize everything properly. Never had an issue with the IRS questioning it.

Thanks for the info! That makes me feel better about just going ahead with my filing. Seems like as long as we report the total income correctly, the specific box issues aren't a dealbreaker.