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New LLC with EIN Number - No Sales Yet, Tax Filing Question
So I started my LLC mid-2024 - got all the legal stuff sorted like articles of organization, business name registration, bought equipment and tools for the business, etc. The problem is I launched everything pretty late in the year and ended up with zero sales but about $4,300 in startup expenses. I know my LLC is set up as a pass-through entity for tax purposes, but I'm confused about how to report this on my personal taxes since there was literally no income. Do I need to generate some kind of 1099-K or other 1099 form showing $0.00 in revenue? I'm trying to figure out where exactly I'm supposed to indicate that my business had zero income for 2024. I'm using TurboTax Desktop and getting a bit lost in the business section. This is my first time filing with a business so any help would be super appreciated!
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Should I hire a CPA or prepare my taxes myself with my complex financial situation?
Hey everyone, I've been going back and forth for weeks about whether I should hire a CPA this year. My family keeps insisting I need one, but the one time I paid for professional help at Liberty Tax, they basically ate up my entire refund with their fees! I normally just use the basic version of TaxAct and fumble my way through it, but my situation got more complicated this year. I earn in the low six figures as a remote W2 employee for a large corporation. I liquidated most of my investments this year to fund buying my first house. A big chunk of that was RSUs from my company that vested. I've got a Health Savings Account and a current 401k, plus I've never rolled over 401ks from my previous 3 employers (they're just sitting there collecting dust). To top it all off, I relocated from Washington to Colorado this year and bought my first home in Colorado. I'm completely out of my depth with all this... is it worth spending the money on a professional so I don't mess something up? Or am I overthinking this and could still handle it with tax software? Any advice appreciated because I'm seriously lost here! :
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I've been in a similar situation (six-figure income, stock sales, home purchase) and I would recommend using a CPA for at least the first year dealing with these complexities. After that, once you understand what forms and schedules you need, you can probably handle it yourself with good tax software if you want. Just make sure to get organized! Gather ALL your documents beforehand: - W-2s - 1099s for stock sales - Home purchase settlement statements - Moving expense receipts - State residency dates and information - 401k and HSA contribution statements A good CPA will explain what they're doing, so treat it as an educational experience too. Ask questions about why certain deductions apply or don't apply to your situation.
Do you think TurboTax's premier version would be sufficient for the following year, or would you recommend a different software?
TurboTax Premier would work fine for most people in this situation, but I personally prefer TaxSlayer or FreeTaxUSA. They handle all the same forms as TurboTax but cost significantly less. TurboTax charges premium prices for forms that the others include in their basic packages. The key is understanding which forms and schedules you need to complete. Once your CPA files this year, ask for a copy of your complete return and note which forms were used. Then verify that whatever software you choose next year supports all those forms. Most major tax software can handle multi-state returns, stock sales, and mortgage deductions - you just pay extra with some platforms.
Don't overlook the potential tax implications of your stock sales, especially the RSUs. Depending on how the company handled the vesting, you might have already paid some tax when they vested (companies often withhold some shares for taxes). When you sell vested RSUs, you'll need to calculate your cost basis correctly to avoid double taxation. Your original W-2 from the year they vested should show the income that was already taxed. The tax software CAN handle this, but you need to understand what you're inputting. This is one area where a CPA's guidance for at least the first year could save you from a costly mistake.
Wow, I had no idea about the potential for double taxation on RSUs. My company did withhold some shares when they vested (about 22% I think), but I never fully understood how that affects my taxes when I sold them. This definitely makes me lean toward getting professional help this year. Do you know if this is something most CPAs understand well, or should I look for someone with specific experience in equity compensation?
Most CPAs should understand RSUs, but I would still specifically ask if they have experience with equity compensation when you're interviewing potential accountants. Some CPAs specialize in working with tech employees or others who receive significant stock compensation. When interviewing potential CPAs, ask them to explain how RSU taxation works. If they can clearly explain that RSUs are taxed as ordinary income when they vest (which should appear on your W-2) and then any additional gain or loss when sold is treated as capital gain/loss, that's a good sign they understand the basics. Make sure they can explain how to properly determine your cost basis, as that's where many people make mistakes. The right CPA can not only prepare this year's taxes correctly but also help you plan for future vesting and sales to minimize your tax burden.
Content creator here - when can I expect my 1099-NEC for 2025 tax filing?
So I'm a full-time content creator (mostly YouTube and Instagram) and this is only my second year doing this professionally. Last year I got my 1099-NEC forms super late, like mid-February, and it stressed me out. I work with about 8 different brands/companies regularly who pay me for sponsored content, and I have no idea when I should expect these forms to arrive. Some companies have my direct deposit info for payments but haven't asked for my mailing address recently, so I'm worried they won't know where to send my tax forms. I made around $85k this year from content creation (up from $63k last year) and I've been setting aside money for taxes, but I need those forms to file correctly, right? The IRS website isn't very clear about when exactly these forms need to be sent out to contractors. Does anyone know when the deadline is for companies to mail out 1099-NEC forms? And should I be proactively contacting all these companies to make sure they have my current address? This tax stuff is seriously the worst part of being self-employed.
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Former accountant here - one thing to keep in mind is that even if you don't receive all your 1099-NECs, you're still legally obligated to report all your income. The IRS matches the 1099s they receive against what you report, so if you underreport, that's a red flag. I recommend keeping a simple spreadsheet throughout the year tracking payments from each company. That way, if a 1099 never arrives or has an incorrect amount, you still have your own records to reference. This helps avoid the last-minute scramble when tax time comes around.
Thanks for the advice! I do keep track of all my payments in a spreadsheet, but I was worried about what happens if my numbers don't match what's on the 1099s. Like what if I think a company paid me $7,500 but their 1099 says $8,000? Who is the IRS going to believe?
The IRS tends to go with what's reported on official tax documents like 1099s, but that doesn't mean you're stuck with incorrect information. If you receive a 1099 with an error, contact the issuer immediately and request a corrected form. They should issue a corrected 1099-NEC, which they'll also send to the IRS. If they refuse to correct it or you can't get it resolved before the filing deadline, you should still report your accurate income based on your records. On your tax return, you'd report the full amount shown on the incorrect 1099 to avoid automatic matching issues, but then make an adjustment to correct it. A tax professional can help you document this properly with your supporting evidence.
Just a heads up - I'm also a content creator and last year one of my sponsors sent my 1099 to my OLD mailing address even though they had my updated info for payments. When I called them they said their payment system and tax form system were separate and didn't communicate with each other 🙄 So definitely email all your sponsors NOW to confirm they have your correct address. It's such a pain but better than scrambling at the last minute. I also take screenshots of all my income transactions throughout the year just in case there are discrepancies.
This happened to me too! Two of my biggest sponsorship deals were with companies that outsource their accounting, and somehow my address got messed up. Now I start emailing companies in December to verify they have my current info.
Capital Gains tax on house sale - any way I can avoid it after selling just short of 2 years?
So I messed up big time and now I'm kicking myself. Got divorced in 2021 and bought a house on June 15th that year. Life happened, met someone new, and decided to move in together. I sold my place on March 20, 2023 - and made about $72k profit. It wasn't until I was talking to a coworker AFTER closing that I found out if I had just waited until June 16th (less than 3 months later!!), I could have completely avoided capital gains tax because of the 2-year ownership rule. Nobody - not my realtor, not the title company, NOBODY - mentioned this to me during the selling process. The worst part is that almost all of that profit went straight into the down payment for the new place I bought with my girlfriend. So it's not like I have a pile of cash sitting around to pay this tax bill. Is there ANY way around this? Any loopholes or exceptions I'm not aware of? I already used retirement funds for the down payment on the first house (and paid taxes on that withdrawal too). This capital gains tax is going to hurt.
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Could you potentially qualify for a partial exclusion? The IRS allows this if your move was due to: - Work relocation (if your new workplace is at least 50 miles farther from the home) - Health issues - Other unforeseen circumstances Even a partial exclusion could save you significant money. For example, if you lived there 21 months, you could exclude 21/24 (87.5%) of the normal exclusion amount.
My job location didn't change, and I don't have health issues that required a move. As for "unforeseen circumstances" - is a new relationship considered unforeseen? It wasn't planned when I bought the house, but I doubt the IRS cares about that.
Unfortunately, a new relationship isn't considered an unforeseen circumstance by IRS standards. Their definition typically includes things like death, divorce that occurs DURING ownership, natural disasters, multiple births from the same pregnancy, or becoming eligible for unemployment. Since none of these apply, focusing on properly calculating your cost basis is your best strategy now. Make sure you include all purchasing costs, capital improvements, and selling costs to minimize the taxable gain. Document everything meticulously - the burden of proof is on you if you're audited.
I'm surprised nobody mentioned this - you should double check if your state has different rules than federal. Some states have different holding periods or other provisions. For example, here in Massachusetts they have a "rollover" provision in some cases.
This is good advice. I live in Colorado and discovered our state treatment of capital gains is different than federal. Saved me about $2,400 on my state return even though I still had to pay the federal capital gains.
Can S-Corp owners reduce their salary to allow business to reimburse increasing out-of-pocket expenses?
Just wrapping up my first year operating as an S-corp and trying to figure something out before my next meeting with my accountant. I've been paying a ton of business expenses out of my personal accounts that I used to just deduct as a sole proprietor in previous years. The thing is, my S-corp isn't bringing in enough to cover these expenses AND my current salary. Last year, I had some side income outside the S-corp that helped cover these gaps, but that's dried up this year. I'd really like to move these expenses onto the company books where they belong. Would it be problematic to reduce my hours/salary so the business has enough cash to reimburse me for these expenses without going into the red? I know this would lower my tax burden, which might raise red flags, but all the expenses are completely legitimate business costs - just regular stuff like mileage, conference travel, office supplies, etc. I'm meeting with my CPA next month for our quarterly tax planning, but want to understand this better before walking in. Any insights from people who've navigated this S-corp territory before?
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Quick question - has anyone here used an actual formula to calculate their S-corp "reasonable compensation"? My accountant is super conservative and wants me to take like 80% of profits as salary which seems to defeat the whole point of having an S-corp.
I use a 60/40 split (60% salary, 40% distribution) for my consulting S-corp based on what my CPA recommended. But I've heard of people going as low as 30% salary in some industries. It really depends on your specific business and what comparable employees make.
One thing nobody mentioned yet - if you're reducing salary to cover business expenses, make sure you're not falling below minimum wage laws for the hours you're actually working! I had a friend get in trouble for this. Even as the owner, you're still technically an employee.
Is this really true? I've never heard of S-corp owners being subject to minimum wage laws. Wouldn't that defeat the purpose of being able to set a "reasonable" salary?
You're right that there's some confusion about this. The IRS's "reasonable compensation" standard is separate from minimum wage laws. However, as an employee of your corporation (even as the owner), you're still theoretically subject to FLSA minimum wage requirements. In practice, this rarely becomes an issue unless someone files a complaint. The bigger concern is that a very low salary compared to hours worked could trigger IRS scrutiny about whether your compensation is "reasonable." It's another data point they might use to challenge your salary if it's unusually low for your industry and workload.
Aria Washington
Something nobody's mentioned yet - even with zero sales, you might need to file other forms depending on your state. For example, in California, LLCs have to file a Form 568 and pay an annual $800 franchise tax even if you had no activity. Check your state's requirements for LLCs. Some states require annual reports or have minimum taxes regardless of whether you had any income. That's separate from your federal filing requirements.
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Lucas Kowalski
AuthorOh that's a good point! I'm in Minnesota - do you know if there are similar requirements here? I paid the initial filing fee but wasn't aware of any annual requirements.
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Aria Washington
In Minnesota, you do have an annual filing requirement - you need to file an Annual Renewal with the Secretary of State by December 31st each year. The good news is there's no fee for the annual renewal in Minnesota (unlike California's painful $800 minimum), but you must file it or your LLC could be administratively dissolved. You can do this online through the Minnesota Secretary of State website. It's pretty straightforward - just updating your registered agent and address information. This is separate from your tax filing requirements.
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Liam O'Reilly
Make sure you keep all your receipts organized! I messed up my first year with my LLC by not properly tracking expenses, and it was a nightmare come tax time. I recommend setting up a simple spreadsheet now with columns for date, vendor, amount, expense category, and payment method. Add all your 2024 expenses and keep it updated going forward. This will be super helpful when you file taxes next year and actually have some income to offset those expenses against.
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Chloe Delgado
What about using accounting software instead of spreadsheets? I've heard QuickBooks is good for LLCs but it seems expensive for a business with no income yet.
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