Quick question - if my LLC has an S-Corp election (not sole proprietor), is charging rent from the LLC to myself still an option? My accountant mentioned something about this potentially being considered self-dealing and creating issues.

Great question Jessica! As others have mentioned, you definitely have options here. Since you're a single-member LLC (which is taxed as a sole proprietorship by default), the home office deduction on Schedule C is typically the simplest route. Based on your description, you'd calculate the percentage of your apartment used exclusively for business. If the second bedroom is 100% business use and you're using 35% of the living room, you'd measure those areas against your total apartment square footage. Let's say that works out to about 25-30% of your total space. A few important things to keep in mind: - Document everything with photos and measurements - The space must be used EXCLUSIVELY for business (sounds like your second bedroom qualifies) - Keep all your rent receipts, utility bills, and other home expenses - Consider whether the simplified method ($5/sq ft up to 300 sq ft) or actual expense method works better for you Since your apartment is officially your business address, you're already on the right track. Just make sure you're not mixing personal and business use in the spaces you're claiming - that's the biggest red flag for audits.

This is such helpful information! I've been doing Uber Eats deliveries on weekends and making about $600-800 a month, and I had no idea I needed to be paying quarterly taxes or keeping track of my mileage for deductions. Reading through all these responses has been eye-opening - especially about how payment apps like Venmo and Zelle are now required to report business transactions over $600. I'm definitely going to start keeping better records of my earnings and expenses. The advice about deducting car expenses and phone usage is something I never would have thought of. Does anyone know if I can deduct things like phone chargers or a phone mount that I bought specifically for delivery driving? Also, since I sometimes grab drinks or snacks during long delivery shifts, would any of that count as a business expense? I'm also curious about the liability insurance mentioned - is that something gig workers should really be considering? My regular car insurance probably doesn't cover commercial use, but I've never thought about what happens if I get in an accident while delivering food.

Great question! I went through this exact same situation last year with my pet sitting business. The key thing to understand is that the IRS considers you self-employed once you're regularly providing services for income, regardless of how informal it feels. Since you're making $950/month ($11,400 annually), you're definitely above the $400 self-employment threshold. Here's what you need to know: **Tax Forms You'll Need:** - Schedule C (Profit or Loss from Business) - this is where you report your dog walking income and expenses - Schedule SE (Self-Employment Tax) - for the 15.3% self-employment tax - Form 1040 - your regular tax return **Quarterly Estimated Taxes:** You should start making quarterly payments using Form 1040-ES. A good rule of thumb is to set aside 25-30% of your earnings for taxes (this covers both income tax and self-employment tax). **Deductible Business Expenses:** Track everything! Dog treats, leashes, waste bags, mileage to/from clients, pet insurance if you carry it, cleaning supplies, even a portion of your phone bill if you use it to coordinate with clients. **Record Keeping:** Those Zelle screenshots are a good start, but create a simple spreadsheet tracking dates, client names, services provided, and amounts received. The IRS loves detailed records if you're ever audited. Don't panic about not setting money aside yet - just start now! You can even set up a separate savings account and automatically transfer a percentage of each payment. Better late than never, and the IRS offers payment plans if needed.

Has anyone looked into whether EV charging stations qualify for accelerated depreciation? With all the tax incentives through the Inflation Reduction Act, I was wondering if adding those to a car wash or other business property might give additional tax benefits.

Thanks for all the detailed insights everyone! As someone who's been researching similar investments, I'm curious about the practical side of documenting material participation. @Landon Morgan mentioned keeping detailed logs - what specific activities count toward the hours requirement? For example, if I'm researching potential ATM locations online or reviewing financial statements at home, does that count? Or does it need to be more hands-on involvement like physically visiting sites or meeting with vendors? Also, has anyone dealt with the IRS questioning their material participation claims? I want to make sure I'm building a defensible record from day one rather than scrambling to document everything after the fact. The car wash example is really helpful - 10-12 hours per week seems very manageable while still clearly meeting the 500+ hour threshold. I'm leaning toward that type of business over ATM routes based on the discussion here about purchase price allocation challenges.

This discussion really highlights how common this issue has become with small businesses trying to navigate payment processing costs. As someone who's worked in small business consulting, I've seen this exact scenario play out dozens of times. The key point that everyone's touched on is absolutely correct - what the bakery is asking for is essentially tax evasion, regardless of their intentions. The IRS doesn't care whether you're trying to save on fees or hide income; circumventing reporting mechanisms is problematic either way. What I'd add is that businesses doing this are also exposing themselves to significant penalties beyond just tax issues. Venmo and other payment processors actively monitor for this behavior and can freeze or close accounts when they detect friends & family payments being used for commercial transactions. I've seen small businesses lose access to their payment processing entirely, which can be devastating. The suggestion about offering to cover processing fees is excellent. In my experience, most small business owners are genuinely grateful when customers approach this supportively rather than just walking away. I've helped several businesses transition to compliant payment methods, and they often discover that proper business processing comes with benefits they hadn't considered - better record keeping, business credit building, and eligibility for merchant services they couldn't access before. For the bakery specifically, they might not realize that home-based food businesses have substantial tax deductions available that could more than offset the processing fees they're trying to avoid.

This has been such an enlightening discussion! As someone who frequently supports local small businesses, I really appreciate how this thread has broken down both the legal and practical aspects of this increasingly common issue. What really stands out to me is how this situation creates a lose-lose scenario when businesses ask for friends & family payments. Customers lose buyer protections, businesses expose themselves to tax compliance risks, and both parties potentially violate platform terms of service. Meanwhile, the fees they're trying to avoid are often much smaller than the potential penalties for tax evasion or account closures. I love how many people have emphasized the educational approach rather than being judgmental. Most small business owners I know are genuinely trying to do right by their customers while keeping their businesses viable. They may simply not understand the full implications of what they're asking. The suggestion about offering to cover processing fees resonates with me as a customer who wants to support businesses ethically. I've actually started doing this with a few local vendors, and you're right - most are really appreciative when you frame it as wanting to help them stay compliant while continuing to support their work. For the original poster's bakery situation, I'd definitely recommend the supportive conversation approach. Something like "I love supporting your business and want to make sure we're both protected. Would you be open to discussing compliant payment alternatives?" could open the door to a really productive discussion that benefits everyone involved.

For the original question about shredding vs recycling - absolutely shred anything with personal information! Tax returns contain your SSN, full address, income details, and dependent information. Even if you tear them up before recycling, determined identity thieves can piece documents back together. Regarding retention periods, the standard 3-year rule applies to most situations, but I'd recommend keeping them for 6 years minimum. Here's why: if you underreport income by more than 25%, the IRS has 6 years to audit. Also, some state tax agencies have longer audit periods than the federal IRS. One thing I haven't seen mentioned yet - if you have any carryforward losses (like capital losses that exceeded the annual limit), keep those returns until you've used up all the carryforwards, which could be many years. Same goes for any NOL (Net Operating Loss) carryforwards if you have business income. For your specific situation with returns from 2014-2018, you're probably safe to dispose of 2014-2016, but I'd personally keep 2017-2018 for another year or two just to be conservative. And definitely invest in a good crosscut shredder - it's worth the $50 to protect your identity!

Just to add another perspective on the digital storage question that several people have asked about - I've been using a hybrid approach that's worked really well. I scan everything to PDF, but then store the files on an encrypted external hard drive that I keep in a fireproof safe at home, plus upload encrypted copies to two different cloud services (Google Drive and Dropbox) as backup. For encryption, I use 7-Zip to create password-protected archives of each year's tax documents before uploading anywhere. The password is something only I know, so even if someone hacked my cloud accounts, they'd just get encrypted files they can't open. One thing I learned from my CPA: definitely keep records related to any Roth IRA conversions indefinitely. Those basis records are crucial for avoiding double taxation when you eventually withdraw from your Roth in retirement. Same goes for any backdoor Roth conversions if you do those. Also, if anyone is dealing with tax documents from a deceased spouse or parent, keep those records much longer - the IRS can audit estates for up to 3 years after the estate tax return is filed, and some estate-related issues can come up years later during probate or property transfers.