One thing to remember that no one mentioned - if u don't have a business license and ur supposed to in ur city, the IRS might share info with local authorities which could lead to fines. Happened to my friend! Also don't forget about self-employment taxes (15.3%) on top of regular income tax. Those hit hard when ur not expecting them!

Great question! I was in a similar situation last year with my freelance graphic design work. The key thing to understand is that business expenses are deductible based on whether you're legitimately running a business, not whether you have a license. However, I'd strongly recommend getting that business license sooner rather than later. While it won't change your tax deductions, it protects you legally and shows the IRS you're serious about your business operations. Plus, at $23k in income, you're definitely past the "hobby" threshold. Make sure you're tracking that business use percentage accurately for mixed-use items like your laptop and internet. The IRS loves documentation, so keep detailed records of when and how you use these items for business. Also, don't forget to set aside money for self-employment taxes - they caught me off guard my first year! One last tip: consider opening a separate business bank account even without the license. It makes tracking expenses so much easier and creates a clear separation between personal and business finances.

I'm really sorry this happened to you - mortgage servicer negligence with escrow accounts is unfortunately more common than it should be, but that doesn't make it any less infuriating when you're the victim. One thing I'd add to the excellent advice already given: make sure your attorney considers the **contractual breach** angle in addition to the RESPA violations. Your mortgage agreement almost certainly contains specific language requiring them to pay property taxes from your escrow account in a timely manner. Their failure to do this isn't just a regulatory violation - it's a fundamental breach of your contract that directly caused you financial harm. Also, when calculating damages, don't forget about **opportunity costs**. The money you had to scramble to pay for redemption fees, attorney costs, and penalties - that money likely came from savings, retirement accounts, or required you to take on debt. Calculate what that money would have earned if it had remained invested, or what interest you're now paying because you had to use credit to cover their mistake. Your situation is exactly why escrow accounts exist in the first place - to protect homeowners from exactly this scenario. The fact that their system failed so catastrophically (to the point where your home was actually sold at auction!) suggests this wasn't just a simple oversight but potentially systemic negligence in how they manage escrow accounts. Stay strong, and don't let them minimize the severity of what happened here.

I'm really sorry you're going through this - it sounds absolutely devastating to almost lose your home because of your mortgage company's negligence. One thing that might help strengthen your case is getting a professional analysis of your mortgage and escrow account history. I've heard good things about services like https://taxr.ai that can analyze all your mortgage documents and create detailed reports showing exactly where and when errors occurred. Having that kind of documentation could be invaluable for your attorney to demonstrate the pattern of mismanagement. Also, definitely file a complaint with the CFPB as others have mentioned. Mortgage servicers often take these complaints more seriously than direct customer complaints, and it creates an official record of their failure. For settlement amounts, given the severity of what happened (your home was literally sold at auction!), I wouldn't lowball yourself. Consider not just the immediate costs you paid, but the ongoing financial impact of that $750 monthly increase. That's $9,000 per year in additional costs caused entirely by their mistake. Over time, that adds up to significant damages. Document everything - every fee, every sleepless night, any medical costs from stress, time off work to deal with this mess. Their negligence put your most important asset at risk, and that deserves meaningful compensation, not just covering your out-of-pocket costs.

Don't forget about self-employment taxes! For the income earned while operating as a sole proprietor, you'll owe self-employment tax (15.3%) on top of income tax. When you transferred the money to the LLC doesn't matter - the IRS cares about when you earned it, not when you moved it.

Just to add another perspective - make sure you understand the state tax implications too, not just federal. Some states have different rules for how they treat LLC income and business transitions. I had a similar situation where I thought I had everything figured out for federal taxes, but then got a surprise notice from my state tax authority because they had different requirements for reporting the business structure change. Each state can have its own rules about when income is attributed to you personally vs. the business entity. It's worth checking with your state's tax department or a local tax professional who knows your state's specific requirements.

I went through this exact same process about 6 months ago and can confirm what others have said - the sequence is crucial. I made the mistake of overthinking it initially and got stuck in analysis paralysis. Here's what I learned from my experience: 1. The IRS EIN application system is designed around legal entity types, not tax elections. So when you see "LLC" vs "S Corporation" options, they're asking about your legal structure, not your tax treatment. 2. Apply for your EIN using "Limited Liability Company" and your full legal name including "LLC". Don't try to work around the system by omitting "LLC" or using a DBA - this could create complications later. 3. The online EIN application really does give you the number immediately in most cases. I was surprised by how fast it was. 4. File Form 2553 as soon as you get your EIN. Don't wait - the 2 month 15 day deadline is firm, and while there's late election relief available, it's better to just file on time. One thing I wish I'd known: make sure your LLC Operating Agreement doesn't have any provisions that would disqualify you from S Corp treatment (like disproportionate distributions or more than 100 members). It's worth reviewing this before you file the election. The whole process took me less than a week once I understood the proper sequence. Good luck with your application!

I just went through this exact process last month and wanted to share what worked for me since I see a lot of great advice here but also some confusion in the comments. The key insight that finally clicked for me: the EIN application asks about your LEGAL entity structure, while Form 2553 is about your TAX election. These are completely separate things, which is why the IRS website seems confusing when you're trying to do both at once. Here's exactly what I did: 1. Applied online for EIN selecting "Limited Liability Company" - used our full legal name including "LLC" 2. Got the EIN instantly (literally took 10 minutes total) 3. Downloaded Form 2553 from IRS website 4. Had both LLC members sign it 5. Mailed it certified mail the next day One thing I'll add to what others have said: make sure you understand the "reasonable compensation" requirements once your S Corp election is effective. As an S Corp, you'll need to pay yourself a reasonable salary (subject to payroll taxes) before taking distributions. This is something to budget for since it affects your cash flow. The whole thing was much simpler than I expected once I stopped overthinking it. The IRS systems actually work pretty well when you follow the proper sequence!

For your eBay business selling vintage video games and collectibles, I'd recommend looking at 451120 - "Hobby, Toy, and Game Stores" since video games seem to be your primary focus. This code specifically covers retailers of video games and would be most accurate for your business. If you're selling a really mixed variety where no single category dominates, then 454110 - "Electronic Shopping and Mail-Order Houses" would be the safer general e-commerce option. The key is to track your sales by category for a month or two and see what makes up the majority of your revenue. That should guide your NAICS code selection. And don't worry too much - you can always update it as your business evolves! One tip: make sure you're keeping detailed records of your inventory costs and shipping expenses. These are often the biggest deductions for eBay sellers regardless of which NAICS code you choose.

Great question! I went through this exact same process last year when I started treating my eBay selling more seriously. For your situation selling vintage video games and collectibles, I'd definitely lean toward 451120 - "Hobby, Toy, and Game Stores" since video games seem to be your main focus. This code is specifically designed for businesses that sell games and hobby items, which sounds like a perfect fit. However, if your sales are really mixed across different categories without one clear winner, then 454110 - "Electronic Shopping and Mail-Order Houses" gives you more flexibility as a general e-commerce classification. One thing that helped me decide was looking at my sales data for the past few months and calculating what percentage came from each category. If 60%+ of your revenue is from video games, go with the hobby/game store code. If it's more evenly split, the general e-commerce code is safer. Also, don't stress too much about getting it "perfect" - the IRS cares more about accurate reporting of your income and expenses than having the absolutely perfect NAICS code. You can always adjust it next year if your business focus changes!