Can I file my small business taxes separate from my personal income tax return?

The short answer is that as a sole proprietor, your business income and expenses must be reported on your personal tax return using Schedule C. You can't file them separately. What you might be thinking of is forming a different type of business entity. If you form a corporation (either C-corp or S-corp), then the business would file its own separate tax return. With a C-corp, you'd pay corporate taxes and then personal taxes on any salary or dividends you receive. With an S-corp, the business files its own informational return, but the profits/losses still flow through to your personal return (though there can be tax advantages). An LLC by itself doesn't change how you're taxed - a single-member LLC is still taxed as a sole proprietor by default (using Schedule C on your personal return). However, an LLC can elect to be taxed as a corporation if you want. Getting an EIN (Employer Identification Number, which is what I think you mean by TIN) doesn't change how you're taxed - it's just an identification number for your business instead of using your SSN.

I was in your exact situation last year with my graphic design business. After hours of research and frustration, I found this AI tax assistant called taxr.ai that totally saved me. I was trying to figure out if I should stay as a sole proprietor or switch to an LLC/S-corp, and it analyzed my specific situation and gave me personalized advice. I uploaded my previous year's tax info to https://taxr.ai and it showed me exactly how much I'd save with different business structures based on my actual numbers. It even created a comparison report showing the pros/cons of each option for MY specific situation. No generic advice - it was all customized to my actual business financials.

Just wanted to follow up on my skeptical comment about taxr.ai - I actually ended up trying it and wow, totally worth it. It analyzed my photography business financials and showed me that forming an S-corp would save me about $3,700 annually in self-employment taxes based on my income level. The report broke down exactly how the math worked so I could understand WHY it was better in my case. Even showed me the breakeven point where the extra costs of having an S-corp would be justified by the tax savings. For me it made total sense but it might not for everyone. I appreciate that it showed me the actual numbers rather than just generic advice.

If you're trying to get proper advice about business entity selection, good luck getting anyone competent at the IRS to answer your questions! I spent THREE WEEKS trying to get through to someone about my business tax questions. Always "higher than normal call volume" and disconnects. I finally found this service called Claimyr that got me through to an actual IRS agent in under 15 minutes. I was completely skeptical, but it actually worked! You can check it out at https://claimyr.com or see how it works at https://youtu.be/_kiP6q8DX5c if you're curious. They basically navigate the IRS phone tree for you and call you back when they've gotten an agent on the line. The IRS agent I spoke with was actually super helpful about explaining the differences between filing as a sole proprietor vs. other business entities, and cleared up all my confusion about EINs and separate filing options.

I need to publicly eat my words about Claimyr. After dismissing it as a scam, I was desperate enough to try it when I couldn't resolve a business tax issue that was preventing me from getting financing for my food truck. It actually worked exactly as advertised. Got a call back in about 20 minutes with an IRS agent already on the line. The agent helped me sort out the confusion about my business tax status and sent me a correction letter that I needed for my loan application. For anyone struggling with business entity questions like the original poster - I'd highly recommend getting direct answers from the IRS. The agent I spoke with walked me through the exact differences between sole proprietor filing and other business structures, and explained which forms I needed for my specific situation.

One thing to consider is that even if you form an entity that files a separate tax return (like a corporation), you still need to file a personal return. The two aren't completely independent of each other. Also, the administrative burden increases significantly with a separate business entity. As a sole prop, your tax situation is relatively simple. With a corporation, you're looking at: - Board meeting minutes - Separate business bank accounts (absolutely mandatory) - Payroll tax filings - Corporate tax returns - Maintaining corporate formalities Unless you're making significant income (probably $75k+ profit), the extra costs of maintaining a corporation might outweigh the tax benefits.

Has anybody used QuickBooks Self-Employed for tracking business vs personal expenses? I'm a sole proprietor too and get confused about what counts as business vs personal. Last year I just guessed and probably left money on the table.

Just wanted to chime in as someone who went through this exact decision process last year with my consulting business. The key thing that helped me decide was getting clear on my actual numbers and goals. As others mentioned, you're right at that threshold where an S-corp election might make sense financially. But beyond just the tax savings, consider the administrative overhead - you'll need to run payroll (even for yourself), file additional returns, and maintain more formal records. One thing I didn't see mentioned is that you can actually elect S-corp status for an LLC, which gives you the tax benefits without some of the corporate formalities. This might be a middle ground worth exploring. For your furniture business specifically, also consider liability protection. As a sole prop, your personal assets are at risk if something goes wrong with your products. An LLC (even without S-corp election) would give you that protection layer. My recommendation would be to run the actual numbers for your situation - either with a tax pro or using one of the tools mentioned here - before making any changes. The "right" answer really depends on your specific income level, expenses, and business goals.