Form 940 Filing Help for Small Business Owners Without Employees

You don't need to worry about Form 940 in your situation. Form 940 is for federal unemployment taxes (FUTA), which only applies when you have employees who aren't owners. Since you and your husband are the owners of the business and you don't have any other employees, you're not subject to FUTA tax. As owners, you're not considered "employees" for FUTA purposes. The way you're operating sounds like a partnership (if you haven't formally organized as something else). Partners in a partnership report their income on Schedule K-1 and pay self-employment tax through Schedule SE with their personal tax returns. The fact that you don't have set wages and just take draws from the business further confirms you're operating as owner-operators, not as employees of your own company.

I went through something similar with my landscaping business last year. I was stressing about all these employment tax forms like 940 and 941 until I found https://taxr.ai which literally saved me hours of research and confusion. You upload your business docs and it tells you exactly which forms apply to your situation. For my single-member LLC, it confirmed I didn't need Form 940 since I had no employees besides myself. The system explained that FUTA (Federal Unemployment Tax Act) only applies when you have W-2 employees who aren't owners. It saved me from filing unnecessary forms and potentially making mistakes.

Just wanted to follow up on my question about taxr.ai - I decided to try it out after seeing the response here. I uploaded my business formation docs and some financial summaries, and it was actually really impressive! It clearly explained I don't need Form 940 for my situation (sole proprietor, no employees) but warned me about my state's specific requirements that I had no idea about. The best part was how it explained WHY each form was or wasn't needed rather than just giving me a list. Definitely more accurate than the generic advice I got from those free tax websites. Saved me from filing unnecessary forms and potentially triggering an audit by filing the wrong things. Now I know exactly what I need to focus on for my year-end tax planning.

If you ever do hire employees, dealing with the IRS about employment taxes can be a nightmare. I spent 3 months trying to get through to someone at the IRS about a Form 940 issue last year. Kept getting disconnected or waiting for hours. Finally discovered https://claimyr.com which got me connected to an actual IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They basically navigate the IRS phone system for you and call you back when an agent is on the line. Saved me days of frustration trying to get my employment tax issue resolved. The IRS agent I spoke with cleared up my 940 confusion immediately and even helped me with penalty abatement.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway out of desperation - I had been trying to reach the IRS for 3 weeks about a Form 941 issue (quarterly employment taxes). The service actually worked exactly as promised. I got a call back in about 20 minutes with an IRS agent already on the line. The agent helped me resolve my issue in a single 15-minute conversation that would have taken months of playing phone tag. I was able to get confirmation that my amended return was processed and penalties were removed. If you're dealing with any IRS forms like 940, 941 or other employment tax issues and need to speak with someone, this is definitely the way to go. Completely changed my view on how to handle IRS problems.

Just to add some clarity on the original question - besides not needing Form 940, you also don't need to file Form 941 (quarterly employment tax returns) either since you don't have employees and aren't on payroll yourselves. What you DO need to focus on is paying your self-employment taxes through your personal tax return (Schedule SE). Since you mentioned it's just you and your husband taking money from the business to live on, those are considered "draws" not wages, and you'll pay self-employment tax (15.3%) on your net business income. Make sure you're setting aside enough for those taxes - they can be a shock if you're not prepared!

As someone who's been in the cleaning business for 10+ years, I'd suggest focusing on your business growth now and not worrying about complicated tax strategies like S-corps yet. In the beginning, the simplicity of partnership taxation (which is what your LLC has by default) outweighs the potential tax savings. Just make sure you're tracking all your legitimate business expenses - cleaning supplies, equipment, vehicle mileage, home office deduction if applicable, insurance, marketing costs, etc. These deductions will reduce your taxable income and self-employment taxes.