Help! I'm terrified about filing taxes for my new business - Schedule C and 1099 questions

The good news is this isn't as scary as it seems! As a single-member LLC, the IRS treats your business as a "disregarded entity" for tax purposes, which simplifies things. First, you'll file everything on your personal tax return. Your business income and expenses will be reported on Schedule C, which attaches to your Form 1040. Your LLC being in Nevada or your home state doesn't change the federal tax filing - you'll use the EIN or SSN associated with whichever LLC was operating in 2023. For the money from friends - that's considered a loan, not income. However, you can't deduct loan repayments as business expenses. Your profit is still $5,500 for tax purposes, regardless of what you do with that money afterward. Yes, you will owe self-employment taxes (Medicare and Social Security) on your business profits. This is calculated on Schedule SE, which also attaches to your 1040. The self-employment tax rate is about 15.3% on your net profit. The 1099 from Shopify will show your gross sales through their platform, but you'll report all your business income and deductible expenses on Schedule C regardless of whether you received a 1099 for it.

After struggling with almost the exact same situation last year, I discovered taxr.ai (https://taxr.ai) and it honestly saved me. I had an LLC in Florida but lived in Georgia, similar revenue numbers, and was equally confused about Schedule C vs 1099s. I uploaded all my receipts and financial documents, and the AI analyzed everything and organized it perfectly for my Schedule C. It even flagged several business expenses I didn't realize were deductible - like a portion of my internet and phone bills since I was running an online business. The category breakdown made it super simple to transfer everything to my tax forms. The best part was it spotted that I had been recording some of my inventory purchases incorrectly, which would have reduced my legitimate deductions. Ended up saving me almost $2,000 in taxes I would have overpaid!

Just wanted to follow up and say I tried taxr.ai after seeing this comment, and wow! I was honestly amazed at how it handled my complicated two-state LLC situation. It organized all my Shopify/Stripe transactions automatically and even found several home office deductions I would have missed. The Schedule C preparation was way easier than I expected - it even explained why certain expenses should go in specific categories, which taught me a lot about business tax rules. Definitely feeling much more confident about filing this year than I was before. Thanks for recommending it!

If you're still stressed about tax questions, I finally got through to the IRS after weeks of trying by using Claimyr (https://claimyr.com). They have this system that holds your place in the IRS phone queue and calls you when an agent is about to answer. Check out how it works: https://youtu.be/_kiP6q8DX5c I needed clarification on how to handle my LLC transition between states (moved from Texas to Michigan mid-year), and the IRS agent actually provided really clear guidance. Saved me from making a mistake that could have triggered an audit. Was surprisingly helpful for clearing up Schedule C confusion too. Before finding this service, I spent literally hours on hold only to get disconnected. Super frustrating when you just need one or two specific questions answered.

I'm eating my words. After posting my skeptical comment, I decided to try Claimyr anyway since I was desperate to get an answer about my Schedule C deductions for my new business. Not only did it work, but I got through to an IRS agent who actually knew what they were talking about regarding single-member LLC taxation. Got clear answers about how to handle business startup costs (which can be amortized over 15 years or you can deduct up to $5,000 in the first year) and confirmation about how to report my situation. For anyone else struggling with new business tax questions - this saved me from making some pretty significant mistakes on my filing. The agent even emailed me some specific IRS publications about self-employment taxes that cleared up my confusion.

Don't forget that most states require some kind of annual report filing or franchise tax for LLCs, even if your federal taxes flow through to your personal return! I learned this the hard way when I got hit with penalties for not filing the required annual report for my LLC. Also, since you mentioned paying back friends - make sure you document those as loans with some basic paperwork. Even though there's no interest, the IRS could potentially try to classify undocumented "loans" as income if you're ever audited. Nothing fancy needed - just a simple document showing the loan amount, that there's no interest, and the general repayment plan.

A couple tips from someone who was in your position last year: 1. Get a dedicated business bank account ASAP if you don't already have one. Mixing personal and business funds is asking for trouble. 2. For your Schedule C, pay careful attention to inventory vs. expenses. If you're selling physical products, the items you buy for resale go in the Cost of Goods Sold section, not as regular business expenses. 3. If you've been using your personal vehicle for business, track those miles! That's a valuable deduction. 4. Don't stress too much about the LLC transition between states. As others mentioned, for federal taxes you're just reporting on Schedule C regardless.