What is the income threshold where you don't have to file taxes for a small business?

Wait really? So there's no minimum threshold at all? What if I only made like $50 from selling something random online once?

The threshold is $400 in net profit from self-employment. So if you only made $50 selling something random online once, and that wasn't part of a regular business activity, you technically wouldn't need to file based solely on that income. But remember, net profit means income minus expenses. So if you had $1,000 in sales but $700 in legitimate business expenses, your net profit would be $300, and you wouldn't hit the $400 threshold.

Does it actually work for home-based businesses? I run a small photography business on weekends and I'm never sure what I can write off for the part of my apartment I use as a "studio.

I'm always skeptical of these AI tax tools. How does it compare to something like TurboTax for small businesses? Does it actually give you advice specific to your state?

Yes, it absolutely helps with home-based businesses! It walks you through calculating your home office deduction based on the percentage of your home used exclusively for business, and even tells you what documentation to keep in case of an audit. As for comparing to TurboTax, it's actually different - it's more like a tax consultant that explains your specific situation before you even start filing. It includes state-specific guidance too, which was super helpful since my state has some weird additional filing requirements. It ended up saving me way more than I expected.

Wait how does this actually work? I thought the IRS callback system was internal only. Are they just sitting on hold for you or something?

This sounds like a scam. Why would I pay a third party when I can just call the IRS myself? And why would I trust them with my tax information?

They basically use their tech to navigate the IRS phone tree and secure a spot in line, then when they're about to reach an agent, they connect the call to your phone. So you get the direct call from the IRS without waiting on hold for hours. I was skeptical too at first, but they don't actually see any of your tax info - they just get you the callback and then you talk directly with the IRS agent. I was desperate after trying for days to get through on my own. When the IRS finally called me, it was an actual IRS agent and I handled everything directly with them.

Do you need to keep receipts for absolutely everything? I'm terrible at organizing that stuff and end up with a shoebox full of random papers every year.

Yes, you should keep receipts for everything business-related. The IRS recommends keeping records for at least 3 years after you file. I used to do the shoebox method too but now I just use a simple app that lets me take pictures of receipts. Also started using a separate credit card just for business purchases which makes it way easier at tax time. Digital receipts can be saved in a dedicated email folder - as long as they show the date, amount, and what was purchased, they count as valid documentation.

There's a lot of confusion about this. An LLC is just a legal structure, not a tax classification. By default, a single-member LLC is treated as a "disregarded entity" for tax purposes, meaning you still report business income on your personal tax return and pay self-employment tax. Your cousin with an S-corp is doing something different. An S-corporation allows you to be both an owner AND an employee. You pay yourself a reasonable salary (which has payroll taxes) and can take additional money as distributions (which avoid self-employment tax). But S-corps require more formalities like payroll processing, separate tax returns, etc. Usually not worth it until you're making at least $40-50k in profit.

ohh that makes sense. everyone acts like LLCs are some magic tax saving thing but sounds like they're really just for legal protection? thanks for explaining!