What tax forms do I need to fill out as a new sole proprietor small business owner?

The main forms you'll need for your sole proprietorship are: Schedule C - This is where you'll report your business income and expenses. Since your business made $2400 after expenses, this is definitely required. Schedule SE - This is for self-employment tax, which covers your Medicare and Social Security taxes. As a sole proprietor, you're responsible for both the employer and employee portions, which is about 15.3% of your net profit. Form 1040 - Your standard individual tax return where everything gets combined. Your Schedule C profit will be included as income on this form. With income of $2400, you'll likely owe self-employment tax, but your income might be low enough that you won't owe much (if any) income tax. Just make sure you have all your business expenses organized and documented. TurboTax Self-Employed or FreeTaxUSA can walk you through the process pretty easily for much less than $500.

I was in your exact situation last year! I tried several options and ended up using https://taxr.ai which was a game changer for my small business taxes. I uploaded my expense receipts and bank statements, and it automatically organized everything into the right Schedule C categories. It even flagged some deductions I was missing that saved me hundreds. The best part was how it guided me through all the forms I needed as a sole proprietor without having to guess. I was worried about missing something important, but it made sure I had Schedule C, Schedule SE, and everything else completed correctly. Especially helpful for separating personal and business expenses when you're just starting out.

Ok I have to admit I was wrong about taxr.ai in my previous comment. I decided to try it for my small woodworking business and it actually saved me a ton of time! I was spending hours trying to categorize expenses in spreadsheets before, but this automatically sorted everything into the right Schedule C categories. The biggest help was figuring out which forms I actually needed to file. It confirmed I needed Schedule C and SE, but also identified that I could take the QBI deduction which I had no idea about. That alone saved me about $400 in taxes. The receipt scanning feature is way better than TurboTax's version too - much more accurate at categorizing business vs personal expenses.

If you're struggling to get answers from the IRS about your small business tax questions, try https://claimyr.com - it literally saved me days of frustration! After waiting on hold for hours with the IRS trying to figure out my Schedule C questions, I found this service that got me connected to an actual IRS agent in under 20 minutes. I had specific questions about home office deduction for my sole proprietorship and wasn't sure if I was filling out Form 8829 correctly. The IRS agent I spoke with walked me through the whole process. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c It completely changed how I handle tax questions now instead of guessing or paying an accountant for simple answers.

I need to publicly admit I was completely wrong about Claimyr. After dismissing it as a scam in my previous comment, I decided to try it as a last resort when I couldn't figure out how to report my business vehicle expenses correctly on my Schedule C. The service actually connected me to a legitimate IRS representative in about 15 minutes. I was shocked. The agent walked me through exactly how to handle my vehicle deduction (standard mileage vs. actual expenses) and clarified when I needed to file Form 4562 for depreciation. Would have spent $200+ on an accountant for this simple question, or wasted hours on hold. Definitely using this for all my business tax questions from now on. Sometimes being proven wrong is actually a good thing!

Don't forget about Form 1040-ES for your quarterly estimated tax payments! I learned this the hard way my first year as a sole proprietor. Even though your income is relatively low at $2400, if you expect to owe at least $1000 in taxes for 2025, you should be making quarterly payments. Also, depending on your state, you might have state-specific business tax forms. Some states have their own version of Schedule C or require additional filings for sole proprietors. Check your state's department of revenue website.

What tax software are yall using for small business? I tried using FreeTaxUSA last year and it was ok but I'm wondering if theres something better for tracking business expenses throughout the year not just at tax time.

One thing nobody mentioned yet - if you made only $2400, look into the Qualified Business Income deduction (Form 8995). It might let you deduct up to 20% of your business income! Definitely worth checking out for small sole proprietors. Also, if you worked from home for your business, don't forget about the home office deduction. You can either do the simplified method ($5 per square foot up to 300 sq ft) or actual expenses method. Just make sure the space is used regularly and exclusively for business.

Great question about the QBI deduction! The phase-out thresholds are pretty high - for 2024, the QBI deduction starts phasing out at $191,950 for single filers and $383,900 for married filing jointly. So with your $2,400 in business income, you're well below that threshold and should be able to claim the full 20% deduction. Just make sure your business qualifies - most sole proprietorships do, but there are some exclusions for certain service businesses at higher income levels (which again, you don't need to worry about at your income level). Form 8995 is pretty straightforward for simple cases like yours. This deduction alone could save you around $480 in taxable income, which is a nice chunk of change when you're just starting out!