Episode 147: Answering your tax and business classification questions

On this episode of the podcast I share the answers to the questions asked on the Friday Live in my Facebook group Braden's Besties

This episode is brought to you by my FREE Tax Challenge. Taxes suck but we all have to file them. I'll walk you through the 5 steps you need to get your tax documents organized and ready to file. Sign up for this free challenge.

Today on the podcast I'm mixing it up. Instead of our usual Tuesday podcast where I answer only one question from my Facebook group, I'm going to be sharing an audio version of my Friday Facebook Live where I answer several questions from Facebook group members like you on anything from specific contract questions to questions about my programs.

Here are this week's questions:

1. If my business was formed as an S Corp but I want to change it to an LLC, what do I need to do? - submitted by Jenny You will need to send in a statement of revocation and also an entity classification election form (IRS form 8832).

2. I wanted to add a clause to my contract about Notification and was going to use this: NOTICE All notices, requests, claims, demands and other communications between the parties shall be in writing. All notices shall be given (a) by delivery in person, (b) by a nationally recognized next day courier service, or (c) by first class, registered or certified mail, postage prepaid, to the address of the party specified in this Agreement or such other address as either party may specify in writing. Such notice shall be effective upon (a) the receipt by the party to which notice is given, or (b) on the third day following mailing, whichever occurs first. Notice may also be given by electronic mail. Such notices shall be effective upon receipt of a written acknowledgement by the party to which notice is given. My concern is the last part about the email notification & the fact that it's only effective if the person acknowledges with a written reply, which folks don't always do. Is there a way around this or better wording? Can I just say that it's effective a day after sending it to an address specified in writing? - submitted by Nikeva This is a pretty wordy clause. Typically in a contract we say there are certain things that require written notice - you want to cancel the contract, amend the services, etc. It's okay to tighten the wording. Check out unfuckyourcontracts.com for additional help with setting up contracts and wording.

3. Tax question - I started my LLC in December. I didn’t acquire a client until January. So, for taxes this year...(I’m sorry to say this but I’m using TurboTax at the moment) but I only had expenses in December. Should I hold them or put them in because of the loss? Because I can’t claim income for last year for the LLC. - submitted by Amanda You still want to file a Schedule C. When TurboTax asks other forms of income you will say you have a business and list your expenses. You still want to report your expenses even if your business did not make profit. Check out my free Tax Challenge for more info on how to prepare to file your taxes.

4. As a florist would I count the flowers I have purchased in 2020 as inventory on the schedule c form? - submitted by Gaby Check out Episode 125 of the podcast where Keila Hill-Trawick and I discuss the difference between cost of goods and expenses.

5. Purchased number of wedding items in 2020 but I used only 2 of the 5 I purchased. To report on my business taxes, do I report all 5 items I purchased or only report the 2 I’ve used and wait until I use the remaining 3 and report them on my 2021 taxes? - submitted by Hebah Check out my podcast next week where I talk to my friend Amy who is an expert on use tax.

6. Does an instructor need to form an LLC if they plan to have only one online course? - submitted by CE It has more to do with the type of business you have and not how many course offerings you have. An LLC is never a bad idea for extra layers of protection. Check out my free training

7. I have to file my first estimates and this is my question. When using the EFTPS(electronic fed payment) do I set up to pay as the biz/LLC entity or an individual? I have the EIN so thought I set up biz to pay estimated taxes/quarterly reports but then froze. Same with state estimated taxes. Thanks-just have to work these kinks out. (My last biz was CCorp/SCorp and I was all set right with Quickbooks and the structure of paychecks and direct pays on this stuff). Don't want to mess this up and have the IRS knocking! - submitted by Keri You can go through the individual payments, not EFTPS. You can pay through your social security number. More here on how and when to pay quarterly taxes.

Join the Braden's Bestie's Facebook group to have your questions answered on the podcast.