Mark Kohler explains how sole proprietors file taxes on Schedule C and why the business structure alone doesn't save money. Self-employment tax hits 15.3%, and an LLC gives liability protection but no tax break. An S corporation conversion might help if you're making serious income.
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Foreign. It's that easy. I'm going to diagram this one more time. You've got your 1040. You're going to do a schedule C. And the schedule C is your small business. You're going to report all your income, 1099s or cash, any cost of goods, sold a product you may have bought, some of your services. So that's it. Then you're going to write off all your expenses. You're going to have a gain or a loss. It comes over here onto schedule one. And then on schedule one, it's on line three. Then it's got unemployment income and some other things, alimony, all sorts of little things that might come into play. Then whatever's left goes up here to line 8 on your 1040. That's it. Then you've got your adjusted gross income, which all the bankers want to know when you go borrow for a car or buy a home. Then you got your standard deduction or your itemized. And your standard deduction last year was $12,400 if you're single and then you have your taxable income. And if they withheld enough from your W2 or whatever, you might get a refund or you will. That's it. That's why I'm an accountant. I love it. Everything's added up in life. There's meaning to life. It all adds up. Either yo taxes, you don't. Don't you have closure now? I feel good. And life is complete. Donna says, what are sole proprietors? This is you. You are a sole proprietor. You are so provider. Now, is schedule C a schedule C? Could be a llc or it could just be you. Either way, you're a sole proprietor. See, that's cool, Donna, right? An LLC does not save you taxes, people. An LLC protects you. You got to watch my other video on S Corps and other strategies. But an LLC doesn't save you taxes. A tax that you might have here that sucks is called self employment tax. And I'll say this, okay, this is a side note, not for today's podcast or sorry, live broadcast. Whatever you netted, you pay self employment tax of 15.3%. Then it goes over here, then it goes over here, and then you pay state or federal income tax, state or fed. But the first tax you're going to pay is this dreaded self employment tax. If you're making more than 30 or 40 grand on your schedule C, I want you to go watch my video on when to convert to an escort. All right? Okay.
