Made your first dollar online?
Ready to make things "official"?
You're in the right place.
Below are three curated resources to help you make sense of this exciting time:
1) Should my solo business be an LLC?
As a sole proprietor, you can write off business expenses against your business income (which lowers your taxable income) just like you can with an LLC. You can legally receive payments, report the income, and write off expenses.
Essentially, being a sole proprietor is a valid way to do business as a solo creative.
But there are times when it makes sense to form an LLC to support your growth..
2) How do I get a business bank account?
3) How tax write-offs actually work
A tax write-off (aka tax deduction) is an expense that you can use to lower your taxable income.
A real life example: If you made $80,000 last year as a freelancer and you had $15,000 in eligible business expenses, you would be able to “write off” that $15,000 against your taxable income ($80k), so that you’d only owe taxes on $65,000.
Once you understand what they are, tax write-offs are relatively straightforward.
For an expense to qualify as a write-off, the IRS states that it must be ordinary and necessary for your business.
Unfortunately, that means you can’t write off a year’s worth of DoorDash deliveries to your home office 🚗
For small businesses, common write-offs include:
(Bonus) Can I write-off expenses without having an LLC?
Short answer: Yes
Long answer: Yessss
As a sole proprietor, if you receive business income, you’ll report the income on IRS Form 1040 (Schedule C). If you have business expenses to deduct, they will be included within that Form 1040.
