4 ms·
> 1. Have you incorporated? No I operate as a sole proprietor. > 2. Do you pay quarterly taxes? Nope, I pay the penalty since my income and ability to shelte
by up_and_up 10y ago
> 1. Have you incorporated?
No I operate as a sole proprietor.
> 2. Do you pay quarterly taxes?
Nope, I pay the penalty since my income and ability to shelter it vary from year to year. The penalty is something like 3% on the total taxes you owe. Not too bad given the flexibility holding your money provides. Maybe I can load up a i401K that year or need to save for some big purchase which is more valuable then just giving the IRS the money.
> 3. Do you list it as other, unreported income on your returns?
I file a Schedule C
I do it all using TaxAct. Super easy and cheap. Helped me to understand taxes as well.
- no_protocol 10y agoCan you share "how many zeroes" are in the income level of your sole proprietorship? Also, would love to hear what accounting processes any small businesses like this are using.
- up_and_up 10y agoIts a 4 zeros business. Decent side income from freelancing. Monthly invoicing using Freshbooks. End of year accounting using TaxAct. If things got any bigger or I went at it fulltime I would prob setup an LLC. But keeping taxes simple at this point is preferable since its just me. I have owned plenty of LLC's previously.
- pbnjay 10y agoFYI if your income varies throughout the year you can reduce the penalty (if it's worth the extra time to you). E.g. In the past I've gotten large checks in December which would have triggered penalty but I used Form 1120 Schedule AI and owed no penalty: https://www.irs.gov/pub/irs-pdf/f2210.pdf https://www.irs.gov/pub/irs-pdf/f2210.pdf