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Thread: Confused about how taxes work for a small business at age 19

  1. #1

    Default Confused about how taxes work for a small business at age 19

    (sorry for my ignorance in advance) one of my friends and I of my good friends have recently started a business we filed for an LLC and opened a business bank account but we haven't got farther than that
    we are just extremely confused on what taxes we need to file for and if we even need to file income tax through the business and how paying ourselves works if someone could break it down for us it would be EXTREMELY appreciated
    we are in Minnesota if that helps

    thanks in advance
    Last edited by andrewk; 10-25-2018 at 05:00 AM. Reason: typo

  2. #2
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    The easiest, and best solution, is to get an accountant involved.
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    I think you must need an accountant because accountant have enough knowledge about taxes, we need to file or he guiding very-well for how we save the tax.

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    I think you need an accountant as well but in a nutshell

    An LLC and an S corp are both pass through entities. The income (or loss) from either of those passes through to your personal taxes. You need to pay estimated taxes and your wages are taxable and you file them as if you were an employee of the LLC which you are. You can pay the estimated taxes from the corporate account so you are not stuck with them individually.

    There are some tax benefits. As long as you are paying yourself a reasonable wage you can pull profits from the corporation tax free. That is because you already paid taxes on that profit. You accountant can discuss this in more detail.
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    I agree with the above. Things will depend on your state and their rules. For instance my state has no income tax. One of 3 that I know of.
    Best to contact someone who knows them.

    Some free resources that you may look into:

    Many areas have free tax advice, or hotlines that you can call and ask questions. For an LLC you probably want to look for any state free resources. They all generally have some kind of advice for business owners and have probably emailed you some resources when you set up your LLC.

    If you have a local SCORE office you can get help from the volunteers there.
    https://www.score.org/

    Call the IRS directly and ask. They can be very helpful and honestly, pretty nice about it.
    https://www.irs.gov/businesses/telep...ness-customers

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