taxes how to set up your self-employed business in TurboTax: in this video we’ll be showing you how to set up your self-employed business taxes in TurboTax.
Setting Up Your Self-Employed Business In TurboTax
Into TurboTax we go for setting up your self-employed business in TurboTax. It’s important to note that none of these features are available in the Free Edition, so if you are self-employed, you’re going to have to pay for TurboTax Home& Business or Self Employed!
I’m in the Mac version for TurboTax Home and Business. Now home and business is their desktop addition. Their Self-Employed is the online edition. Now this is a Mac. There is no difference between the Mac and PC software other than how it looks, but you have the same options. Of course with with a Mac, I have these options up here, whereas you actually have them in the software on a PC, but it’s the same thing. Everything’s the same!
So, the first step is to click this business tab and then click continue. Now, you can use all of this software through a “walk me through everything,” and the software will ask you questions it’s called the interview format, but I prefer to choose what I work on and then go through everything.
However, if you’re a bit nervous about taxes, doing the walk through everything is probably the best way to go. You may be answering “no” to a lot of questions, but you kind of have to do that anyway, so it may or may not save you time.
Right here business income and expenses click update. Do you have any income and expenses for your business?
*See all TurboTax coupons here!
Whenever You’re Paid for the Work You Do, You Have to File a Self-Employed Business
Remember, this applies if you just started a business and people paid you for work you do. Whenever you’re paid for work you do, you have to file a self-employed business, if you’re not paid as an employee. But, you also may have single member LLC, and that’s why a single member LLC is what I recommend doing for your business.
You get this the limited liability for legality purposes and you can treat your business like an actual separate business, (you have two for the LLC to exist) but, when it comes to taxes, things are much easier for you. If you do have a multi-member LLC or another type of business be sure to check out my other videos for multi-member LLC, partnership, S corp where i go through other tax softwares including turbo tax their Business Edition which is for separate entity returns.
*Related: WSJ $99 Subscription Offer!
Your Self-Employed Income is Filed on a Schedule C
When you’re self-employed your self-employed income and expenses are recorded on a Schedule C with your personal return, so this keeps things simple you cannot file your business separate from your personal taxes. So, they want to know about the name. If you file a DBA with your state, you should enter your business has a different name. If you’re an LLC your business has a different name, you can leave your home address, which is already on your return.
Now, they want to know if you started this business last year, or you stopped the business even if you just gave up the business, you would check “I sold or disposed of” and you see you can pick I disposed of it in these ways.
Ok, so I’m gonna leave this unchecked because it’s on the plight now one thing with TurboTax see we can’t uncheck this. You want to be careful with TurboTax because if you check off something or enter something you have to be sure to get it out of there if you change your mind on the question beforehand otherwise it can get stuck.
*Related: 9 Weird Tax Deductions
Do You Have an EIN (Employee Identification Number)
Do you have an EIN? you only need to enter that if you’re paying other people. If you have one you have to enter it here, but you don’t have to get one unless you’re an employer, as a single member LLC. A lot of lawyers will tack it on. Now, this is a business lookup code so you can search whatever your business does and choose whatever boat most matches your business
Otherwise you can just put 999 the miscellaneous code. Now, cash versus accrual basis: You will basically know if you use accrual. Cash means you record income when you receive it so in other words if someone pays you for a package that you’re delivering a service for over a period of time you’re not recognizing income over that time most self-employed people are cash basis it’s a lot more work to be accrual.
TurboTax: How to Add a Second Business
Now, that’s it. We’ve completed all of those questions. We’re in this business profile section and this page is a summary page so that completes setting up your business. I’m going to click “continue” and you can see what happens. See how you can add another business, so if you do different types of work for yourself, you could have more than one business, or if you and a spouse have different work.
So now just to show you we can go out I’ll choose what I work on and we can go back in and go back into this summary page and this is where we’ll add our income and expenses. Thanks for watching I’ll see you in the next video where we’ll be going through income and then expenses then assets and depreciation and other issues!
Checkout Business Finance Coach on YouTube!