I created an LLC a couple of years ago and put the business to the side for a while. I am about to begin the process with it and had some tax questions.

This business will most likely always be a side gig for me, so I will probably pay out most of the income to myself.

The main things I am unsure of are:

-how do I report/pay states sales tax?

-how often do you have to pay federal income tax and how does this work? For a business like mine which will be paying out almost all monies to the owner is the income tax based on the amount received in sales or net income/loss? Do I have to pay tax on the income I am giving myself as the business? As an independent person this income is just like any employer income, right?

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    These sound like questions for your accountant, not The Workplace. – dwizum Jun 5 '19 at 17:57
  • Sorry I didn't know that tax questions were not valid on that forum. – Paul Jun 5 '19 at 18:03
  • Check out quickbooks.intuit.com/r/taxes/… for a good summary. – Jay Jun 5 '19 at 18:22
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    You might also try freelancing.stackexchange.com Likely some more first-hand experience there. – Jay Jun 5 '19 at 18:33
  • money.stackexchange.com might also be a good place to post for more information on taxes in this situation. – Upper_Case Jun 5 '19 at 18:41

Assuming you're in the US since you said LLC.

I'd recommend bringing your records to an accountant who can help you prepare your next tax return and decide if you need to amend any previous returns.

Sales tax can be very complex given you likely have a liability to the state, county, city, and other municipal units. A business tax accountant can help you determine what the rules are depending on where and how you generated revenue.

The income tax you owe, thankfully, is less complex. As an owner of an LLC in the US, you'll include your share of the LLC's income in your personal tax return. Again, a tax accountant can best guide you.

You can expect to pay $300-1000/year for help from a CPA to file your tax returns -- it is a well-earned fee, however -- tax laws in the US are very complex and you should do your best to be in compliance. An experienced CPA may also be able to advise you on ways to reduce your total tax liability.

To directly answer your question:

-how often do you have to pay federal income tax ... ?

At least annually (as part of your personal tax return) but it could be more often depending on how much income your business earns and the nature of the earnings. A CPA or lawyer that serves startups will know best.

Congrats on being a business owner!

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    Thank you. Yes, I am in the US - OH. I do not have any current tax liabilities as I do not have any sales yet. I wanted to figure this out first. My business is a marketing/web design agency. So I provide a service and digital product. Also I am a sole-proprietorship. – Paul Jun 5 '19 at 18:22
  • Ah - thanks. Good on you to get ahead of the issue. LLCs and proprietorships are different legal classifications of entities, but largely behave the same way for taxes. You might consider incorporating as an LLC, in which case, the lawyer that helps you incorporate could also offer guidance on handling your taxes. – Jay Jun 5 '19 at 18:26
  • Sorry I am confused. I am an LLC, but am the only owner. Is there a difference in what you are saying? – Paul Jun 5 '19 at 18:29
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    I filed it with the state or fed, I forget. I followed the steps I found online. I have my forms/certificates for it. File Articles of Organization....Create an LLC Operating Agreement – Paul Jun 5 '19 at 18:36
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    Thanks for the help Jay. – Paul Jun 5 '19 at 18:42

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