Tax Talk 2021
Good Morning! I'm in a great mood, i'm at the Brass Tacks Coffee in Fruit Cove Jax, listening to the new The Weekend album Dawn FM (fun dance synth pop!). This week I got the booster, got sick, did my taxes, broke my car, then got great news! Our permits are approved by the city! and we can begin construction next week! So we'll talk more about that next weekend.
This week I want to outline our taxes as a $0 income business in 2021
Exciting I know, and they aren't too different than if we had paid wages. The IRS and State want a lot of the same stuff for reporting purposes. After all, the .gov doesn't know what you've been up to since registering as a business.
Keep in mind I'm not a tax professional.
Even though I have worked two years in a job where I helped people file corporate taxes. As a rule of thumb when searching for tax info online, you should always make sure that it lines up with the IRS instructions on their website. Usually it's easy to google something, get an answer, then google that answer and find an IRS link that confirms it.
Paying Non-Employees.
People we did pay this year were contractors, and non-employees like architects and builders. Those we paid over $600 to need a 1099-NEC for "non employee compensation." There are a few different types of 1099's, you may have even received one without your own registered business for doing stuff like uber driving or designing a website, they're not too uncommon.
You'll need to request a W9 from your non-employees which have their basic tax info, then you can use that to fill out their 1099, send one to the IRS and one back to the non-employee.
Paying Employees
We had no employees, meaning they didn't fill out any I9's (proving they're registered to work in the US) or W4's (explaining their filing status). So we're not filing W2's this year! Sweet!
Reporting Employee Taxes
Despite not having any employees this year we still need to file the 941 to report quarterly income, social security, and medicare taxes that would normally be withheld from employee paychecks. We did this last quarter too and it's basically zero'd out for the fields that do apply to us.
We also had to file a zero amount for our annual 940 (FUTA) form for reporting federal unemployment taxes, and the state equivalent SUTA or FL reemployment tax.
Reporting our LLC taxes
To report our taxes as an LLC with a couple members we filed the 1065 (US return of partnership income). This declares our profits, losses and deductions. We had no profits but since we paid rent for our building we did have that as a deduction. Which hey, translated to a bigger return on our personal incomes.
As part of this form we also filled out a 1125-A to report cost of goods sold, meaning cost of inventory and labor. We filled out a Schedule B to opt out of an audit for LLC's with over a hundred members (we have, two). We filled out K-1's which are sort of a W2 equivalent for partnerships and break up the LLC's income and loss as it applies to individuals. I had to fill out like 7 K-1's in total by hand to attach to a few different forms.
We then filled out some state returns like the 1065 equivalent F-1065, and the first quarterly report on DR-15 for our sales and use tax. For most people FL does not have a state income tax so that was nice. I still need to submit our Reemployment return, that was one I assumed was not required since we had no employees but the state mailed me asking us to anyways.
I did this all by hand, and it ended up being about 30 pages. It took weeks, but it was totally doable.
I'm hoping this is helpful to someone
One of the most common responses I get when I say I'm working on opening a coffee shop is, "oh I want to my own coffee shop one day" or "I want to open another business where I do X one day."
And I want everyone to make that happen! If you put in some time, anything is possible, taxes are just another obstacle. Again just reference the IRS website. You can do it~!
Thanks for reading, have a great weekend! - Elias
