Description

The IRS calls your single-member LLC a “disregarded entity,” which sounds insulting but really just means your business income goes on your personal return via Schedule C. Simple enough in theory. In practice, this is where a lot of solo business owners get blindsided.

Here’s the thing most people don’t calculate until April: you owe self-employment tax on top of your regular income tax. That’s 15.3% of your net profit for Social Security and Medicare. W-2 employees never think about this because it’s withheld automatically. You have to plan for it yourself, and if your deductions aren’t dialed in, the bill hurts.

The IRS also audits Schedule C filers more often than corporations. Makes sense from their perspective: it’s easier for a sole proprietor to blur the line between personal and business expenses. Get caught doing that and you’re looking at back taxes, interest, and a 20% negligence penalty.

And there’s the quarterly payment issue. The IRS expects you to pay estimated taxes four times a year using Form 1040-ES. Wait until April 15 to pay everything and you’ll owe an underpayment penalty even if you have the money ready.

What This Service Does:

Your full 1040 with Schedule C, categorized correctly. Self-employment tax calculation including the deduction you get for the “employer half.” Depreciation decisions on equipment and vehicles (whether to take bonus depreciation now or spread it out depends on your situation). Home office and vehicle deductions, where the tax professionals Digital Ascension Group works with will run both methods to see which saves you more. State returns, including non-resident filings if you worked across state lines, they can also set up your quarterly vouchers for next year so you don’t get hit with penalties again.