Starting a business is exciting, but taxes can be confusing. If you have a Single-Member LLC (SMLLC), here’s how it impacts your taxes.
What Is a Single-Member LLC?
A Single-Member LLC is a Limited Liability Company with one owner. It protects personal assets while keeping taxes simple.
How Are Taxes Handled?
The IRS treats an SMLLC as a disregarded entity, meaning:
- Business income and expenses go on Schedule C of your personal tax return.
- Profits are added to your personal income and taxed accordingly.
Do You Pay Self-Employment Tax?
Yes! As a self-employed individual, you pay 15.3% self-employment tax on profits, covering Social Security and Medicare.
Can You Save on Taxes?
Absolutely! Consider these strategies:
- Business Deductions – Deduct expenses like supplies, travel, and home office costs.
- Qualified Business Income Deduction (QBI) – You may qualify for up to a 20% tax deduction on your business income.
- Set Up Retirement Accounts – Contributing to a Solo 401(k) or SEP IRA can reduce taxable income while helping you save for the future. Retirement planning is especially important for self-employed individuals who don’t have access to employer-sponsored plans.
How Favored Financial Planning Can Help
At Favored Financial Planning, we specialize in helping business owners like you with tax planning, retirement investing, and financial strategies to grow and protect your wealth. We can help you:
- Maximize deductions and lower your taxable income.
- Set up and manage retirement accounts tailored to your business needs.
- Develop a long-term investment plan for financial security.
An SMLLC is a great way to protect your assets while keeping taxes simple. Understanding tax strategies can save you money—contact Favored Financial Planning for expert guidance on taxes, investments, and retirement planning! Call 336-422-6734 to schedule your consultation today!
