Side project · Projects

How do you handle the business structure and taxes of side projects?

Nikola Aleksić QA Tester

November 23rd, 2016

For those of you with income generating side projects, have you incorporated? Do you pay quarterly taxes? Do you list it as other, unreported income on your returns?

Roy EA Helping Clients Build Products, Processes, & Profits| Adjunct Chief Financial, Research, or Operations Officers|

November 24th, 2016

Scott,
Your business cannot POSSIBLY be incorporated and then be part of your taxes. Perhaps, you meant to say you formed an LLC and as a sole owner, it is a disregarded entity.  That is the only way one can list a state established business entity on a Schedule C.
Which is a valid way for Nikola to handle his situation.  
But, both of you have to understand that your net profits are subject to both income tax and employment tax.  Depending on you tax bracket, the employment taxes can be a multiple of your income taxes due.
Moreover, you need to have business records.  if you are small enough, Excel may suffice.  Quicken Home and Business is better.  Xero may be best.
Check out my blog, cerebrations.biz, seeking out startup, LLC, business structure, for more complete expositions.   You can also check out  http://www.urcfoishere.com/monthly.html for assistance.

Scott Winterroth

November 23rd, 2016

My side business is incorporated but it's still through my personal taxes as a Schedule C. I file the business along with my W2 from my full-time job. Not sure if this is the best way but it is what I figured out.