Guides

Yes, usually: most cities and counties require a general business license even for fully online businesses, typically $25-$100 per year. State-level and industry-specific licenses depend on what you sell and where you operate.

By default, a single-member LLC is a disregarded entity (report on Schedule C of your 1040), while a multi-member LLC files Form 1065 and issues K-1s to members. Either can elect S-corp or C-corp taxation instead.

Nexus is a connection to a state that triggers tax obligations there. Physical presence (you, an office, inventory, even a remote employee) creates it instantly; economic nexus comes from sales volume — commonly $100,000 or 200 transactions.

Licensing depends on what you do, not what you call yourself. Coaching and consulting are largely unlicensed, but giving specific financial, legal, medical, or nutrition advice can cross into licensed-practice territory with real penalties.

Whether you collect sales tax on digital products depends on each state's rules and whether you have nexus there — typically $100,000 in sales or 200 transactions. About 30 states tax digital goods; rules for SaaS and online courses vary widely.

To claim the home office deduction, you must use part of your home regularly and exclusively for business. Choose the simplified method ($5 per square foot, up to 300 sq ft) or actual expenses (a percentage of rent, utilities, insurance) on Form 8829.

To close a business legally: vote/decide to dissolve, file Articles of Dissolution with your state, settle debts and notify creditors, cancel licenses and permits, file final federal and state tax returns, and close your EIN account with the IRS.

An EIN is free directly from the IRS at irs.gov — the online application takes about 10 minutes and issues your number immediately. Never pay a third-party service for one.

If you expect to owe $1,000+ in tax, the IRS requires quarterly estimated payments due roughly April 15, June 15, September 15, and January 15. Pay 100% of last year's tax (110% if AGI over $150k) or 90% of this year's to avoid penalties.

Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare) on 92.35% of your net self-employment earnings, reported on Schedule SE. You deduct half of it on your 1040, and an S-corp election can reduce it at higher profit levels.

You can deduct expenses that are 'ordinary and necessary' for your business: software, equipment, marketing, professional services, business insurance, education, travel, a portion of meals, and more — documented and reported on Schedule C.

Most solopreneurs start as a sole proprietor or single-member LLC, then elect S-corp status once net profit consistently clears $80,000. C-corps mainly make sense if you plan to raise venture capital.