When people start throwing terminology around like LLC and S-Corp, it can feel like being a business involves speaking a new language, not to mention filing a bunch more paperwork.

The truth is, you don't have to have any special structure or paperwork at all to be a business. It's actually much simpler than that—if you are earning money for work you do, or things and services you sell, and that money isn't being taxed before it gets to you, then most likely you're self-employed. And if you're self-employed, you're a business!

Some folks make small amounts once in a while on the side with their hobbies, but if your goal is to make a profit with the untaxed money you're earning, that's the thing that typically means you're operating a business, not whether you have a corporate structure or not.

Even if your profits are small, it's good to be clear that you're running a business because that opens up the possibility of taking into account the cost of running your business—i.e. your business expenses. Profit is the money you earn minus the money it costs you to keep your business going. And businesses only pay taxes on the profit, not everything that comes in.

Have more questions about how you earn your money and what that means for your taxes? Ask your tax preparer or email info@brasstaxes.com to get the best advice for your situation!