This is such a helpful thread! I'm a new single-member LLC owner (started my graphic design business 3 months ago) and was completely confused about the W9 situation. Reading through everyone's experiences has been really reassuring. I've been doing exactly what the original poster described - personal name on line 1, business name on line 2, using my SSN - but I was second-guessing myself when clients started asking questions about payment processing. It's good to know this is the correct approach. The idea of creating an educational document to send with W9 forms is genius! I'm definitely going to put together something similar. Has anyone found that getting an EIN later (even as a single-member LLC) caused any complications with existing client relationships, or is it pretty straightforward to transition mid-year if you decide to go that route? Also really appreciate the practical tips about invoice wording - small details like that can prevent so much confusion down the line.

Great thread! As someone who's been running a single-member LLC for 4 years now, I can confirm that all the advice here is solid. I wanted to add one more perspective that might help newcomers avoid some pitfalls I experienced. When I first started, I made the mistake of being inconsistent with how I presented my business information to different clients. Some got W9s with just my personal name, others got the full LLC setup, and it created a mess during tax season. The key is consistency - pick one approach (personal name + business name + SSN like you're doing) and stick with it for ALL clients. Also, I've found it helpful to have a brief conversation about payment processing during the initial client onboarding. I explain upfront that I'm a single-member LLC taxed as a sole proprietor, so payments can go to either name, but the important thing is using the correct tax ID. Most clients appreciate the transparency and it prevents awkward conversations later when they're trying to cut checks. One last tip: keep really good records of which clients paid using which name format. Even though the IRS systems can handle it, having your own documentation makes tax prep much smoother and gives you confidence if any questions come up later. A simple spreadsheet tracking client, payment method, and name used has saved me hours during tax season.

Great question about depreciation! One important thing to add - since you purchased the property in November 2024, you'll need to use the mid-month convention for your first year of depreciation. This means you can only claim 1.5 months of depreciation for 2024 (November counts as a half month, plus December). So instead of a full year's worth, you'd calculate your annual depreciation amount and multiply by 1.5/12. Also, keep detailed records of when you move out completely and convert to 100% rental use. The IRS considers this a "change in use" and you'll need to document the exact date for your depreciation calculations going forward. Take photos showing the property is ready for rental and keep records of when you start advertising or get your first tenant - this helps establish the conversion date if you're ever audited. One more tip: consider getting a professional appraisal that breaks down land vs building value. It's worth the cost for a $1.35M property to ensure you're maximizing your depreciable basis correctly.

Don't forget about the Section 199A deduction (QBI deduction) for rental real estate! Since you'll be operating a rental property business, you may qualify for up to a 20% deduction on your rental income. However, there are income limitations and the property needs to qualify as a "trade or business" rather than just passive investment activity. To qualify, you'll generally need to spend at least 250 hours per year on rental activities (advertising, maintenance, tenant screening, etc.) and keep detailed records of your time. Given that you're doing renovations and actively managing the property conversion, you're likely already meeting the activity requirements. Also, since you mentioned this is a high-value property in a presumably good area, consider whether you'll hit the income phase-out limits for the QBI deduction. The deduction starts phasing out at $191,950 for single filers in 2024. If your total income is above this threshold, the deduction calculation becomes more complex but could still provide significant tax savings. This deduction can be substantial - on $50k of rental income, it could save you up to $10k annually in taxes if you qualify fully. Definitely worth discussing with a tax professional alongside your depreciation strategy!

I switched from S-corp back to Sched C last year. For me it was a no-brainer since I only made like $35k profit and was paying almost $2k for tax prep plus that $800 CA fee. My accountant showed that I was LOSING money with the S-corp structure at my income level.

The threshold question is really key here. From what I've seen with my own consulting business, the S-corp structure typically becomes worthwhile when you're consistently hitting $40k+ in profit, but it also depends heavily on your state fees and accounting costs. At $30k profit, you're right on the borderline. The self-employment tax savings could be around $1,500-2,000 annually if you structure the salary/distribution split correctly, but that California $800 fee plus professional tax prep costs can easily eat into those savings. One thing to consider is the trend of your business - if you expect to grow beyond $40k profit in the next year or two, it might be worth keeping the S-corp structure in place. Converting back and forth between entity types can be more costly and complicated than just maintaining the structure through a lower-profit year. Have you calculated your total annual costs for maintaining the S-corp (state fees, accounting, payroll processing if applicable)? That's really the number you need to compare against your potential self-employment tax savings to make this decision.

This entire discussion has been incredibly enlightening! As someone who's been collecting unemployment for the first time this year, I was completely confused about how it affects my tax credits. I had no idea that unemployment benefits don't count as earned income for EIC purposes - I honestly thought all income was treated the same. Reading through everyone's experiences and explanations really helped me understand that the IRS makes a clear distinction between money earned from actual work versus benefits received when you can't work. I was worried I wouldn't qualify for any credits since I was unemployed for several months, but now I realize that my earnings from the beginning of the year before my layoff should still qualify me for EIC. I'm definitely going to follow the advice about double-checking the EIC worksheet in my tax software to make sure it's only counting my W-2 wages and not including my unemployment compensation. It's reassuring to know that even in a difficult year with job loss, there are still tax benefits available to help families get by. Thanks to everyone who shared their knowledge and experiences - this community is incredibly helpful for navigating these confusing tax situations!

This has been such a comprehensive discussion! As someone who works in tax preparation during filing season, I see this exact confusion come up constantly. What I find helpful is explaining to clients that the IRS essentially has different "buckets" of income for different purposes. For the Earned Income Credit, they're very strict about what goes in the "earned income" bucket - it has to be compensation you received for actually working. Unemployment compensation, even though it's taxable, goes in a different bucket because it's a government benefit program, not payment for services performed. Beatrice, your instinct was absolutely correct to question your tax software. While most modern tax programs handle this correctly, it's always smart to verify. With your $16,500 in wages and two qualifying children, you should receive a substantial EIC - likely in the $5,000+ range based on current tables. One final tip for everyone: if you're ever unsure about these distinctions, Publication 596 from the IRS has detailed explanations and examples of what counts as earned income for EIC purposes. It's surprisingly readable for an IRS publication and can help you feel confident about your calculations.

I'm in a similar situation with a shared apartment but hadn't thought about the exclusive use requirement that Sofia mentioned. Since you mentioned the second bedroom is "exclusively used" for your business, make sure you can truly prove that if audited. One thing I'd add to the great advice already given - keep detailed records of everything. Take photos of your office setup, save all rent receipts, and document that 13% square footage calculation with measurements and a floor plan sketch. The IRS loves documentation, especially for home office deductions. Also, double-check your state tax rules too. Some states have different requirements or don't allow the federal home office deduction, so you might need to calculate things differently for state vs federal returns. For your van parking expense, definitely keep that separate on Schedule C as others suggested. That $125/month adds up to $1,500 annually, which is a solid business deduction you don't want to dilute by mixing it into your home office calculation.

One additional consideration for your situation - since you're splitting rent 50/50 with your partner, make sure you're clear on who can claim what if your partner also works from home or has any business use of the apartment. Only one person can claim the home office deduction for a specific space, so if there's any overlap in business use areas, you'll need to coordinate to avoid both of you claiming deductions for the same square footage. Also, keep in mind that if you ever move or your living situation changes, you'll need to recalculate everything based on your new space and rent amounts. The 13% calculation is specific to your current apartment layout and rent split. For record-keeping, I'd recommend creating a simple spreadsheet tracking your monthly rent payments, the calculated office percentage, and your van parking expenses separately. This makes it much easier when tax time comes around and you need to total everything up for the year. Plus having organized records like this can be a lifesaver if you ever face an audit. The advice about checking state tax rules is crucial too - some states like New York have specific limitations on home office deductions that differ from federal rules, so definitely verify what applies in your state.