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sr_erick
Senior Member
USA
1318 Posts |
 Posted - 20 July 2004 : 22:42:45
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What do I have to do with all of this tax stuff??? I'm planning on selling email addresses, clothing, and other things on my website this coming season and I was told I need to register for a business tax ID (USA of course) because I was going to be collecting state sales tax. I think this is the proper website for my state. http://www.taxes.state.mn.us/taxes/index.shtml Is it a hard process?? What's all involved then when I file my taxes? I guess this is why I get someone else to do taxes for me.  Complicated things! |
Erick
Snowmobile Fanatics
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Panhandler
Average Member
USA
783 Posts |
Posted - 20 July 2004 : 23:29:29
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I've had a TIN for so long that I don't remember how I got it.
However, the people at H&R Block Premium (for businesses) are very helpful and will give you some free time.
In fact, many CPA offices will grant you free time to ask them questions - this can be very benificial to a start up business.
I strongly suggest that you stop by one of their offices and introduce yourself and ask if they have any advice, what their fees are and what they offer as resources.
There are several type of Tax ID numbers, including your social security number. But get a Employer ID number (called an EID and it can be used the same as a Social Security number or an ITIN.)
If your business takes off and you need to hire part time help, then you will need an EIN, so file for it now.
Its a little confusing. . . the EIN is the same as a TIN (Tax Identification Number) and can be used interchangably on all government forms - fed and local.
I found this which looks like the area you're exploring:
http://www.irs.ustreas.gov/businesses/small/international/article/0,,id=96696,00.html#ein
But again, I suggest some face time with a tax pro.
It can be had free and is as simple as a glass of water to them.
(Its sort of like panhandling for free advice )
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redbrad0
Advanced Member
USA
3725 Posts |
Posted - 21 July 2004 : 07:05:39
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| I really do not think you will need anything because you are going to be the only one and your not doing a ton of sales. You can get a Sole Proprietorship by going down to the county clerks office I believe and you basically say you will be doing business as your company name. You will have to look up to make sure nobody else is doing business as that name in the system and then you pay them $15 and they will register the business in your name and give you a certificate. This certificate is good to take to a bank and open a business bank account which I was told a long time ago because you need to try and keep your business and personal funds separate. Basically at the end of the year when you are doing your taxes you have to say how much money you billed out, then you start deducting your deductibles. The best thing to do is goto Office Depot or some office supply store and keep a log every week. This log is just for your expenses. Server rental, Business phone, software, new computer for your business, Mileage (for anything that you do is business related), Food (if you take out a customer or someone that is doing work for you. You just have to write on the receipt who you took out and why). This is all just a brief overview of everything you got to do and I am not a professional so just to make sure things have not changed its still a good idea to talk to someone like what Rich said. |
Brad
Oklahoma City Online Entertainment Guide
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Panhandler
Average Member
USA
783 Posts |
Posted - 21 July 2004 : 09:46:37
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When you start a business, you don't always know where it will take you.
I'd like to sell email addresses - not to individuals, but to businesses.
A small business of 75 employees would be a good starter.
Perhaps you don't want that type of business.
But if you do, they will require you to fill out a W9 form.
And you will have to provide either your TIN or Social Security number.
Personally, I don't like giving my SS# to every Tom,Dick&Harry company out there.
Another argument for a TIN number is appearance.
You "look" like a business to another company with a TIN as opposed to a SS#
Believe it or not, you establish an attitude in your customers head if you appear to be an experienced established business as opposed to a wanna-be business.
Another argument is that if your business takes off and you decide that you prefer not to give out your SS#, then you don't have to make a change in mid-stream if you start with a TIN.
(Well obviously you've pushed my button. . .and I don't want to get moderated out of here. . .)
Been self-employed for 20+ years. . .
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Doug G
Support Moderator
USA
6493 Posts |
Posted - 21 July 2004 : 16:13:35
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There are two "taxing" issues with your own business, either part-time or full-time. First, you need to pick your business organization as a sole proprietor, partnership, limited partnership, S-corporation, C-Corporation, LLC. Each type of business has different income tax reporting requirements.
Then most state have sales tax collection requirements. For that, in California anyway and in most states, you need to obtain a reseller permit which comes with a sales tax ID number. You must have your business formed before you can get a sales tax #. Once you have a sales tax #, you must collect the exact sales tax for your tax district for any taxable product or service you sell, and on some schedule you must submit a sales tax return to the state, accompanied by a check for the amount of sales tax you've collected.
You do not need an EIN as a sole proprietor unless you have employees. You report your sole proprietor income tax as part of your personal return, under your SSN.
http://www.irs.ustreas.gov/businesses/small/article/0,,id=98350,00.html
Whether you have an EIN or not is strictly up to you, it does not make your business "look" any better unless you are of the habit of revealing private information to others. Your banker, cpa, lawyer, and the IRS and Tax authority are the only people you ever need (or should) reveal your SSN or EIN to.
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Doug G
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Computer history and help at www.dougscode.com |
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seahorse
Senior Member
USA
1075 Posts |
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seahorse
Senior Member
USA
1075 Posts |
Posted - 21 July 2004 : 23:15:29
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quote:
Originally posted by Doug G
There are two "taxing" issues with your own business, either part-time or full-time. First, you need to pick your business organization as a sole proprietor, partnership, limited partnership, S-corporation, C-Corporation, LLC. Each type of business has different income tax reporting requirements.
Having done a little reading, I wouldn't go for an sole proprietorship. You'll get far better tax and legal benefits from other methods that probably won't cost you much more in startup costs.
As I recall S-corporations don't allow foreign ownership, so that's something to think about if you or a partner are not US citizens.
I guess it depends on how you approach getting advice and doing research. I think a little work in this area can save you a lot of money and trouble later on. |
Ken
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Worldwide Partner Group
Microsoft |
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Doug G
Support Moderator
USA
6493 Posts |
Posted - 21 July 2004 : 23:36:09
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I've been a sole proprietor business for over 15 years, it depends on what you want out of life and your business.
My goals have been to stay fed, stay moderately busy, never have any employees, and be able to work from anywhere and not be tied to the phone (I can sometimes go a day or two without a phone call). So far, so good :)
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Doug G
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Computer history and help at www.dougscode.com |
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Panhandler
Average Member
USA
783 Posts |
Posted - 22 July 2004 : 13:58:55
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If your business does business with other businesses (apparently yours doesn't) you will have to provide them your SSN or EIN on form W9 when you make more than $600 (??exact amount forgotten??)
Dozens of businesses have requested a W9 form from me - typically its an accounting clerk that requests it.
I don't like giving my SSN to some clerk at every company that uses my services.
Thus, I suggest obtaining an EIN.
It doesn't cost anything additional and one is prepared.
1) I feel that this post is a little mean-spirited and I will go back and edit out the error containing quote.
2) Reality Check: our budding entrepreneur probably doesn't need all this information and will be just fine using a SSN - thousands of people start up businesses every year and never go anywhere with it.
3) You have a good attitude and good advice regarding the goal to:
"to stay fed, stay moderately busy, never have any employees, and be able to work from anywhere and not be tied to the phone" - best advice yet!
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Edited by - Panhandler on 22 July 2004 23:51:04 |
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sr_erick
Senior Member
USA
1318 Posts |
Posted - 22 July 2004 : 23:56:50
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| Thanks for the advice...I'll look into my options. Probably go speak with the person who does my taxes. |
Erick
Snowmobile Fanatics
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seahorse
Senior Member
USA
1075 Posts |
Posted - 23 July 2004 : 11:25:03
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I'd speak to a lawyer.
One good reason not to go with a sole proprietorship or general partnership is that you are personally liable. The business's debt is your personal debt. That means that anyone with a claim against your business can not only go after your business's assets, but your personal assets as well(home, car, etc.).
General Partnerships are worse, becuase you are also liable for the decisions your partner makes. If your partner makes stupid spending decisions or business agreements, you and your personal assets are on the hook as well.
Other entities help limit debt and legal liability to the business, which helps protect your personal assets like your home, etc.
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Ken
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Worldwide Partner Group
Microsoft |
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Steve D.
Average Member
USA
640 Posts |
Posted - 23 July 2004 : 14:01:29
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| Exactly. My wife and I have an LLC. It cost $500 for a lawyer to set it up for us. We run a dance business and if someone breaks their neck and decides to sue us we don't have to worry about losing our house. Of course that's what insurance is for, but that's a whole other topic. If you have a tax accountant you may want to speak with them first so you don't have your lawyer spend any more time then necessary. I think you can also buy cd's that explain how to set up your own LLC from places like Staples. I'm not sure how much I'd trust them, but that's me not being very legally saavy. |
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