Business Advise Needed

[tmax]

I'm just starting my Internet Business.
I don't think I'll be making a lot of money for at least few years.
Hopefully I'll be selling some ad spaces, merchandise & others....

Then someone told me that I should get my business registered and get a reseller's permit, so that unclee sam would help my $$$ department.

Here's my question.
Can anyone tell me anything about the internet business and filing tax and... things I can buy whole sale and... other stuffs like that?
How do I file Tax on the banner spaces you sell?

Anything would help. God bless

[Justin]

Actually, I have the same sort of question myself and just haven't had the time to ask. I wanted to add that I'm using "Inc" after my "company" name when I'm not really incorporated http://www.aota.net/ubb/smile.gif

Is that necessarily illegal? I hope not... if so, how do I become incorporated and thus legal?


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Justin Nelson, SFE Inc.
http://www.vdj.net

[flowersource]

Justin,
You don't even want to think about 'incorporating' unless the biz is making enough money to pay an accountant do do all of the paperwork and filing that is necessary on a regular basis. There are other considerations beyond that.

Most businesses start out as a sole proprietorship or partnership, then maybe incorporate later, if there are any advantages for your particular business.

A sole proprietorship business still has monthly, quarterly and annual tax and paperwork filing requirements. One major advantage of a sole proprietorship business is that when you file federal income taxes, you and the business are one in the same, one filing, with a couple extra forms. Financially, you will benefit if you earn a full time salary from a 'regular' outside job and your business actually loses money. The business loss will bring down your 'taxable' income.

An example would be if you currently were paid a salary of $30,000 at your present, outside job and had an internet business which showed expenses which exceeded income from the business, by say, $10,000, you would end up with a much lower tax bill for the year. (You should also close the loser business)

Again, there are different strategies applicable to each business situation.

Mike

[Justin]

Eek! Sounds like I would be getting in way over my head there... My "business" is just me, my bedroom / office, and my 'puter! I don't think that justifies an accountant http://www.aota.net/ubb/smile.gif

So, basically, right now this is my full time job. I'm not exactly losing money, but it's hard to call it a profit when right before my check gets here something on the 'puter breaks. But I've made more than I've put in, even with the new monitor and video card (and domain, ISP, phone, etc.), so I'm not doing badly. However, it's not exactly going to earn me a living until I pull in some serious profits.

If that does happen, like Tmax asked, how do you claim that? I have no clue how to claim income from selling software and advertising space on the internet - I don't think the 1040-EZ form has a spot for such things http://www.aota.net/ubb/smile.gif


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Justin Nelson, SFE Inc.
http://www.vdj.net

[hearts]

Hey Justin, from what I understand, saying you are INC and NOT being INC is illegal. You will have to check with YOUR STATE on that. Alot of business rules and requirements are governed by the state you live in.

Being INCorporated, is like the business itself is another person, that isn't a person. Inc's elect CEO's and such and require documented meetings. Reason people INCorporate is to protect the individuals that are in the INC from lawswuits. If you were to get sued, the suing party would only be able to go after the INC and not the individuals and their personal assests. ALso, the monies the INC takes in belongs to the company and can only be spent by the company for the company, nothing personal. ALSO, you will need to talk with an attorney, as I believe you need an INC seal. (I don't know all of everything involved, but I do understand that there are many things to learn on this.)

In your case, a sole proprietor is better. IT gives ya a bit more freedom financially. However, you will need to check with your state laws.

There is not much difference between a parnership and INC. Some people end up doing a "C CORPORATION".. and don't ask me why, cuz I am not fully awake yet.

I have not had to worry about this, cuz my Mike has taken care of all of this and we have an attorney.

You have your homework now huh?

Keep good records, speak with an accountant (CPA) and try speaking with an attorney.

Good luck to ya's



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~~~ hearts

Heartistic Designs www.heartisticdesigns.com (http://www.heartisticdesigns.com)

The REAL ME www.heartsangels.com/hearts (http://www.heartsangels.com/hearts)

[Jacob Stetser]

mike quoth:

(You should also close the loser business)

http://www.aota.net/ubb/smile.gif

That depends. Many high-tech businesses lose money for the first couple of years. One _major_ plus to incorporation is that you are no longer fully liable for your company's debts. (I'm not an accountant, you'll need to speak with one about specific perks and drawbacks)

I'm considering becoming an LLC for my first few years of business. The loss/income of an LLC corporation is passed through to me and I pay taxes on it as personal income or loss, but liability is limited (hence the name limited liability corporation).

Incorporation is a step you take if you _know_ you're committed to the development of your business. It's not for a half and half effort.

Anyhow... as to the original question http://www.aota.net/ubb/wink.gif

Sales tax only needs to be charged on the state in which your business and product reside. I don't believe banner spaces are taxable at this time.

Justin, I think it is illegal, btw, to claim to be an Inc. if you're not. But I won't tell anyone :P

[Deb]

<Disclaimer>I am the last person to depend on for legal advice -- each state/country is different in their own ways -- anything I say can't and wont be used against me http://www.aota.net/ubb/smile.gif
</disclaimer>

LLC is what we also looked at... it seems like a good idea if you don't plan on making much and/or if you plan on loosing money for a while (as a host we risk loss big time in the first year) it's certainly worth looking at! Quite a bit simpler then INC. We, personally, are in limbo between the INC., and the LLC.... looking into pros and cons of both.

I *THINK* INC can in fact be used with your business name as long as it does not include the ., after it. What makes the INC., legal is the ., (this is just what someone else told me who also had no authority -- gotta love grape vines). The reason has something to do with people wanting to include the word incorporated within there business name and being allowed to abbreviate their name.

I personally can't wait until we can hire someone else to handle the legal/accounting/books side of this business! http://www.aota.net/ubb/wink.gif But like autuer said... tis more $$'s....

You may even want to take advantage of the local H&R Block and just call and generally ask their opinion... they will usually give you some ideas to get you off in the right direction...

Deb

[SneakyDave]

Deb, so I assume that the "dba FutureQuest" means "doing business as", and that its a Sole Proprietorship? I was just wondering if that's what it means.

I was told by some guy in the alley with a bottle of Mad Dog 20/20 that the gubbermint will let losing business ventures slide 3 years, and then come wondering what you're in business for if you can't make any money.

Here in Nebraska, they want you to collect state taxes for ALL states you do business with, but its not a law. It mentions something on the order of if the state government goes after one of your customers for not paying state taxes on your sale, they have every right to come after YOU!

I'd like to know what people are using for their accounting software?

[Deb]

Yes, you are correct.... we'll probably end up incorporating but have not decided for sure yet... the first year is 'easy' simply because there would have to be a miracle of miracles for there to be a profit this year.

I was talking to another host the other day and I had to agree when he said something like "our revenues...." and then noted "(I wouldn't dare call them profits cuz there simply aren't any yet)" hehe

As far as charging state taxes... there are no state taxes in Florida http://www.aota.net/ubb/wink.gif

The one thing we do have going for us is the measuring of the home and separating business from personal http://www.aota.net/ubb/smile.gif The Business part of the house takes up more then 50% so I guess technically we can claim over 50% of the rent/utilities etc on the business side.

It is true that if you have ANYTHING personal on your computer you can not claim it as part of the business... I was (not) surprised to find out that if 'they' (who are they anyways?) want to, they can check the files on your computer and verify that it is for biz use only. This included the mention of no games or other recreational software -- so I had to wonder why Windows comes with games -- geesshhh picky picky. We also had to make sure we had an enter/exit door that led straight into the biz side of the house w/o having to go through the personal side of the house to get there and then note that we do not use this enter/exit to get in and out of our personal side of the home...tis nutz...

We've almost perfected the details, the only problem spot is that you do still have to go through the office to get to the laundry room but it is separated by a door :P <evil grin>. If all else fails and someone were to become toooo picky with us I guess we can call the server room the 'business place' and just note that we take a LOT of work home with us http://www.aota.net/ubb/wink.gif

QuickBooks seems to be the easiest program to use for small business. The new one is compatible with MS Excel so that helps... As far as the accounting for us -- sigh -- with all of the different types of billing and billing happening every day of the year etc etc we'll end up writing our own to work specifically the way we want it too. I'm currently just working between QuickBooks and Excel mainly. I'm anxious to be able to add some of the tasks into the CNC for things like 'payment reminders'.

The joy of new business http://www.aota.net/ubb/wink.gif

Deb

[Bi4Be]

Oh boy, I am FULL of legal questions! I just wish this stuff was more simpler!!!!

"A sole proprietorship business still has monthly, quarterly and annual tax and paperwork filing requirements."

I am just filing my very first annual income tax report thingy for my business, so either I am in DEEP DEEP DEEP trouble w/ the IRS for not filing monthly & quarterly tax and paper work requirements or I don't have too.

THAT and I heard if it is a free webite or free online auction (that's me) you can get some sort of tax write off? Is this true?

I am a quite new entreprenuer (I guess that's me, but I consider this almost as a hobby because I will be making so little) to this business thing so I guess I need to take this and MUCH more to my local IRS building (eeek!) in a phone call (wheww!)

[gwlubin]

Dear TMAX,

Aren't you puting the cart before the horse? Why don't you wait until you have made some money and THEN deal with the problem of paying tax?

Good luck with your venture!

Graham

[meikel]

Hi,

I'm currently evaluating possibilities to open my business in some 3rd world country. These countries have great tax offers and no banks which could tell IRS your real income http://www.aota.net/ubb/smile.gif

Just kidding, but I had to say this.

Meikel

[SneakyDave]

I don't know about filing quarterly. My lawyer suggested filing once a year, but maybe I need a new lawyer. I think I'm doing the government a FAVOR by not filing quarterly because of the hassle. If you take any percentage of 0 dollars, you still get NO MONEY! http://www.aota.net/ubb/smile.gif If somebody knows something different, please let me know so I can chew my fingers some more.

My biggest single expense for the year will be BANK FEES. I can't believe it the differences in fees they charge between individuals and businesses. Maybe I need a new bank AND a new lawyer. I (currently) can't write off rent/utilities, and I'm not upgrading my PC equipment until I'm in the black.

If your business is web based, I ASSUME you can write off your connection charges per month (as long as its business related and not for SneakyDave's Sex Shoppe).

Just my rants and ravings.

[auteur]

I had talked with an accountant before I started as a consultant. They wanted $500.00 upfront to process and make me an Inc. Then I talked with the IRS, they said only if my business had possible a liability [high chances of getting sued, welcome to America http://www.aota.net/ubb/smile.gif] that I should become an Inc. Saving $500.00 I agreed with the IRS.

There's a lot of sticky situations with claiming Inc. and deductions, especially for home businesses. Like did you know you have to measure your house and measure your office space take that percentage of office space usage and that's your deduct....AND you can't have any personal items in the office [there goes your bed http://www.aota.net/ubb/smile.gif], no one else can use the space and no television set either. They, supposedly, watch small businesses closely.

And that, "loser of a business" should be kept, because you're allotted...I believe...two years of claiming a loss on your taxes..great tax break while building a business to a great business. http://www.aota.net/ubb/smile.gif


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Elizabeth M. Miller
Getting You the Attention You Deserve!
www.123marketing.com (http://www.123marketing.com)

[Justin]

Here's what I look at. I can measure about 13.5 % of my room and call it the office. Basically just the desk. There is no TV in here (never watch TV anyway), but the bed is more a place to set stuff than a sleeping place.

On my computer, there are really no games, other than Windows stuff. I have a lot of audio stuff and mp3's but I write audio stuff and need mp3's for that purpose. Covered there http://www.aota.net/ubb/smile.gif There is also a stereo in the room, but again, necessary for the business.

If you read my email or looked at my history, you'd know I use my ISP 99% of the time for business. Hell, the phone line too.

Then there's all the stuff breaking lately (monitor, video card) - that's a business expense if I ever saw one. And really, I got the cheapest monitor and video card that I could, so it's not like a luxury thing. I didn't go out and get a 21" monitor and a Vodoo card and call it business...

So I think, if somehow I could write off business expenses, I'd be ok. I don't care about the home bills, just the phone and ISP. Maybe a small portion of electric, too http://www.aota.net/ubb/smile.gif

Now I just have to call H&R block and ask their advice on the actual business side of things.

Oh, yeah, I can use my window as the separate entrance to the office http://www.aota.net/ubb/smile.gif Or the back door, only 4 feet from the room door.
there are no state taxes in Florida
That's it, I'm moving right now!! I hate all this snow anyway http://www.aota.net/ubb/smile.gif What's a hurricane every now and then? Beats the snow and taxes...

Justin

[Bi4Be]

LOL Justin! http://www.aota.net/ubb/smile.gif

The heat get REALLY annoying when it gets to be up to or over 100 degrees outside!
Then their is the humidity, it is like 60% during the summer. If you even walk from Publix to your car in a parking lot you get that nappy sticky feeling and get all sweaty. It is too hot to live! http://www.aota.net/ubb/smile.gif
Not to sound like I am complaining, I mean it IS nice but can get old. All this winter I have been hoping for some Artic blast or current bringing nights to around 40 degrees (we have had a couple so far, but in the last few days we experienced the last of winter).

I am pretty sure other Floridians can agree with the summer thing, though. Although it is perfect poolside lounging weather (if you have one, I do), but there is no PC out there! What would I be doing?!?!? http://www.aota.net/ubb/smile.gif

Now I could debate this on and on and on with myself but I think I need to stop here because the post is long as it is...
Toodles,
-Bi4Be