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[ { "docid": "c11d1781a910fe53b160db6f0ac43cb5", "text": "The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate", "title": "" } ]

[ { "docid": "221c2facfbbbc27225c5f7d9f28af460", "text": "You don't say what country you live in. If it's the U.S., the IRS has very specific rules for business use of a car. See, for starters at least, http://www.irs.gov/publications/p463/ch04.html. The gist of it is: If you use the car 100% for business purposes, you NEVER use it to drive to the grocery store or to your friend's house, etc, then it is a deductible business expense. If you use a car party for business use and partly for personal use, than you can deduct the portion of the expense of the car that is for business use, but not the portion that is for personal use. So basically, if you use the car 75% for business purposes and 25% for personal use, you can deduct 75% of the cost and expenses. You can calculate the business use by, (a) Keeping careful records of how much you spent on gas, oil, repairs, etc, tracking the percentage of business use versus percentage of personal use, and then multiplying the cost by the percentage business use and that is the amount you can deduct; or (b) Use the standard mileage allowance, so many cents per mile, which changes every year. Note that the fact that you paid for the car from a business account has absolutely nothing to do with it. (If it did, then everyone could create a small business, open a business account, pay all their bills from there, and all their personal expenses would magically become business expenses.) Just by the way: If you are going to try to stretch the rules on your taxes, business use of a car or personal computer or expenses for a home office are the worst place to do it. The IRS knows that cars and computers are things that can easily be used for either personal or business purposes and so they keep a special eye out on these.", "title": "" }, { "docid": "bff69f709bf2f7bdb5f225d3e2e59824", "text": "\"Suppose that I work from home, but do not qualify for a business use of home deduction. As I understand it, this means I cannot deduct trips from home to another work location (e.g., going to a client's home or office to do work there). I do not think this is true. You cannot deduct trips to your main business location, i.e.: you cannot deduct trips to your office or client's location if this is your main client and you routinely work on-site. However, if you only visit your clients on occasion for specific events while doing your routine work at home - you can definitely deduct those trips. The deduction of the home usage itself has nothing to do with it. However, there's a different reason they refer to pub 587. Your home must qualify as principal place of business (even if it doesn't qualify for deduction). The qualifications of \"\"principal place of business\"\" are described in pub 587. \"\"if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second.\"\" What is not clear to me is what exactly is deductible if there are significant time gaps (within a single day) between trips to different clients. You got it right. What this quote means is that if you have client A and client B, and you drive from A to B - you can only deduct the travel between A and B, nothing else. I.e.: if you have 2 hours to kill and you take a trip to the mall - you cannot deduct the mileage attributable to that trip. You only deduct the actual distance between A and B as it would be had you driven from A to B directly. The example you cite re first client being considered as the place of business is for the case where your home doesn't qualify as principal place of business. In this case you start counting miles from your first client, and only for direct trips from client to client. If you only have 1 client in that day, tough luck, nothing to deduct. Also, it's not clear whether stopoffs between clients would really be \"\"personal reasons\"\", since the appointment times are often set by the client, so it's not as if the delay between A and B was just because I felt like it; there was never the option of going directly from A to B. That's what is called \"\"facts and circumstances\"\". You can argue that you had enough time between meetings to go back to your home office to continue working. The IRS agent auditing you (and you're likely to get audited) will consider that. Maybe will accept it. Maybe not. If I had a gap like that described above, I could save on my taxes by going to the park or a hamburger stand instead of going home between A and B But then you wouldn't be at home, so why would it be \"\"principal place of business\"\" if you're not there? Boom, lost deduction for the trip to the first client. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State). You're dealing with deductions that are considered \"\"red flags\"\" for the IRS. I.e.: many people believe that these deductions (business use of your home/car) trigger audits. To substantiate business use of your car you need to keep very good track of your travels (literally travel log, they sell them at Staples), and make sure to distinguish between personal travel and business travel, keep proofs that the meetings took place (although keeping a log is a requirement, it can be backdated/faked, so if audited - the IRS will want to see more than your own documentation). A good tax adviser will educate you on all these rules, and also clarify the complexities you were asking about here. I'm not a tax adviser, so don't rely on this answer when you're preparing your tax return or responding to the IRS audit. In your edit you ask this: Specifically, what I'm wondering is whether it is possible for a home to qualify as a \"\"principal place of business\"\" for purposes of deducting car expenses but not for the home office deduction. The answer is yes. Deductibility is determined by exclusivity of use, among other things. But the fact that you manage your business from your kitchen doesn't make your kitchen any less of a principal place of business. It is non-deductible because you also cook your dinners there, but it is still, nonetheless, your principal place of business. The Pub 587 which I linked to has these qualifications: Your home office will qualify as your principal place of business if you meet the following requirements. You use it exclusively and regularly for administrative or management activities of your trade or business. You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. As you see, exclusivity of the usage of your home area is not a requirement here. The \"\"exclusively and regularly\"\" in the quote refers to your business not using any other location, and managing it from home regularly. I.e.: if you manage your business a day in a year - that's not enough for it to be considered principal. If you manage your business from your office and your home - you cannot consider home as principal.\"", "title": "" }, { "docid": "c2e80c349518ee93dd52768ec917fa84", "text": "I would take each of these items and any others and consider how you would count it as an expense in the other direction. If you have an account for parking expenses or general transportation funds, credit that account for a refund on your parking. If you have an account for expenses on technology purchases, you would credit that account if you sell a piece of equipment as you replace it with an upgrade. If you lost money (perhaps in a jacket) how would you account for the cash that is lost? Whatever account would would subtract from put a credit for cash found.", "title": "" }, { "docid": "bacbe17f21b09d058f277e0c87cc31a0", "text": "Keep this rather corny acronym in mind. Business expenses must be CORN: As other posters have already pointed out, certain expenses that are capital items (computers, furniture, etc.) must be depreciated over several years, but you have a certain amount of capital items that you can write off in the current tax year.", "title": "" }, { "docid": "baafc7faa6bfbfcb4e5e51674043a1bd", "text": "Assuming your country is the United States there is. See schedule C line 9 and the corresponding instructions. There are many rules associated with this, in some cases the entire purchase can be written off but typically if the truck is only used for business. Most people write off partial usage in the form of credits for mileage. You are best to consult with a CPA once your business earns a profit. Good luck.", "title": "" }, { "docid": "ce475229839fec15efb664cd7ad7ac50", "text": "Your home doesn't belong to the partnership, it belongs to you. So you can (if qualified) deduct home office usage as a business expense on your individual tax return. Same goes to your partner. Similarly any other unreimbursed expense.", "title": "" }, { "docid": "1ba79cc552d47f900a08881f2c79d879", "text": "You can deduct this if the main purpose of the trip is to attend the seminar. Travel expenses relating to the attendance at conferences, seminars and other work-related events are deductible to the extent that they relate to your income-producing activities. You will need to apportion your travel expenses where you undertake both work-related and private activities. Travel costs to and from the location of the work-related event will only be deductible where the primary purpose of the travel was to attend the event. Accommodation, food and other incidental costs must be apportioned between work-related and private activities taking into account the types of activities that you did on the day you incurred the cost. You might like to consider in advance what you would tell them if they questioned this - for instance you might say (if they are true):", "title": "" }, { "docid": "c93f3024d8d4bde48399c1dabe42032b", "text": "\"I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an \"\"other\"\" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, \"\"Oh, I think business use must have been about 3/4 of the time.\"\" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used \"\"regularly and exclusively\"\" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used \"\"exclusively\"\" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of \"\"estimated\"\" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!\"", "title": "" }, { "docid": "f81ad22890ccc28b8d5635a494d7570b", "text": "\"The government thought of that a long time ago, and has any loophole there plugged. Like if you set up a company to buy a car and then allow you to use it ... You can use the car for company business, like driving to a customer's office to make a sales call or delivery, and the cost of the car is then tax deductible. But the company must either prohibit personal use of the car, or keep a log of personal versus business use and the personal use becomes taxable income to you. So at best you'd get to deduct an expense here and then you'd have to add it back there for a net change in taxable income of zero. In general the IRS is very careful about personal use of business property and makes it tough to get away with a free ride. I'm sure there are people who lie about it and get away with it because they're never audited, but even if that causes you no ethical qualms, it's very risky. I don't doubt that there are people with very smart lawyers who have found loopholes in the rules. But it's not as simple as, \"\"I call myself a business and now all my personal expenses become tax deductible business expenses.\"\" If you could do that, everybody would do it and no one would pay taxes. Which might be a good thing, but the IRS doesn't see it that way.\"", "title": "" }, { "docid": "8be85e6de45b64fe19db102bc76f2858", "text": "\"The piece is a little misguided at best and poor journalism at worst. The problem lies in the difference between what's deductible for individuals and what's deductible for corporations. The short version of the story is that corporations can deduct a hell of a lot more things than individuals can. Individual deductions are spelled out in the Internal Revenue Code. Stuff like medical expenses (above 7.5% of your AGI), certain educational things, etc. For corporations, the basic rule is that they can deduct any \"\"ordinary and necessary\"\" business expenses. That includes operating, travel, interest, employee, etc. I wish that the article had cited specific sections of the Code if this was some kind of loophole or something, but alas, it appears that they didn't. That leads me to believe that these companies are deducting the portion not paid to the government as a business expense. ~~For what it's worth, I don't believe that a company can deduct those expenses for tax purposes unless it's to \"\"protect their business interests.\"\" My assumption (I don't have the time or desire to search case law right now) is that settlements with the US Government are considered to fall under that definition.~~ **EDIT** - See my comment [here](http://www.reddit.com/r/business/comments/11dbzu/federal_regulators_have_lauded_a_series_of/c6ll7ez) for the relevant Treasury Regulation dealing with this.\"", "title": "" }, { "docid": "94f593b5521152a87c5459a25f4a9088", "text": "\"In the US you are not required to have a corporation to use business expenses to offset your income. The technical term you need is \"\"deducting business expenses\"\", and in matters of taxes it's usually best to go straight to the horse's mouth: the IRS's explanations Deducting Business Expenses Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit. What Can I Deduct? Cost of Goods Sold, Capital Expenses, Personal versus Business Expenses, Business Use of Your Home, Business Use of Your Car, Other Types of Business Expenses None of this requires any special incorporation or tax arrangements, and are a normal part of operating a business. However, there is a bit of a problem with your scenario. You said you \"\"invested\"\" into a business, but you mentioned buying specific things for the business which is not generally how one accounts for investment. If you are not an owner/operator of the business, then the scenario is not so straight-forward, as you can't simply claim someone else's business expenses as your own because you invested in it. Investments are taxed differently than expenses, and based upon your word choices I'm concerned that you could be getting yourself into a bit of a pickle. I would strongly advise you to speak with a professional, such as a Certified Public Accountant (CPA), to go over your current arrangement and advise you on how you should be structuring your ongoing investment into this shared business. If you are investing you should be receiving equity to reflect your ownership (or stock in the company, etc), and investments of this sort generally cannot be deducted as an expense on your taxes - it's just an investment, the same as buying stock or CDs. If you are just buying things for someone else's benefit, it's possible that this could be looked upon as a personal gift, and you may be in a precarious legal position as well (where the money is, indeed, just a gift). And gifts of this sort aren't deductible, either. Depending on how this is all structured, it's possible that you should both consider a different form of legal organization, such as a formal corporation or at least an official business partnership. A CPA and an appropriate business attorney should be able to advise you for a nominal (few hundred dollars, at most) fee. If a new legal structure is advisable, you can potentially do the work yourself for a few hundred dollars, or pay to have it done (especially if the situation is more complex) for a few hundred to a few thousand. That's a lot less than you'd be on the hook for if this business is being accounted for improperly, or if either of your tax returns are being reported improperly!\"", "title": "" }, { "docid": "26934933debfc980c3627ccfc5be78e7", "text": "\"Worksheets/ Documentation: (From my experience filing my business deductions through several tax preparers.) Keep all your calculations, but only submit the calculations and worksheets requested by the tax form. Most travel deductions are just a category total. If the IRS wants more info, it will ask for it. Information from the book Home Business Tax Deductions (from Nolo) (2012): Traveling with kids: In chapter 9 (\"\"Leaving Town: Business Travel\"\"), in the section \"\"Taking People With You\"\", it specifically discusses your situation. Paraphrasing, it says that you can deduct the amount any eligible expenses would have cost you if you were traveling without your kids. So, you can deduct the cost the smaller hotel room that you and your wife would have normally rented if you were alone. How your side trips affect your business deductions: According to the book, since you spent 50% or more of your time on business activities while traveling in the U.S.: Deducting meals shared with your kids: You can deduct meals as either entertainment or travel expenses. I would recommend you buy one of Nolo's books on deductions, as it goes into much more detail than I do here.\"", "title": "" }, { "docid": "ba1ad496da75fa89e0e779d75eb78141", "text": "\"Yes, your business needs to be in the business of making money in order for you to deduct the expenses associated with it. I suppose in theory this could mean that if you take in $10,000 and spend $30,000 every year, you not only don't get a net deduction of $20,000 (your loss) but you have to pay tax on $10,000 (your revenue). However this is super fixable. Just only deduct $9500 of your expenses. Tada! Small profit.For all the gory details, including how they consider whether you have an expectation of profits, see http://www.cra-arc.gc.ca/E/pub/gl/p-176r/p-176r-e.html This \"\"expectation of profit\"\" rule appears to apply to things like \"\"I sell home décor items (or home decorating advice) and therefore need to take several multi week trips to exotic vacation destinations every year and deduct them as business expenses.\"\" If you're doing woodworking or knitting in your home and selling on Etsy you don't particularly have any expenses. It's hard to imagine a scenario where you consistently sell for less than the cost of materials and then end up dinged on paying tax on revenue.\"", "title": "" }, { "docid": "22e3750962b1dcc273e770bbe1ba72f9", "text": "Not authoritative, but according to TurboTax: If your new cell phone acts as both your business and personal phone, you are only allowed to deduct the portion used for business from your taxable income. It’s important for you to hang on to your itemized phone bill and receipts to ensure that you’re deducting the right amounts and to keep records of your deduction. Since the usage you're describing sounds like a very small amount of the overall usage, it will probably be difficult to justify a business expense deduction.", "title": "" }, { "docid": "c6dba7fc748b0af0e57a483470ae31a5", "text": "\"It's hard to know what to tell you without knowing income, age, marital status, etc., so I'll give some general comments. ETFs come in all varieties. Some have more volatility than others. It all depends on what types of assets are in the fund. Right now it's tough to outpace inflation in an investment that's \"\"safe\"\" (CDs for example). Online savings accounts pay 1% or less now. Invest only in what you understand, and only after everything else is taken care of (debt, living expenses, college costs, etc.) A bank account is just fine. You're investing in US Dollars. Accumulating cash isn't a bad thing to do.\"", "title": "" } ]

[ { "docid": "19a5eaff889e256c24b4d030e13e7d2c", "text": "As a general rule, you must choose between a mileage deduction or an actual expenses deduction. The idea is that the mileage deduction is supposed to cover all costs of using the car. Exceptions include parking fees and tolls, which can be deducted separately under either method. You explicitly cannot deduct insurance costs if you claim a mileage deduction. Separately, you probably won't be able to deduct the deductible for your car as a casualty loss. You first subtract $100 from the deductible and then divide it by your Adjusted Gross Income (AGI) from your tax return. If your deductible is over 10% of your AGI, you can deduct it. Note that even with a $1500 deductible, you won't be able to deduct anything if you made more than $14,000 for the year. For most people, the insurance deductible just isn't large enough relative to income to be tax deductible. Source", "title": "" } ]

[ { "docid": "5abf3aeec6c19bec0614fea89f34cc6f", "text": "Business expenses reduce business income. The SE tax is paid on business income. The credit for 1/2 the SE tax is based on the amount of SE tax paid. So:", "title": "" }, { "docid": "255ced4517b0b7d6b04e2db97cfaec4c", "text": "The answer on the Canadian Government's website is pretty clear: Most employees cannot claim employment expenses. You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing. However, that is most likely related to a personal vehicle. There is a deduction related to Public Transportation: You can claim cost of monthly public transit passes or passes of longer duration such as an annual pass for travel within Canada on public transit for 2016. The second sleeping residence is hard to justify as the individual is choosing to work in this town and this individual is choosing to spent the night there - it is not currently a work requirement. As always, please consult a certified tax professional in your country for any final determinations on personal (and corporate) tax laws and filings.", "title": "" }, { "docid": "4c0eb18c326e5065204d4fe2fa83bc4c", "text": "I can make that claim because I've dealt with negotiating with taxi insurance before. This doesn't have anything to do with the courts. This comes down to the driver and their insurance. Your regular car insurance doesn't cover commercial use. If you're using your vehicle for work, you have to tell your insurance company and then they adjust your policy. If you tell them you are running a cab service, they will straight up cancel your policy because there is an entirely separate insurance industry for cab companies. So, please, tell me more about the industry I worked in for 8 years.", "title": "" }, { "docid": "7bf8250ba25bc7f34249ea8c31d7d2bb", "text": "As an individual, I am not aware of any insurance you can buy that will cover legal costs for any event that may occur (whether criminal or civil)... I imagine this is because the risk is too difficult to measure and the moral hazard too great. I do notice you mention rental property/small business needs. If your concern is truly for costs relating to some legal issue that arises out of your professional operations, then Professional liability insurance may be what you are looking for (oftentimes referred to as errors and omissions, or E&O for short). This insurance is specific to whatever business you engage in, however will typically protect you against legal claims (including defense costs) as a result of your business operations. Note however that what is actually covered will be specific to your policy. As duffbeer703 mentioned, the purpose of insurance is for covering specific losses, i.e., protecting you from legal claims that may arise during the course of business. If you are looking for a solution that will, e.g., provide you a standard set of legal documents (maybe a lease agreement) then you are not in fact looking for insurance, but instead legal services at a fixed rate. Why would an insurance company pay for services both you and it already know you need?", "title": "" }, { "docid": "316710461de83750af605d1897addf25", "text": "Chris, since you own your own company, nobody can stop you from charging your personal expenses to your business account. IRS is not a huge fan of mixing business and personal expenses and this practice might indicate to them that you are not treating your business seriously, and it should classify your business as a hobby. IRS defines deductible business expense as being both: ordinary AND necessary. Meditation is not an ordinary expense (other S-corps do not incur such expense.) It is not a necessary expense either. Therefore, you cannot deduct this expense. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses", "title": "" }, { "docid": "e31d8c3f836d3ec8d604107df90b5081", "text": "For the purpose of personal finance, treating $500 as Interest Expense is sufficient. For business accounting, it involves making the $500 a contra-liability and amortizing it as interest expense over the course of life of the loan.", "title": "" }, { "docid": "e1fe3430b8aac8f8a2d492cd2caaff94", "text": "Basically a company who provides health insurance for their employees provides it as part of the employee's salary package. This is an expense by the company in its pursuit of making income. In general, tax deductions are available on any expense incurred in deriving income (the exception is when social policy allows deductions for other types of expenses). If you pay for your own health insurance individually, then this expense is not an expense for you to derive your income, and as such is not tax deductible.", "title": "" }, { "docid": "7348a5a39e5d09a5d84942986787e34e", "text": "\"Disclaimer: This should go without saying, but this answer is definitely an opinion. (I'm pretty sure my current accountant would agree with this answer, and I'm also pretty sure that one of my past accountants would disagree.) When I started my own small business over 10 years ago I asked this very same question for pretty much every purchase I made that would be used by both the business and me personally. I was young(er) and naive then and I just assumed everything was deductible until my accountant could prove otherwise. At some point you need to come up with some rules of thumb to help make sense of it, or else you'll drive yourself and your accountant bonkers. Here is one of the rules I like to use in this scenario: If you never would have made the purchase for personal use, and if you must purchase it for business use, and if using it for personal use does not increase the expense to the business, it can be fully deducted by the business even if you sometimes use it personally too. Here are some example implementations of this rule: Note about partial expenses: I didn't mention partial deductions above because I don't feel it applies when the criteria of my \"\"rule of thumb\"\" is met. Note that the IRS states: Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. At first read that makes it sound like some of my examples above would need to be split into partial calulations, however, I think the key distinction is that you would never have made the purchase for personal use, and that the cost to the business does not increase because of allowing personal use. Partial deductions come into play when you have a shared car, or office, or something where the business cost is increased due to shared use. In general, I try to avoid anything that would be a partial expense, though I do allow my business to reimburse me for mileage when I lend it my personal car for business use.\"", "title": "" }, { "docid": "a2f90aea0d5c4bccafa3f3047a28797e", "text": "\"Assuming its in the US: No, it is not, and such things are usually treated as \"\"red flags\"\" for audit (and no, golf club memberships are not deductible either). The food expenses are not deductible in their entirety as well, only up to 50% of the actual expense, and only if it is directly business related. From what you've described, it sounds like if you have an audit coming you'll be in trouble. The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions.\"", "title": "" }, { "docid": "4369868410d906a8c2a6ee3fc23dc638", "text": "It depends on the business entity. If the entity is a sole proprietorship or a general partnership, the individual are considered to be the business. There are no shares, and so yes, the owner would have to take on 75% of the expenses. For example, in the event of a lawsuit, if the claimant were awarded $1,000,000, the 75% partner would be personally liable for $750,000. In the event of a corporation, there are shares, so the responsibility is on the management of the company, not the owners, to come up with money for the expenses of the business. That money can come from the business' capital, which is the money owners have put in. Basically, for a corporate entity, the owner is not responsible for 75% of expenses, for a partnership, yes, they are.", "title": "" }, { "docid": "fbe3c32df23d6bab65850a0504a96d0d", "text": "Very generally speaking if you have a loan, in which something is used as collateral, the leader will likely require you to insure that collateral. In your case that would be a car. Yes certainly a lender will require you to insure the vehicle that they finance (Toyota or otherwise). Of course, if you purchase a vehicle for cash (which is advisable anyway), then the insurance option is somewhat yours. Some states may require that a certain amount of coverage is carried on a registered vehicle. However, you may be able to drop the collision, rental car, and other options from your policy saving you some money. So you buy a new car for cash ($25K or so) and store the thing. What happens if the car suffers damage during storage? Are you willing to save a few dollars to have the loss of an asset? You will have to insure the thing in some way and I bet if you buy the proper policy the amount save will be very minimal. Sure you could drop the road side assistance, rental car, and some other options, during your storage time but that probably will not amount to a lot of money.", "title": "" }, { "docid": "ade1f187fc1c0403179210d8806b6971", "text": "Yes, you will be able to claim it as an expense on your taxes, but not all in the current year. It is split into three categories: Current Expenses - Assets purchased such as inventory would be able to be claimed in the current year. Assets - Vehicles, Buildings, and equipment can be depreciated over time based on the value you purchased them for and the CCA class. Goodwill - In tax terms this is the value of the business purchase that is not eligible in 1 or 2 and is called Eligible Capital Property. This can be expensed over time. From info at CRA website: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/byng/menu-eng.html", "title": "" }, { "docid": "081f555c38ac6fb2c9bc41996fc7ad5a", "text": "\"Disclaimer: My answer is based on US tax law, but I assume Australian situation would be similar. The IRS would not be likely to believe your statement that \"\"I wouldn't have gone to the country if it wasn't for the conference.\"\" A two-week vacation, with a two-day conference in there, certainly looks like you threw in the conference in order to deduct vacation expenses. At the very least, you would need a good reason why this conference is necessary to your business. If you can give that reason, it would then depend on the specifics of Australian law. The vacation is clearly not just incidental to the trip. The registration for the conference is always claimable as a business expense.\"", "title": "" }, { "docid": "be257fcb0ae0253e58681c0f96f3d63a", "text": "\"The answer is \"\"Yes\"\", You can deduct them. As long as you showed that you put in effort to make a profit then you can deduct business expenses.\"", "title": "" }, { "docid": "71bd8b7bb71148feb7f19174d08ae7fa", "text": "\"When I have a question about my income taxes, the first place I look is generally the Giant Book of Income Tax Information, Publication 17 (officially called \"\"Your Federal Income Tax\"\"). This looks to be covered in Chapter 26 on \"\"Car Expenses and Other Employee Business Expenses\"\". It's possible that there's something in there that applies to you if you need to temporarily commute to a place that isn't your normal workplace for a legitimate business reason or other business-related travel. But for your normal commute from your home to your normal workplace it has this to say: Commuting expenses. You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot deduct commuting expenses even if you work during the commuting trip.\"", "title": "" } ]

[ { "docid": "7a0f5ae5d21bde5bfb381e841ac88197", "text": "Most US states have rules that go something like this: You will almost certainly have to pay some registration fees, as noted above. Depending on how you organize, you may or may not need to file a separate tax return for the business. (If you're sole proprietor for tax purposes, then you file on Schedule C on your personal Form 1040.) Whether or not you pay taxes depends on whether you have net income. It's possible that some losses might also be deductible. (Note that you may have to file a return even if you don't have net income - Filing and needing to pay are not the same since your return may indicate no tax due.) In addition, at the state level, you may have to pay additional fees or taxes beyond income tax depending on what you sell and how you sell it. (Sales tax, for example, might come into play as might franchise taxes.) You'll need to check your own state law for that. As always, it could be wise to get professional tax and accounting advice that's tailored to your situation and your state. This is just an outline of some things that you'll need to consider.", "title": "" } ]

[ { "docid": "1a949988273831ba706baa2e52f20924", "text": "You're gonna start a business but you can't choose your own name? C'mon man, that's the fun part.. Have you researched the demand? In a dying industry like hard copy games, what sets you aside from big players like GameStop? What's gonna set you apart from all the rest? Sorry to say but right now you don't even have a name, my friend. My advice is to write out a detailed business plan & come up with ways to keep yourself afloat. Either way, like I said, you're entering a dying industry that may have something like 10 years at the max considering digital copies are becoming the majority. Personally, i'd rethink your business concept because you may be calling it Game Over before you even push start.. Good Luck", "title": "" }, { "docid": "34d5a488129484a5a5d253c3815c3209", "text": "First of all $1k is not enough money to start a web business. You're probably going to lose all your money, your business and your friendship. Second of all you need to retain a lawyer. I really can't emphasize this enough. If a lawyer is too expensive for you, then THIS BUSINESS IS TOO EXPENSIVE FOR YOU. If you don't have the money, then you don't have the time. When you say it's his idea - did he come to you with a fully written business plan? Even if he did, that's not really worth 20% of the equity. I would insist on 50/50 if the capital is 50/50, and salary to whoever is working on it. You're not going to have profits in the first year. Let me repeat that. YOU'RE NOT GOING TO HAVE PROFITS IN THE FIRST YEAR. Things never, ever, EVER work that way. Or ok they do but it's like 1%. It's not going to happen to you.", "title": "" }, { "docid": "55cab6c8c047f51ea5f0380b2fb3c27b", "text": "\"Watch out for PO financing. A lot of those contracts have nasty terms like \"\"I agree that SCAM CAPITAL will be my sole source of credit for the next 2 years.\"\" that can get in the way of using bank debt or credit cards. They may even tell you otherwise to get you to sign, but they are the payday lenders of the business world. It can be great when it works, but there are a lot of shark men. While you can grow your company on po financing, understand that those companies exist to suck all the profit out of small, non-innovative companies, who needed a hand and their terms reflect that. If your business is that good maybe you can get someone to buy in instead? The second benefit to this is that if things go tits-up, then you don't have any personal guarantee. You will likely have to guarantee PO financing in most parts of the country.\"", "title": "" }, { "docid": "c0d157b54df2e9a51e6e0fff91b6bbd7", "text": "**http://www.newpa.com/business/growing-business/download-guide** You want practical? This is nuts and bolts and geared to someone starting their own business from scratch. It is put out by the Commonwealth of Pennsylvania so it is very Pennsylvania oriented. You might want to check and see what kinds of similar business publications your state, province, or territory has for free. Do not discount this kind of information. The price is right.", "title": "" }, { "docid": "576c253d76c272420c7130eb8ad5afa3", "text": "On the web have a major scale business website, for example, Amazon, eBay, shopclues etc. When your business website additionally connected the web index like yahoo, google, and bing through the internet this is known as the Business to business directory. You can list your business in global trade connect business directory and get a huge buyer from all over the world. Else you are really missing a huge opportunity to find the online searcher.", "title": "" }, { "docid": "8c4898f903f252efd310e0f149accf0c", "text": "If you have a new company and you want to attract investors, such as venture capitalists and private equity, incorporating in Delaware LLC probably makes sense. There are actually many investors who will only invest in a Delaware Online incorporation, so starting off by creating a Delaware corporation from the beginning may save a lot of money and stress down the road. You can also choose to form an LLC in Delaware, to begin with, then convert it to a C corporation later.", "title": "" }, { "docid": "83ccfe7a14924f2312a884665c1db75d", "text": "\"For practical purposes, I would strongly suggest that you do create a separate account for each business you may have that is used only for business purposes, and use it for all of your business income and expenses. This will allow you to get an accurate picture of whether you are making money or not, what your full expenses really are, how much of your personal money you have put into the business, and is an easy way to keep business taxes separate. You will also be able to get a fairly quick read on what your profits are without doing much accounting by looking at the account balance less future taxes and expenses, and less any personal money you've put into the account. Check out this thread from Paypal about setting up a \"\"child\"\" account that is linked to your personal account and can be set up to autosweep payments into your main account, should you like. You will still be able to see transactions for each child account. NOTE: Do be careful to make sure you are reserving the proper amount out of any profits your startup may have for taxes - you don't want to mix this with personal money and then later find out that you owe taxes and have to scramble to come up with the money if you have already spent it This is one of the main reasons to segregate your startup's revenues and profits in the business account. For those using \"\"brick and mortar\"\" banking services rather than a service like Paypal: You likely do not need a business checking account if you are a startup. Most likely, you can simply open a second personal account with your bank in your name, and name it \"\"John Doe DBA Company Name\"\" (DBA = Doing Business As). This way, you can pay expenses and accept payments in the name of your startup. Check with your banker for additional details (localized information).\"", "title": "" }, { "docid": "c58daa07acae659b5335af1ae1dfa254", "text": "Keep in mind a good lawyer will have the contract cover the five D's: Its really best to lay these things out ahead of time. I watched, first hand, two friends start a business. When they were broke and struggling the worked very well together. Then the money started rolling in. Despite exceeding their dreams they were constantly at each other's throats fighting and bickering over stupid stuff. In the end, because they had decent legal docs, they both were able to pull money out of the business. Had that not been worked out they would have destroyed the business so that no one would have profited.", "title": "" }, { "docid": "8d1793d8dad93f2b5d895f0241e47e9b", "text": "If you do go the online route (there's TONS of information out there on how to launch an e-store) make sure you're aware of the caveats. Amazon sellers for example can be shafted pretty hard on returns, as policy generally dictates that you eat the costs. If you don't have a lot of capital this could be back-breaking. Don't let that discourage you, though! You could make a decent business essentially just setting up an online storefront and drop shipping items from elsewhere, which could fund the capital needed to open a brick and mortar shop. To answer your question directly, what everyone else has said is definitely important and correct but don't ignore the smaller things like the fact that you could have a page that presents the items better and makes things look more appealing/luxurious, and the fact that not everyone punches every item they're considering buying into Google to compare. Decent marketing can go a long way (depending on what you're selling, at least)", "title": "" }, { "docid": "f01f96df1cf05cedc0e666c3927043dd", "text": "\"This question is really general to answer. That's like asking \"\"Is it easier to be a dog or a cat?\"\" Your answer is going to be defined by your circumstances and approach, which are going to come somewhere from the following: - How much capital do you have to start stuff? - Can you get a loan? If so, how much is it? - Do you already have a business model? Is it going to effectively compete against existing, successful businesses? - Do you have a unique advertising gimmick? - Is this a technical business? Does it require a patent? Is that patent already secured? - Do you already have a new idea or technology? - Where will you find talent? - Do you have any experience with investment? How aggressive are you going to be investing? - Do you have any experience with business? Just remember, the overwhelming majority of businesses fail. I know several business owners (some successful, some unsuccessful). The list goes on, and honestly I don't think Reddit is a good place to start.\"", "title": "" }, { "docid": "f1f2772f286afe2073551bb026368900", "text": "Yes. I'm not a coder by trade, but learned on my own as a hobby and then launched a barebones version in 2015 and then a full-fledged version just a few months ago. I'm a lawyer by training and I had been thinking for 12+ years that there needed to be a more efficient way for professionals to get clients and for clients to know the level of expertise of a professional through the power of the Internet. I had tried to hire outside web developers on my own about 10 years ago, but got burned but learned some valuable life lessons - if you are passionate about something, learn to do it yourself - you almost always will be better off. The result today is Hire.Bid and I'm happy to say we are kicking ass. If Reddit has taught me anything, it is to chase your dreams and make shit happen yourself. You'll regret not doing so. Make it happen. If it is a hobby and something you are passionate about first, you'll have a much better chance of success in the long run. Just my $0.02.", "title": "" }, { "docid": "eb389b09b7bb394c4430165a6c427d6f", "text": "Now today all small and big business depends on the internet. So businessman should be those business lists in the multiple online directories. In the USA maximum user buy product through the web. If you have a business, then you can list your business globaltradeconnect's Business directory online. Where you can get more customer, product information, business location and direction. It's awesome to list a business on other online website like Google, Facebook, Bing.", "title": "" }, { "docid": "2c7280ef2f9b1af1a1f051cf8bd8c9ac", "text": "A good idea is try use your weekends to develop your business/plans at first. Most business startups don't boom overnight, it takes time to build. Dont quit your job, that is revenue you can build your business with. The most important thing is to have a sound business plan, not too ambitious, not too realistic.", "title": "" }, { "docid": "359ae73ca6999b03de77b0dbf6ff2063", "text": "Well I was trying to describe it very generally because I think if other people heard the idea especially on an business thread the idea would be taken easily. And the idea came to me about a month ago and I guess I didn't explain well but I was wondering what kind of homework I need to research. My intention was for people to give me an idea of where to start. I've already started to write out a business plan I just didn't know if there were places to go to find people to invest into it or not. And I'm totally fine with criticism and what not but the way he came out was actually humorous to me, to call someone's idea bad when you don't know what it is is just silly. Snapchat seemed like a stupid idea in my opinion. Why would I only want to see someone's picture for 10 seconds and it goes away forever? But hey that turned into gold. So you never know what can be successful and not these days and how are you supposed to find out without taking the risks and going for it. So I guess a specific question is, if I write a business plan, what is my next step, who do I show it to?", "title": "" }, { "docid": "2d63890e6541973a8b8c3136391aa5f1", "text": "Become your own boss web business can be easily done with great fortune. The bonus are apparent to running your own kind of business particularly online, however, what you require to attain those bonus might not be so apparent. There’re various elements, however, the 3 most essential elements are mindset, proper training and education and posting yourself as a leader.", "title": "" } ]

[ { "docid": "0fe8ad531b8303ea06ea6b21256025fe", "text": "I don't believe Saturday is a business day either. When I deposit a check at a bank's drive-in after 4pm Friday, the receipt tells me it will credit as if I deposited on Monday. If a business' computer doesn't adjust their billing to have a weekday due date, they are supposed to accept the payment on the next business day, else, as you discovered, a Sunday due date is really the prior Friday. In which case they may be running afoul of the rules that require X number of days from the time they mail a bill to the time it's due. The flip side to all of this, is to pick and choose your battles in life. Just pay the bill 2 days early. The interest on a few hundred dollars is a few cents per week. You save that by not using a stamp, just charge it on their site on the Friday. Keep in mind, you can be right, but their computer still dings you. So you call and spend your valuable time when ever the due date is over a weekend, getting an agent to reverse the late fee. The cost of 'right' is wasting ten minutes, which is worth far more than just avoiding the issue altogether. But - if you are in the US (you didn't give your country), we have regulations for everything. HR 627, aka The CARD act of 2009, offers - ‘‘(2) WEEKEND OR HOLIDAY DUE DATES.—If the payment due date for a credit card account under an open end consumer credit plan is a day on which the creditor does not receive or accept payments by mail (including weekends and holidays), the creditor may not treat a payment received on the next business day as late for any purpose.’’. So, if you really want to pursue this, you have the power of our illustrious congress on your side.", "title": "" }, { "docid": "639cc7a31d1d784762a35b44780f1a2c", "text": "You definitely have an argument for getting them to reverse the late fee, especially if it hasn't happened very often. (If you are late every month they may be less likely to forgive.) As for why this happens, it's not actually about business days, but instead it's based on when they know that you paid. In general, there are 2 ways for a company to mark a bill as paid: Late Fees: Some systems automatically assign late fees at the start of the day after the due date if money has not been received. In your case, if your bill was due on the 24th, the late fee was probably assessed at midnight of the 25th, and the payment arrived after that during the day of the 25th. You may have been able to initiate the payment on the company's website at 11:59pm on the 24th and not have received a late fee (or whatever their cutoff time is). Suggestion: as a rule of thumb, for utility bills whose due date and amount can vary slightly from month to month, you're usually better off setting up your payments on the company website to pull from your bank account, instead of setting up your bank account to push the payment to the company. This will ensure that you always get the bill paid on time and for the correct amount. If you still would rather push the payment from your bank account, then consider setting up the payment to arrive about 5 days early, to account for holidays and weekends.", "title": "" }, { "docid": "300207fb417715762863a5b3d7fa6275", "text": "It's likely that your bill always shows the 24th as the due date. Their system is programmed to maintain that consistency regardless of the day of the week that falls on. When the 24th isn't a business day it is good to error on the side of caution and use the business day prior. It would have accepted using their system with a CC payment on the 24th because that goes through their automated system. I would hazard a guess that because your payment was submitted through your bank and arrived on the 23rd it wasn't credited because a live person would have needed to be there to do it and their live people probably don't work weekends. I do much of my bill paying online and have found it easiest to just build a couple days of fluff into the schedule to avoid problems like this. That said, if you call them and explain the situation it is likely that they will credit the late charge back to you.", "title": "" } ]

[ { "docid": "133464c876056ea6f006d3b68d5352cd", "text": "In the US there is no set date. If all goes well there are multiple dates of importance. If it doesn't go well the budget process also may include continuing resolutions, shutdowns, and sequestrations.", "title": "" }, { "docid": "f2001e382087977d58faadeb8485548a", "text": "I'm not familiar with Gnucash, but I can discuss double-entry bookkeeping in general. I think the typical solution to something like this is to create an Asset account for what this other person owes you. This represents the money that he owes you. It's an Accounts Receivable. Method 1: Do you have/need separate accounts for each company that you are paying for this person? Do you need to record where the money is going? If not, then all you need is: When you pay a bill, you credit (subtract from) Checking and debit (add to) Friend Account. When he pays you, you credit (subtract from) Friend Account and debit (add to) Checking. That is, when you pay a bill for your friend you are turning one asset, cash, into a different kind of asset, receivable. When he pays you, you are doing the reverse. There's no need to create a new account each time you pay a bill. Just keep a rolling balance on this My Friend account. It's like a credit card: you don't get a new card each time you make a purchase, you just add to the balance. When you make a payment, you subtract from the balance. Method 2: If you need to record where the money is going, then you'd have to create accounts for each of the companies that you pay bills to. These would be Expense accounts. Then you'd need to create two accounts for your friend: An Asset account for the money he owes you, and an Income account for the stream of money coming in. So when you pay a bill, you'd credit Checking, debit My Friend Owes Me, credit the company expense account, and debit the Money from My Friend income account. When he repays you, you'd credit My Friend Owes Me and debit Checking. You don't change the income or expense accounts. Method 3: You could enter bills when they're received as a liability and then eliminate the liability when you pay them. This is probably more work than you want to go to.", "title": "" }, { "docid": "c7925c388a4ae383d3f58c8a67ecb5e9", "text": "Maybe it's just because of the foundation date. If I start a company on August 1st, I would like its FY starts on that date too, in order to track my first whole year. Would be quite useless to finish my year on December, after just five months. I want to have data of my first year after a twelve months activity.", "title": "" }, { "docid": "cfbb547b620fea17de7b1d8d8b42af06", "text": "it means that 20% of my closing balance each day will be added up over the course of a month and then given once the month is over. Yes apart from the typo 0.20% of every day balance. The rate itself is quoted for a year, so for a day it will be (Px0.20)/(100x365). Where P = The principal amount of every day. The credits will be every month-end. For leap year will be 366. Check with your Bank quite a few Banks still use the old convention of 360 days in year.", "title": "" }, { "docid": "c522e1e5a10c5380d40f06148f473874", "text": "In addition to the company-specific annual business cycle reasons and company-specific historical reasons mentioned in the other answers, there is another reason. Accounting firms tend to be very busy during January (and February and March) when most companies are closing and auditing their calendar-year books. If a company chooses its fiscal year to end at a different time of year, the accounting firms are more available, and the auditing costs might be lower.", "title": "" }, { "docid": "af8082def21f44a1b9f418f3c16c3302", "text": "\"Trying to figure out how much money you have available each day sounds like you're making this more complicated than it needs to be. Unless you're extremely tight and you're trying to squeeze by day by day, asking \"\"do I have enough cash to buy food for today?\"\" and so on, you're doing too much work. Here's what I do. I make a list of all my bills. Some are a fixed amount every month, like the mortgage and insurance premiums. Others are variable, like electric and heating bills, but still pretty predictable. Most bills are monthly, but I have a few that come less frequently, like water bills in my area come every 3 months and I have to pay property taxes twice a year. For these you have to calculate how much they cost each month. Like for the water bill, it's once every 3 months so I divide a typical bill by 3. Always round up or estimate a little high to be safe. Groceries are a little tricky because I don't buy groceries on any regular schedule, and sometimes I buy a whole bunch at once and other times just a few things. When groceries were a bigger share of my income, I kept track of what I spent for a couple of months to figure out an average per month. (Today I'm a little richer and I just think of groceries as coming from my spending money.) I allocate a percentage of my income for contributions to church and charities and count this just like bills. It's a good idea to put aside something for savings and/or paying down any outstanding loans every month. Then I add these up to say okay, here's how much I need each month to pay the bills. Subtract that from my monthly income and that's what I have for spending money. I get paid twice a month so I generally pay bills when I get paid. For most bills the due date is far enough ahead that I can wait the maximum half a month to pay it. (Worst case the bill comes the day after I pay the bills from this paycheck.) Then I keep enough money in my checking account to, (a) Cover any bills until the next paycheck and allow for the particularly large bills; and (b) provide some cushion in case I make a mistake -- forget to record a check or make an arithmetic error or whatever; and (c) provide some cushion for short-term unexpected expenses. To be safe, (a) should be the total of your bills for a month, or as close to that as you can manage. (b) should be a couple of hundred dollars if you can manage it, more if you make a lot of mistakes. If you've calculated your expenses properly and only spend the difference, keeping enough money in the bank should fall out naturally. I think it's a lot easier to try to manage your money on a monthly basis than on a daily basis. Most of us don't spend money every day, and we spend wildly different amounts from day to day. Most days I probably spend zero, but then one day I'll buy a new TV or computer and spend hundreds. Update in response to question What I do in real life is this: To calculate my available cash to spend, I simply take the balance in my checking account -- assuming that all checks and electronic payments have cleared. My mortgage is deducted from my checking every month so I post that to my checking a month in advance. I pay a lot of things with automatic charges to a credit card these days, so my credit card bills are large and can't be ignored. So subtract my credit card balances. Subtract my reserve amount. What's left is how much I can afford to spend. So for example: Say I look at the balance in my checkbook today and it's, say, $3000. That's the balance after any checks and other transactions have cleared, and after subtracting my next mortgage payment. Then I subtract what I owe on credit cards. Let's say that was $1,200. So that leaves $1,800. I try to keep a reserve of $1,500. That's plenty to pay my routine monthly bills and leave a healthy reserve. So subtract another $1,500 leaves $300. That's how much I can spend. I could keep track of this with a spreadsheet or a database but what would that gain? The amount in my checking account is actual money. Any spreadsheet could accumulate errors and get farther and farther from accurate values. I use a spreadsheet to figure out how much spending money I should have each month, but that's just to use as a guideline. If it came to, say, $100, I wouldn't make grandiose plans about buying a new Mercedes. If it came to $5,000 a month than buying a fancy new car might be realistic. It also tells me how much I can spend without having to carefully check balances and add it up. These days I have a fair amount of spending money so when, for example, I recently decided I wanted to buy some software that cost $100 I just bought it with barely a second thought. When my spending money was more like $100 a month, lunch at a fast food place was a big event that I planned weeks in advance. (Obviously, I hope, don't get stupid about \"\"small amounts\"\". If you can easily afford $100 for an impulse purchase, that doesn't mean that you can afford $100 five times a day every day.) Two caveats: 1. It helps to have a limited number of credit cards so you can keep the balances under control. I have two credit cards I use for almost everything, so I only have two balances to keep track of. I used to have more and it got confusing, it was easy to lose track of how much I really owed, which is a set up for getting in trouble.\"", "title": "" }, { "docid": "117688752ea927341f36a9f0a79df182", "text": "A debt is created when the service is rendered or the goods are sold to you. The bill is simply a way of recording the debt and alerting you to it.", "title": "" }, { "docid": "4f1b1c566e68e180bc8d2edd76e7676a", "text": "\"But I have been having a little difficulty to include the expenditure in my monthly budget as the billing cycle is from the 16th to 15th of the next month and my income comes in at the end of the month. Many companies will let you change the statement date if you want, so one way to do this would be to request your bank to have statements due at the end of the month or first of month. You can call and ask, this might resolve your problem entirely. How can I efficiently add the credit card expenditure to my monthly budget? We do this using YNAB, which then means our monthly budget is separate from our actual bank accounts. When we spend, we enter the transaction into YNAB and it's \"\"spent.\"\" Additionally, we just pay whatever our credit card balance is a day before the end of the month so it is at $0 when we do our budget discussion at the end of each month.\"", "title": "" }, { "docid": "4fd0d70975a9e25e6f4df9b653ffceee", "text": "\"I cannot answer the original question, but since there is a good deal of discussion about whether it's credible at all, here's an answer that I got from Bank of America. Note the fine difference between \"\"your account\"\" and \"\"our account\"\", which does not seem to be a typo: The payment method is determined automatically by our system. One of the main factors is the method by which pay to recipients prefer to receive payments. If a payment can be issued electronically, we attempt to do so because it is the most efficient method. Payment methods include: *Electronic: Payment is sent electronically prior to the \"\"Deliver By\"\" date. The funds for the payment are deducted from your account on the \"\"Deliver By\"\" date. *Corporate Check: This is a check drawn on our account and is mailed to the pay to recipient a few days before the \"\"Deliver By\"\" date. The funds to cover the payment are deducted from your account on the \"\"Deliver By\"\" date. *Laser Draft Check: This is a check drawn on your account and mailed to the pay to recipient a few days before the \"\"Deliver By\"\" date. The funds for the payment are deducted from your account when the pay to recipient cashes the check, just as if you wrote the check yourself. To determine how your payment was sent, click the \"\"Payments\"\" button in your Bill Pay service. Select the \"\"view payment\"\" link next to the payment. Payment information is then displayed. \"\"Transmitted electronically\"\" means the payment was sent electronically. \"\"Payment transaction number\"\" means the payment was sent via a check drawn from our account. \"\"Check number\"\" means the payment was sent as a laser draft check. Each payment request is evaluated individually and may change each time a payment processes. A payment may switch from one payment method to another for a number of reasons. The merchant may have temporarily switched the payment method to paper, while they update processing information. Recent changes or re-issuance of your payee account number could alter the payment method. In my case, the web site reads a little different: Payment check # 12345678 (8 digits) was sent to Company on 10/27/2015 and delivered on 10/30/2015. Funds were withdrawn from your (named) account on 10/30/2015. for one due on 10/30/2015; this must be the \"\"corporate check\"\". And for another, earlier one, due on 10/01/2015, this must be the laser draft check: Check # 1234 (4 digits) from your (named) account was mailed to Company on 09/28/2015. Funds for this payment are withdrawn from your account when the Pay To account cashes the check. Both payments were made based on the same recurring bill pay payment that I set up manually (knowing little more of the company than its address).\"", "title": "" }, { "docid": "f76bbbe3bdcffd70db05c0c0aa87e869", "text": "How about the fact that when a stranger calls me at 3pm on a Tuesday it means only a few things: * I've forgotten to pay a bill * Someone I know is in the hospital * Someone wants my opinion on something I don't care about At 3pm on a Tuesday (like nearly every other weekday afternoon) I'm busy. I answer the phone to ensure it isn't a forgotten bill or someone in the hospital, but it's usually someone trying to sell me stuff or ask for my opinions. I always decline. BECAUSE I'M BUSY, LIKE EVERY OTHER WORKING ADULT WITH A FAMILY!", "title": "" }, { "docid": "e3d56be34cfc8de0abbc03ac42ee8256", "text": "As with most things accounting/tax related it depends. In general though yes. As an example, if the client were to buy equipment on credit before fiscal year end, in lets say December, but did not pay until the next year started in January, then under cash basis they would not have the purchase accounted for until they made payment. That means they could not claim any deductions from the purchase. Under accrual, the purchase would have been put on the books in December, when the equipment was installed, and they would have been able to claim any deductions.", "title": "" }, { "docid": "845b0104a1698b092c1d865f1661ebdc", "text": "A loan is most generally a liability, a part of the balance sheet. Expenses & income are part of the income statement. Income is the net of revenues after expenses. The interest is an expense on the income statement, but the loan itself does not reside there unless if it is defaulted and forgiven. Then it would become a revenue or contra-expense, depending on the methodology. The original purpose of the income statement is to show the net inflows of short term operational accruals which would exclude new borrowing and repaid loans. The cash flow statement will better show each cash event such as borrowing debt, repaying debt, or paying off a bill. To show how a loan may have funded a bill, which in theory it directly did not because an entity, be it a person or business, is like a single tank of water with multiple pipes filling and multiple pipes extracting, so it is impossible to know which exact inflow funded which exact outflow unless if there is only one inflow per period and one outflow per the same period. That being said, with a cash flow statement, the new loan will show a cash inflow when booked under the financing portion, and paying a bill will show a cash outflow when booked under the operating portion. With only those two transactions booked and an empty balance sheet beforehand, it could be determined that a new loan funded a bill payment.", "title": "" }, { "docid": "b288f4246d6d89e0c58cf716df4993bd", "text": "\"$500, this is called \"\"cash basis\"\" accounting. A large company might handle it otherwise, counting shipments/billings as revenue. Not you. Yet.\"", "title": "" }, { "docid": "5f4c85a0ec524834a22e73607839809b", "text": "I wrote a small Excel-based bookkeeping system that handles three things: income, expenses, and tax (including VAT, which you Americans can rename GST). Download it here.", "title": "" }, { "docid": "9f62569be9b7c332637d6eeed835ddb2", "text": "It depends on the bank and network. Banks are to provide outgoing data at the certain time for the processing by the central clearing house (the Federal Reserve system, for ACH), which then distributes incoming data back to the banks. All this has to be done between the closing of the business day and the opening of the next one. If the transaction hasn't completed the full path during that time - it will wait at the position it was stuck at until the next cycle - next night. That's why sometimes ACH transactions take more than 1 day to complete (if, for example, multiple Fed banks have to be involved).", "title": "" } ]

[ { "docid": "300c2b236171618b127627cb296130ad", "text": "Through your question and then clarification through the comments, it looks like you have a U.S. LLC with at least two members. If you did not elect some other tax treatment, your LLC will be treated as a partnership by the IRS. The partnership should file a tax return on Form 1065. Then each partner will get a Schedule K-1 from the partnership, which the partner should use to include their respective shares of the partnership income and expenses on their personal Forms 1040. You can also elect to be taxed as an S-Corp or a C-Corp instead of a partnership, but that requires you to file a form explicitly making such election. If you go S-Corp, then you will file a different form for the company, but the procedure is roughly the same - Income gets passed through to the owners via a Schedule K-1. If you go C-Corp, then the owners will pay no tax on their own Form 1040, but the C-Corp itself will pay income tax. As far as whether you should try to spend the money as business expense to avoid paying extra tax - That's highly dependent on your specific situation. I'd think you'd want to get tailored advice for that.", "title": "" } ]

[ { "docid": "dc55d2f06ed16eb2a0e502d86f342e03", "text": "\"So the main reason that you aren't getting answers is that the question is not really answerable on this site without putting a lot of details about the expenses of your company online. Even then you will need someone who specializes in Canadian taxes to go through those details to be sure. Most of those people feel like they should be paid a decent amount per hour to go through the details. That being said, I dealt with a similar question for my contract work company by just taking a couple weekends and calculating the taxes myself on estimated numbers. It was time consuming but not really that hard. I thought I might have to buy software, but all I needed was a small calculator. Along the way I learned a few details that helped me lower my overall tax exposure. I found that Neil was generally correct that you are \"\"taxed on profits\"\" but it is worth doing the taxes yourself because the details can really matter.\"", "title": "" }, { "docid": "bd1ea9e7005d801f8ae1f194260d983f", "text": "As far as accounting goes, if you speak with a CPA, you may be able to reduce the business tax liability. So... the company buys the truck, deducts it, and the adjusted gross income drops, so he'd pay less tax. Or something. You said anything helps, hope you meant it!", "title": "" }, { "docid": "547b4e9e1520ac085e0ddc41d12abe56", "text": "It sounds like something is getting lost in translation here. A business owner should not have to pay personal income tax on business expenses, with the caveat that they are truly business expenses. Here's an example where what you described could happen: Suppose a business has $200K in revenue, and $150K in legitimate business expenses (wages and owner salaries, taxes, services, products/goods, etc.) The profit for this example business is $50K. Depending on how the business is structured (sole proprietor, llc, s-corp, etc), the business owner(s) may have to pay personal income tax on the $50K in profit. If the owner then decided to have the business purchase a new vehicle solely for personal use with, say, $25K of that profit, then the owner may think he could avoid paying income tax on $25K of the $50K. However, this would not be considered a legitimate business expense, and therefore would have to be reclassified as personal income and would be taxed as if the $25K was paid to the owner. If the vehicle truly was used for legitimate business purposes then the business expenses would end up being $175K, with $25K left as profit which is taxable to the owners. Note: this is an oversimplification as it's oftentimes the case that vehicles are partially used for business instead of all or nothing. In fact, large items such as vehicles are typically depreciated so the full purchase price could not be deducted in a single year. If many of the purchases are depreciated items instead of deductions, then this could explain why it appears that the business expenses are being taxed. It's not a tax on the expense, but on the income that hasn't been reduced by expenses, since only a portion of the big ticket item can be treated as an expense in a single year.", "title": "" }, { "docid": "18aa3fdbbe9aca96da6f7a89dc764210", "text": "If you sell through an intermediate who sets up the shop for you, odds are they collect and pay the sales tax for you. My experience is with publishing books through Amazon, where they definitely handle this for you. If you can find a retailer that will handle the tax implications, that might be a good reason to use them. It looks like Etsy uses a different model where you yourself are responsible for the sales tax, which requires you to register with your state (looks like this is the information for New York) and pay the taxes yourself on a regular basis; see this link for a simple guide. If you're doing this, you'll need to keep track of how much tax you owe from your sales each month, quarter, or year (depending on the state laws). You can usually be a sole proprietor, which is the easiest business structure to set up; if you want to limit your legal liability, or work with a partner, you may want to look into other forms of business structure, but for most craftspeople a sole proprietorship is fine to start out with. If you do a sole proprietorship, you can probably file the income on a 1040 Schedule C when you do your personal taxes each year.", "title": "" }, { "docid": "f44b20011b4c0ef83ce99bfe19e6e1ca", "text": "It's not quite clear what you are asking, so I'll answer a few possible interpretations. Businesses pay taxes on their profits. So if your business took a million pounds in revenue (e.g. sold a million pounds worth of stuff) then you would subtract (roughly speaking) everything the business spent on making and selling that stuff, and pay taxes only on the profit. VAT however is a different matter, and you would have to pay VAT on all of that income (technically the VAT portion isn't even income - it's tax you are forced to collect on behalf of the government). If your business made a million pounds pounds profit, it would pay tax on all of that million (subject to what a tax accountant can do to reduce that, which ought to be considerable). You can't subtract your personal living expenses like that. However the company can pay you a salary, which counts as an expense and the company doesn't pay tax on that. You might also take some money from the company as dividends. Both salary and dividends count as personal income to yourself, and you will need to pay personal income tax on them. As for the Ferrari, it depends on whether you can justify it as a business expense. A lot of companies provide cars for their employees so that they can use them for business - however you have to be able to show that IS for business, otherwise they are taxed like salary. The rules for company cars are quite complicated, and you would need an accountant. If this is a real rather than hypothetical situation, definitely get a tax accountant involved.", "title": "" }, { "docid": "ece04d2bd05cd3126ea8db90f178fe7e", "text": "\"It's not possible to determine whether you can \"\"expect a refund\"\" or whether you are claiming the right number of exemptions from the information given. If your wife were not working and you did not do independent contracting, then the answer would be much simpler. However, in this case, we must also factor in how much your contracting brings in (since you must pay income tax on that, as well as Medicare and, probably, Social Security), whether you are filing jointly or separately, and your wife's income from her business. There are also other factors such as whether you'll be claiming certain child care expenses, and certain tax credits which may phase out depending on your income. If you can accurately estimate your total household income for the year, and separate that into income from wages, contracting, and your wife's business, as well as your expenses for things like state and local income and property taxes, then you can make a very reasonable estimate about your total tax burden (including the self-employment taxes on your non-wage income) and then determine whether you are having enough tax withheld from your paycheck. Some people may find that they should have additional tax withheld to compensate for these expenses (see IRS W-4 Line #6).\"", "title": "" }, { "docid": "a87cca5fbc1756efd03f929a1e73182a", "text": "The short answer is yes, losses get passed through to members. Limits/percentages do apply, primarily based on your share in the business. Check out the final post in this thread: http://community2.business.gov/t5/Other-Business-Issues/Paying-oneself-in-a-LLC/td-p/16060 It's not a bad little summary of the profit/loss pass-through. Regarding your 60K/60K example: the amount of money you earn in your day job will impact how much loss you can claim. Unfortunately I can't find anything more recent at the IRS or business.gov, but see this from 2004 - 40K was the limit before the amount you could claim against started to be mitigated: http://en.allexperts.com/q/Tax-Law-Questions-932/tax-loss-pass.htm HTH", "title": "" }, { "docid": "f0e35b50511df8a0a78fcdf833adddd5", "text": "Compliance issues vary from country to country and, in the US, state to state as well. There'll be a number of levels, though: Bear in mind that it is not that these taxes and responsibilities don't apply to sole traders or unregistered businesses, it's just that being registered signals your existence and introduces the bureaucracy to you all at once. Update: Your accountant should manage your company and consumer tax calculations and submissions on your behalf (and a good one will complete all the paperwork on time plus let you know well in advance what your liability is, as well as offer advice on reducing and restructuring these liabilities). You're probably on your own for local taxes unless your accountant deals with these and is local to even know what they are.", "title": "" }, { "docid": "c37c859d76ab2b25b7c9ce489d4b5c82", "text": "There is more than one kind of tax. It is a little confusing because in reality the tax revenues collected by the Government aren't earmarked to a particular usage based on where they came from, usually. Well, the Gov't often CLAIMS they do, but for all practical matters it all goes in a big bucket. So just because a business or individual isn't paying income taxes doesn't mean they aren't paying anything for the use of Government furnished infrastructure/services. You are limiting the scope of your question to Income Taxes, which are taxes paid on profits to a business or individual. It makes perfect sense that you wouldn't pay a tax on something you didn't get. However, you aren't considering taxes that ARE being paid even by a company that isn't profitable. For example consumption taxes, employment taxes, and other fees. That same company paid sales tax on all the supplies it purchased, and probably collected/paid sales taxes on anything it sold. To take one of your examples, it paid for its share of using the roads through Government imposed taxes on fuel. Don't worry about the Government. They know how to get theirs. They might not pull it from your right pocket, but they will make sure to get it from the left.", "title": "" }, { "docid": "718905db40990ac18df585bab389f3f1", "text": "Your argument with elvendude happened because your comment makes it appear that you think that if a business has less cash at the end of a year than at the beginning, the business does not need to pay taxes. elvendude is trying to show you that this isn't true.", "title": "" }, { "docid": "7691b04c045df57a892e781356f4004f", "text": "Washington State doesn't have a state income tax for individuals, so unless you've got a business there's nothing to file. Find out more on their website.", "title": "" }, { "docid": "f358501a7f9abf6f372a1afd9f0f7be5", "text": "except that most companies are small companies and most business owners end up as families at some point. I'm starting a business abroad and will be taxed at 35% in the USA even if I don't live there. There's ways to get around it, but I'm not sure exactly how to do it yet nor am I making enough money yet to justify the up front expense of doing this", "title": "" }, { "docid": "7ea1758db9e303c44c12f3fd0ebcf923", "text": "\"I pay taxes on revenue. You do have the ability to deduct expenses, though it's not as comprehensive as what companies can do: These figures apply to everybody, so those that earn more get taxed more on thee additional income in each bracket (meaning the first $100,000 of taxable income is taxed the same for everybody at one rate, the next $100,000 at a different rate, etc.) So you do get to deduct personal expenses and get taxed on \"\"profit\"\" - but since the vast majority of people don't keep detailed records of what they spend, it's much simpler just to use blanket deduction amounts for everyone. Companies have much more detailed systems in place to track and categorize expenses, so it's easier to just tax on net profit. Plus, the corporate tax rate is much higher than the average individual tax rate - would you trade more deductions for a higher tax rate?\"", "title": "" }, { "docid": "5b287fe3e5c18c67590e241a102689ff", "text": "\"1 - in most cases, the difference between filing joint or married filing single is close to zero. When there is a difference you're better off filing joint. 2 - The way the W4 works is based on how many allowances you claim. Unfortunately, even in the day of computers, it does not allow for a simple \"\"well my deduction are $xxx, don't tax that money.\"\" Each allowance is equal to one exemption, same as you get for being you, same as the wife gets, same as each kid. 3 people X $3800 = $11,400 you are telling the employer to take off the top before calculating your tax. She does this by using Circular E and is able to calculate your tax as you request. If one is in the 15% bracket, one more exemption changes the tax withheld by $570. So if you were going to owe $400 in April, one few exemption will have you overpay $170. i.e. in this 15% bracket, each exemption changes annual withholding by that $570. For most people, running the W4 numbers will get them very close, and only if they are getting back or owing over $500, will they even think of adjusting. 3 - My recently published Last Minute Tax Moves offers a number of interesting ideas to address this. The concept of grouping deductions in odd years is worth noting. 4 - I'm not sure what this means, 2 accounts each worth $5000 should grow at the same rate if invested the same. The time it makes sense to load one person's account first is if they have better matching. You say you are not sure what percent your wife's company matches. You need to change this. For both of your retirement plans you need to know every detail, exact way to maximize matching, expense ratios for the investments you choose, any other fees, etc. Knowledge is power, and all that. In What is an appropriate level of 401k fees or expenses in a typical plan? I go on to preach about how fees can wipe out any tax benefit over time. For any new investor, my first warning is always to understand what you are getting into. If you can't explain it to a friend, you shouldn't be in it. Edit - you first need to understand what choices are within the accounts. The 4% and 6% are in hindsight, right? These are not fixed returns. You should look at the choices and more heavily fund the account with the better selection. Deposit to her account at least to grab the match. As far as the longer term goals, see how the house purchase goes. Life has a way of sending you two kids and forcing you to tighten the budget. You may have other ideas in three years. (I have no P2P lending experience, by the way.) Last - many advise that separate finances are a bad path for a couple. It depends. Jane and I have separate check books, and every paycheck just keep enough to write small checks without worry, most of the money goes to the house account. Whatever works for you is what you should do. We've been happily married for most of the 17 years we've been married.\"", "title": "" }, { "docid": "829ff126b899af4b65aa225ce89badc3", "text": "Lets just get to the point...Ordinary income (gains) earned from S-Corp operations (i.e. income earned after all expenses for providing services or selling products) is passed through to the owners/shareholders and taxed at the owner's personal tax rate. Separately, if an S-Corp earns capital gains (i.e. the S-Corp buys and sells stock, earns dividends from investments, etc), those gains are passed through to the owners and taxed at a capital gains rate Capital gains are not the same as ordinary income (gains). Don't get the two confused, they are as different for S-Corp taxation as they are for personal taxation. In some cases an exception occurs, but only when the S-Corp was formally a C-Corp and the C-Corp had non-distributed earnings or losses. This is a separate issue whereas the undistributed C-Corp gains/losses are treated differently than the S-Corp gains/losses. It takes years of college coursework and work experience to grasp the vast arena of tax. It should not be so complex, but it is this complex. It is not within the scope of the non-tax professional to make sense of this stuff. The CPA exams, although very difficult and thorough, only scrape the surface of tax and accounting. I hope this provides some perspective on any questions regarding business tax for S-Corps and any other entity type. Hire a good CPA... if you can find one.", "title": "" } ]

[ { "docid": "475ff0dce200c39f9e5720194d86cca2", "text": "Miscellaneous income -- same category used for hobbies.", "title": "" }, { "docid": "0e0ae1e5e3f2fc011f870fc4b608327e", "text": "\"You can list it as other income reported on line 21 of form 1040. In TurboTax, enter at: - Federal Taxes tab (Personal in Home & Business) - Wages & Income -“I’ll choose what I work on” Button Scroll down to: -Less Common Income -Misc Income, 1099-A, 1099-C. -The next screen will give you several choices. Choose \"\"Other reportable Income\"\". You will reach a screen where you can type a description of the income and the amount. Type in the amount of income and categorize as Tutoring.\"", "title": "" } ]

[ { "docid": "2fca1facc06f3225c3ebc700424e3432", "text": "Colloquially, there's no difference except for the level of risk (which is an estimate anyway). Classically, investment is creating wealth through improvement or production. Purchasing a house with the intent to renovate and sell it for a profit would be an investment, as the house is worth more when you sell than when you bought it. Speculation, on the other hand, is when you hope to make a profit through changes in the market itself. Purchasing a house, letting it sit for 6 months, and selling it for a profit would be speculation.", "title": "" }, { "docid": "033b3dc786aabf615ad1a76442c0e644", "text": "\"There are moral distinctions that can be drawn between gambling and investing in stocks. First and I think most important, in gambling you are trying to get money for nothing. You put $100 down on the roulette wheel and you hope to get $200 back. In investing you are not trying to get something for nothing. You are buying a piece of a hopefully profit-making company. You are giving this company the use of your money, and in exchange you get a share of the profits. That is, you are quite definitely giving something: the use of your money for a period of time. You invest $100 of your money, and you hope to see that grow by maybe $5 or $10 a year typically. You may get a sudden windfall, of course. You may buy a stock for $100 today and tomorrow it jumps to $200. But that's not the normal expectation. Second, gambling is a zero sum game. If I gamble and win $100, then someone else had to lose $100. Investing is not a zero sum game. If I buy $100 worth of stock in a company and that grows to $200, I have in a sense \"\"won\"\" $100. But no one has lost $100 to give me that money. The money is the result of the profit that the company made by selling a valuable product or service to customers. When I go to the grocery store and buy a dozen eggs for $2, some percentage of that goes to the stockholders in the grocery store, say 5 cents. So did I lose 5 cents by buying those eggs? No. To me, a dozen eggs are worth at least $2, or I wouldn't have bought them. I got exactly what I paid for. I didn't lose anything. Carrying that thought further, investing in the stock market puts money into businesses. It enables businesses to get started and to grow and expand. Assuming these are legitimate businesses, they then provide useful products and services to customers. Gambling does not provide useful products and services to anyone -- except to the extent that people enjoy the process of gambling, in which case you could say that it is equivalent to playing a video game or watching a movie. Third -- and these are all really related -- the whole goal of gambling is to take something from another person while giving him nothing in return. Again, if I buy a dozen eggs, I give the store my $2 (or whatever amount) and I get a dozen eggs in exchange. I got something of value and the store got something of value. We both walk away happy. But in gambling, my goal is that I will take your money and give you nothing in return. It is certainly true that buying stocks involves risk, and we sometimes use the word \"\"gamble\"\" to describe any risk. But if it is a sin to take a risk, then almost everything you do in life is a sin. When you cross the street, there is a risk that you will be hit by a car you didn't see. When you drink a glass of water, there is the risk that it is contaminated and will poison you. When you get married, there is a risk that your spouse will divorce you and break your heart. Etc. We are all sinners, we all sin every day, but we don't sin quite THAT much. :-) (BTW I don't think that gambling is a sin. Nothing in the Bible says that gambling is a sin. But I can comprehend the argument for it. I think gambling is foolish and I don't do it. My daughter works for a casino and she has often said how seeing people lose money in the casino regularly reminds her why it is stupid to gamble. Like she once commented on people who stand between two slot machines, feed them both coins and then pull the levers down at the same time, \"\"so that\"\", she said, \"\"they can lose their money twice as fast\"\".)\"", "title": "" }, { "docid": "814386e466e2fcb8282aa0e2612cbcea", "text": "\"I am a healthcare compliance consultant making good money. I understand the logic behind ROI and education. I was trying to raise the point that choosing what to study is more than what you make when you're done with college or what the \"\"value\"\" of your degree is. Can't we value education intrinsically? Why does it have to be tied to ROI? Maybe the business sub isnt the best place for this debate, but I think its important.\"", "title": "" }, { "docid": "186949c06eb488b98bb884fff413d4d4", "text": "Renting a house out using a management company is mostly passive income. Earning affiliate income from companies that pay on a recurring basis is closer to passive income.", "title": "" }, { "docid": "f2eb9fcac14a964a1438a708467f2e8b", "text": "Why is one person more succesfull than another? At the end of the day I think it simply comes down to personal choices, some people will choose to invest their time in profitable indevours and some will not. This of course assumes people have a reasonable access to a mean of improvement (free education, vocational training, etc.)", "title": "" }, { "docid": "58f5c3b4f9fa26b9553a047ba094966b", "text": "Agreed. If you create a small sustainable biz for yourself, you create the freedom to pursue the hobby project ideas as well. You have a strong base which protects you. A software biz like ours is WAY more tolerant than a job. Like when I got sick for 3 mos and couldn't work at ALL, we didn't grow, but we didn't collapse either. It pretty much coasted. That means we have way more free time than we think we do.", "title": "" }, { "docid": "6adac1714e527948fccc024674e5b61a", "text": "\"I appreciate your taking the time to shoot some holes in this oft repeated statistic. However, I do disagree on some points. > Nor is there anything wrong with the person then ENDING that \"\"business\"\" and moving on... to another (different name, different field) business... or taking a job with some company There may not be anything shameful about doing that, but that scenario is, indeed, a business failure. People do not shutter a profitable (successful) business and then go to work for someone else. I believe a key contributor to the confusion is talking about the self-employed and business owners in the same breath. Someone who's self-employed basically owns a job. His income will always be directly proportional to the amount of time spent working and the company does not exist apart from himself. A business owner, on the other hand, has processes/equipment/staff/IP in place that generates income whether or not she gets out of bed in the morning. These are different people with different goals and cannot be lumped into the same demographic block.\"", "title": "" }, { "docid": "f06119600d3aea07f3eb0978ad02434e", "text": "You would report it as business income on Schedule C. You may be able to take deductions against that income as well (home office, your computer, an android device, any advertising or promotional expenses, etc.) but you'll want to consult an accountant about that. Generally you can only take those kinds of deductions if you use the space or equipment exclusively for business use (not likely if it's just a hobby). The IRS is pretty picky about that stuff.", "title": "" }, { "docid": "15f8fe31dafe995883d263bca748b91e", "text": "I know. It's crazy, if you step back and look at it. The issue is that startup media is really tabloid media. It focuses only on the big, unlikely wins, which appeals to our base instincts. We want to believe that we are Cinderella dressed up in Ruby on Rails. But the fact is, the more you read about extraordinary things, the more likely you are to think it will happen regularly, and happen to you. That's a basic cognitive bias, the availability heuristic. That, and the cooing of venture capitalists, is what leads people to believe that their hobbies or fun non-profit projects could and should make them rich.", "title": "" }, { "docid": "70959a94ab8dc442e876159289f59fd4", "text": "\"? You quoted an oft cited oft disproven false factoid. It's extremely biased. Like you seem to be. Most of those \"\"self made\"\", notice those quotes, people came from money. Their business is \"\"self made\"\", with family money. Like the article implies.\"", "title": "" }, { "docid": "691ed606e941985e1cf97265ec9495c9", "text": "You could say the same thing but replace money with pacman and it would be true for the guys who are really good at pacman. Making money can be no different than any other hobby. The only difference is that you can engage in direct exchange after the fact instead of barter exchange. But make no mistake enjoying it does not make warren any more insane than the pacman guys (or more seriously most academics).", "title": "" }, { "docid": "277aeb456c68a74536054f63adc22af7", "text": "These 'issues' don't exclusively relate to the 'sharing economy', the challenge of uncertainty would exist for any small business / independent contractor. It's not as if people didn't work as independent contractors in these industries before, it's just now the industries are being enhanced and overhead lowered, from technology. For example: Uber driver vs Medallion [Leasing] Taxi Driver AirBNB landlord vs Apartment landlord, vacation rental landlord, or traditional bed & breakfast owner. PostMates messenger vs traditional bike messenger", "title": "" }, { "docid": "84ab27a123f3a72dbaf250f4d0c4b850", "text": "One owns bar/restaurants and is a millionaire, but claims he never used anything he learned from the degree. He is more of a COO so in a way he doesn't need to think about the economics of the business. He just needs to operate/maintain. The other, lost his job so parents bought him a gas station. These people never really went the corporate route so they aren't the best examples, imo.", "title": "" }, { "docid": "a4753cca35c315b3f8d6cff278a55bfe", "text": "By simplifying my hobbies, I have more time for money-saving activities such as researching deals, creating an effective coupon-clipping system, and making more foods from scratch (which doubles as entertainment since I enjoy it). When I run frantically from activity to activity, I tend to mindlessly throw away more money, too. By living more intentionally, I think about my purchases more as well. On the simplifying note, never underestimate the power of less stuff in terms of being able to fit into a smaller home. That leads to less space to heat and cool, which leads to savings. Everyone has their comfort level with less, of course, and some people love space. There are just trade-offs to more stuff.", "title": "" }, { "docid": "a0df265d0fc10366cd384ff52dbfec00", "text": "Possible alternative: In my case, the part-time locksmithing is a small enough portion of my I come that I just submit it as hobby income, rather than trying to track it as a separate entity.", "title": "" } ]

[ { "docid": "a1c74729f1dca762dfb8b1500a304afd", "text": "I'll assume you are asking about a check for some kind of work or service that you provided them, that they hired your company to do. No large business will do that. In their records they have a contract with your company to provide services. If they write you a personal check it won't match with the contract, and when the auditors see that they will scream blue murder. Whoever wrote the check will have to prove that you are legitimately the same thing as the company (that doesn't mean taking your word for it). They may also have to show they weren't conspiring with you to commit tax fraud ( that wasn't your intention of course, was it?) .", "title": "" } ]

[ { "docid": "17609ed5dd1c22d3b7733a7358c9a2a2", "text": "\"I expect the company wanted to pay you for a product (on a purchase order) rather than as a contract laborer. Whatever. Would they be willing to re-issue the check to you as a sole proprietor of a business named ABC Consulting (or anything like that)? You can register your sole proprietor business with the state using a \"\"Doing Business As\"\" (DBA, or fictitious name), and then open the bank account for your business using the check provided by the customer as the first deposit. (There is likely a smaller registration fee for the DBA.) If they won't re-issue the check and you have to go the LLC route... Scrounge up $125 doing odd jobs or borrowing from a friend or parents. Seriously, anyone can earn that amount of money in a week or two. Besides the filing fee for the LLC, your bank may require you to provide an Operating Agreement (which is not required by the State). The Operating Agreement can be simple, or more complex if you have a partner (even if it's a spouse). If you do have a partner, it is essential to have such an agreement because it would specify the responsibilities and benefits allocated to each partner, particularly in the event of equity distributions (taking money out of the business, or liquidating and ending the LLC). There are websites that will provide you a boilerplate form for Operating Agreements. But if your business is anything more than just single member LLC, you should pay an attorney to draw one up for you so the wording is right. It's a safeguard against potential future lawsuits. And, while we're at it, don't forget to obtain a EIN (equivalent to a SSN) from the IRS for your LLC. There's no cost, but you'll have to have it to file taxes as a business for every year the LLC exists and has income. Good luck!\"", "title": "" }, { "docid": "3c9b91c35eb318ee1c0c35dfe4d2df3d", "text": "If you're a sole proprietor there's no reason to have a separate business account, as long as you keep adequate records, as you are one and the same for tax purposes. My husband and I already have 5 accounts and a mortgage with one bank. I don't see the need to open up yet another account. As a contracted accountant, I don't need to write business checks, and my expenses are minimal. As long as I have an present my assumed business name certificate and ID, there's no reason for a bank not to deposit into my personal account.", "title": "" }, { "docid": "dcf7b6129f6a8a9145f65dc426f9870e", "text": "PocketSmith is another tool you might like to consider. No personal banking details are required, but you can upload your transactions in a variety of formats. Pocketsmith is interesting because it really focus on your future cash flow, and the main feature of the interface is around having a calendar(s) where you easily enter one off or repetitive expenses/income. http://www.pocketsmith.com/", "title": "" }, { "docid": "46691bddaf9882f2bfd4e34befd3fefa", "text": "You can't cash the check silly. How can you go off on a rant when you can't even tell the difference between a real check and a promotional tool. If you don't want to call in an get info throw it away....simple. This thread made me laugh. Thanks for that. Good day.", "title": "" }, { "docid": "9e647855ce80fa9aaed40fc2b7b5c1b3", "text": "\"I know of one practical difference between business checks (8\"\" check) and personal checks (6\"\" check) dealing with the paper check conversion rule to electronic debit. The National ACH Association, created a rule that allows receivers of checks without an \"\"Auxiliary On-Us\"\" field, to convert your check into an electronic debit via the ACH network. By default, 6\"\" checks (personal checks) do NOT have the AUX ON-US field, and are eligible to be converted to ACH debit. If you do not want your paper checks converted to ACH debits, then start using business checks with the AUX ON-US field populated. You can use business checks for business or personal checking accounts. More information can be found below: http://www.deluxe.com/miscfiles/pdf/AuxOnUsField.pdf http://www.achrulesonline.org/\"", "title": "" }, { "docid": "6aa022f401826c82028f3335f5cd8c4d", "text": "I'm going to give the checkmark to Joe, but I wanted to convey my personal experience. I bank with TD in New Jersey and was informed by the teller that I simply needed to endorse the check myself and indicate Parent of Minor. I cannot attest if other banks will accept this, but it at least works for TD and my situation in particular.", "title": "" }, { "docid": "d3b115181031954eaaccb2a341b09b63", "text": "While you can print that on the check, it isn't considered legally binding. If you are concerned about a check not being deposited in a timely manner, consider purchasing a cashier's check instead. This doesn't solve the problem per se, but it transfers responsibility of tracking that check from you to the bank.", "title": "" }, { "docid": "32d72da103ae8a43c1c999c9c204cb7e", "text": "I feel the change should not be to remove the stigma from personal default. It should be to add it, in very large amounts, to corporate default. Every member of a defaulting corporation should be ashamed to be seen in public. The have let their culture down and should be mortified. So if you defaulted on your mortgage, yeah, that's not great. If you're Donald Trump, that filed 11 a couple times, he can go fuck himself.", "title": "" }, { "docid": "da1a151451e9fea0a7fda6d5b8185a0f", "text": "It's not the legitimate checks or bounced checks that are the problem, it's phony checks issued against real accounts with actual money in them. All the security measures on the check don't amount to crap if someone can print up some legitimate looking checks with bogus amounts on them, or even just steal some printed checks and sign something resembling the authorized signature.", "title": "" }, { "docid": "f1b045c543a90f25c4cfb615618dd4e6", "text": "I don't know, ask the various companies I'm forced to do business with why in the hell they want me to stop by their office so I can drop a check off vs just using some means of digital payment. I would fucking LOVE to ditch paper checks.", "title": "" }, { "docid": "51fb633f62e19dd495c87a1636237e4e", "text": "\"To put a positive spin on the whole thing, maybe it's a small family shop, and having the check made out to \"\"cash\"\" means that your barber can hand it to someone else without the need to countersign. Or maybe his last name is \"\"Cash\"\" - there was a pretty famous singer who fit that description. Either way, it's not your place to nanny his finances.\"", "title": "" }, { "docid": "8f414572f1273861b9e4d36c3ad3e02a", "text": "As I replied to someone else who said that: I'm often having to send stuff with the check. Paperwork, a bill etc. While that would work to a person who knows me, it's usually not going to work with a business or government who needs to know why I'm sending this check.", "title": "" }, { "docid": "a6a8bc7193252f2ccfec889fe8110dcb", "text": "No, most check deposits are processed that way. Banks transmit the pictures of the checks between themselves, and allow business customers to deposit scans for quite some time now. I see no reason for you to be concerned of a check being in a dusty drawer, it's been deposited, cannot be deposited again. If you're concerned of forgery - well, nothing new there.", "title": "" }, { "docid": "df87670ac7382775987c809f727ed906", "text": "\"A.1 and B.1 are properly balanced, but \"\"Business Expense\"\" is an expense, not an asset. The T entries should be timestamped. The time should be equal to the time on the credit card receipts. This will make audit and balancing easier. A or B can be used, but if the the business is to be reimbursed for personal expenses, the accounts should be renamed to reflect that fact. More explicit account names could be \"\"Business expense - stationary\"\" and \"\"Personal expense - lunch\"\" or even better \"\"Personal expense - cammil - lunch\"\". With a consistent format, the account names can be computer parsed for higher resolution and organization, but when tallying these high resolution accounts, debits & credits should always be used. When it comes time to collect from employees, only accounts with \"\"Personal expense\"\" need be referenced. When it comes time to collect from \"\"cammil\"\", only net accounts of \"\"Personal expense - cammil\"\" need be referenced. An example of higher resolution, to determine what \"\"cammil\"\" owes, would be to copy the main books, reverse any account beginning with \"\"Personal expense - cammil\"\", and then take the balance. Using the entries in the question as an example, here's the account to determine \"\"cammil\"\"'s balance: Now, after all such balancing entries are performed, the net credit \"\"Personal expense - cammil\"\" is what \"\"cammil\"\" owes to the business. The scheme for account names should be from left to right, general to specific.\"", "title": "" }, { "docid": "0b765d68528c6fdf490f9af8dd659d99", "text": "\"Checks sold as \"\"business checks\"\" are larger than checks sold as \"\"personal checks\"\". Personal checks are usually 6\"\" x 2 1/2\"\" while business checks are 8 1/2 \"\" x 3 to 4 \"\". Also, business checks typically have a tear-off stub where you can write who the check was made out to and what it was for. In this computer age that seems pretty obsolete to me, I enter the check into the computer, not write it on a stub, but I suppose there are still very small businesses out there that doesn't use a computerized record-keeping system. These days business checks are often printed on 8 1/2 by 11\"\" paper -- either one per sheet with a big tear-off or 3 per sheet with no tear off -- so you can feed them through a computer printer easily. Nothing requires you to use \"\"business checks\"\" for a business account. At least, I've always used personal checks for my business account with no problem. These days I make almost all payments electronically, I think I write like one paper check a year, so it's become a trivial issue. Oh, and I've never had any problem getting a check printer to put my business name on the checks or anything like that.\"", "title": "" } ]

[ { "docid": "d55b27429ba53a663bc7257aa958fc75", "text": "\"I am going to keep things very simple and explain the common-sense reason why the accountant is right: Also, my sister in law owns a small restaurant, where they claim their accountant informed them of the same thing, where a portion of their business purchases had to be counted as taxable personal income. In this case, they said their actual income for the year (through their paychecks) was around 40-50K, but because of this detail, their taxable income came out to be around 180K, causing them to owe a huge amount of tax (30K ish). Consider them and a similarly situated couple that didn't make these purchases. Your sister in law is better off in that she has the benefit of these purchases (increasing the value of her business and her expected future income), but she's worse off because she got less pay. Presumably, she thought this was a fair trade, otherwise she wouldn't have made those purchases. So why should she pay any less in taxes? There's no reason making fair trades should reduce anyone's tax burden. Now, as the items she purchased lose value, that will be a business loss called \"\"depreciation\"\". That will be deductible. But the purchases themselves are not, and the income that generated the money to make those purchases is taxable. Generally speaking, business gains are taxable, regardless of what you do with the money (whether you pay yourself, invest it, leave it in the business, or whatever). Generally speaking, only business losses or expenses are deductible. A purchase is an even exchange of income for valuable property -- even exchanges are not deductions because the gain of the thing purchased already fairly compensates you for the cost. You don't specify the exact tax status of the business, but there are really only two types of possibilities. It can be separately taxed as a corporation or it can be treated essentially as if it didn't exist. In the former case, corporate income tax would be due on the revenue that was used to pay for the purchases. There would be no personal income tax due. But it's very unlikely this situation applies as it means all profits taken out of the business are taxed twice and so small businesses are rarely organized this way. In the latter case, which is almost certainly the one that applies, business income is treated as self-employment income. In this case, the income that paid for the purchases is taxable, self-employment income. Since a purchase is not a deductible expense, there is no deduction to offset this income. So, again, the key points are: How much she paid herself doesn't matter. Business income is taxable regardless of what you do with it. When a business pays an expense, it has a loss that is deductible against profits. But when a business makes a purchase, it has neither a gain nor a loss. If a restaurant buys a new stove, it trades some money for a stove, presumably a fair trade. It has had no profit and no loss, so this transaction has no immediate effect on the taxes. (There are some exceptions, but presumably the accountant determined that those don't apply.) When the property of a business loses value, that is usually a deductible loss. So over time, a newly-purchased stove will lose value. That is a loss that is deductible. The important thing to understand is that as far as the IRS is concerned, whether you pay yourself the money or not doesn't matter, business income is taxable and only business losses or expenses are deductible. Investments or purchases of capital assets are neither losses nor expenses. There are ways you can opt to have the business taxed separately so only what you pay yourself shows up on your personal taxes. But unless the business is losing money or needs to hold large profits against future expenses, this is generally a worse deal because money you take out of the business is taxed twice -- once as business income and again as personal income. Update: Does the business eventually, over the course of the depreciation schedule, end up getting all of the original $2,000 tax burden back? Possibly. Ultimately, the entire cost of the item is deductible. That won't necessarily translate into getting the taxes back. But that's really not the right way to think about it. The tax burden was on the income earned. Upon immediate replacement, hypothetically with the exact same model, same cost, same 'value', isn't it correct that the \"\"value\"\" of the business only went up by the amount the original item had depreciated? Yes. If you dispose of or sell a capital asset, you will have a gain or loss based on the difference between your remaining basis in the asset and whatever you got for the asset. Wouldn't the tax burden then only be $400? Approximately, yes. The disposal of the original asset would cause a loss of the difference between your remaining basis in the asset and what you got for it (which might be zero). The new asset would then begin depreciating. You are making things a bit more difficult to understand though by focusing on the amount of taxes due rather than the amount of taxable gain or loss you have. They don't always correlate directly (because tax rates can vary).\"", "title": "" }, { "docid": "547b4e9e1520ac085e0ddc41d12abe56", "text": "It sounds like something is getting lost in translation here. A business owner should not have to pay personal income tax on business expenses, with the caveat that they are truly business expenses. Here's an example where what you described could happen: Suppose a business has $200K in revenue, and $150K in legitimate business expenses (wages and owner salaries, taxes, services, products/goods, etc.) The profit for this example business is $50K. Depending on how the business is structured (sole proprietor, llc, s-corp, etc), the business owner(s) may have to pay personal income tax on the $50K in profit. If the owner then decided to have the business purchase a new vehicle solely for personal use with, say, $25K of that profit, then the owner may think he could avoid paying income tax on $25K of the $50K. However, this would not be considered a legitimate business expense, and therefore would have to be reclassified as personal income and would be taxed as if the $25K was paid to the owner. If the vehicle truly was used for legitimate business purposes then the business expenses would end up being $175K, with $25K left as profit which is taxable to the owners. Note: this is an oversimplification as it's oftentimes the case that vehicles are partially used for business instead of all or nothing. In fact, large items such as vehicles are typically depreciated so the full purchase price could not be deducted in a single year. If many of the purchases are depreciated items instead of deductions, then this could explain why it appears that the business expenses are being taxed. It's not a tax on the expense, but on the income that hasn't been reduced by expenses, since only a portion of the big ticket item can be treated as an expense in a single year.", "title": "" }, { "docid": "61de18f1f7c5f12ef51739de5e6f5d9a", "text": "Expenses are where the catch is found. Not all expenditures are considered expenses for tax purposes. Good CPAs make a comfortable living untangling this sort of thing. Advice for both of your family members' businesses...consult with a CPA before making big purchases. They may need to adjust the way they buy, or the timing of it, or simply to set aside capital to pay the taxes for the profit used to purchase those items. CPA can help find the best path. That 10k in unallocated income can be used to redecorate your office, but there's still 3k in taxes due on it. Bottom Line: Can't label business income as profit until the taxes have been paid.", "title": "" } ]

[ { "docid": "ae96ebf7c42b5aa8611e7c1b9890c299", "text": "First - get a professional tax consultation with a NY-licensed CPA or EA. At what point do I need to worry about collecting sales taxes for the city and state of New York? Generally, from the beginning. See here for more information on NYS sales tax. At what point do I need to worry about record-keeping to report the income on my own taxes? From the beginning. Even before that, since you need the records to calculate the costs of production and expenses. I suggest starting recording everything, as soon as possible. What sort of business structures should I research if I want to formalize this as less of a hobby and more of a business? You don't have to have a business structure, you can do it as a sole proprietor. If you're doing it for-profit - I suggest treating it as a business, and reporting it on your taxes as a business (Schedule C), so that you could deduct the initial losses. But the tax authorities don't like business that keep losing money, so if you're not expecting any profit in the next 3-4 years - keep it reported as a hobby (Misc income). Talk to a licensed tax professional about the differences in tax treatment and reporting. You will still be taxed on your income, and will still be liable for sales tax, whether you treat it as a hobby or as a business. Official business (for-profit activity) will require additional licenses and fees, hobby (not-for-profit activity) might not. Check with the local authorities (city/county/State).", "title": "" }, { "docid": "b54f359812447b459ce484e396958a5f", "text": "Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature.", "title": "" }, { "docid": "20ddde4441bb0e5a4d7ee4f81e44300d", "text": "According to the Illinois Department of Revenue, you don't have to file any taxes that are specific to a LLC, only your personal taxes. LLC on Federal level is disregarded, instead you submit all your business income/expenses on Schedule C. On the state level - it seems to be the same (only individual tax return). Consult your state certified tax specialist. That is not the case in other states, for example in California LLC has to file its own tax return and pay its own taxes, in additional to the individual taxes.", "title": "" }, { "docid": "ceeecc34e00810972aa028a778fd4c31", "text": "The LLC will file its own business taxes which may or may not have business level income and expenses. At the end, the LLC will issue Schedule K-1 tax forms to the members, that based on their percentage ownership, will reflect the percentage share of the income/losses. From an individual standpoint, the members need only worry about the K-1 form they receive. This has quite a few pass-through categories from the LLC, but the Income/Loss may be the only used one. The individual will likely include the K-1 by filing a Schedule-E along with their 1040 form. The 1040 Schedule-E has some ability to deduct expenses as an individual. Generally it's best not to commingle expenses. Additional schedule-E expense reporting is generally for non-reimbursed, but related business expenses. If a member paid certain fees for the LLC, it is better for the LLC to reimburse him and then deduct the expense properly. Schedule-E is on a non-LLC, personal level.", "title": "" }, { "docid": "1be25d189c6efb019fd87a53bad1e3a2", "text": "\"Before filing your first business tax return, you will need to choose a taxation method, either corporation or partnership. If you choose a partnership, then it's moot - your business income flows through to your personal taxes via form K-1. Also, regardless of your taxation method, you should consult a legal expert, since having your business pay off your personal debt would almost always be counted as income to you, and may cause you to lose the personal liability protections provided by the LLC (aka \"\"piercing the corporate veil\"\"). Having a single-member LLC with no employees, you have to be very careful how you manage the finances of the business. Any commingling of personal and business could jeopardize your protections.\"", "title": "" }, { "docid": "b15d163a90235fed85ed81ab71d178ac", "text": "\"Do I understand correctly, that we still can file as \"\"Married filing jointly\"\", just add Schedule C and Schedule SE for her? Yes. Business registration information letter she got once registered mentions that her due date for filing tax return is January 31, 2016. Does this prevent us from filing jointly (as far as I understand, I can't file my income before that date)? IRS sends no such letters. IRS also doesn't require any registration. Be careful, you might be a victim to a phishing attack here. In any case, sole proprietor files a regular individual tax return with the regular April 15th deadline. Do I understand correctly that we do not qualify as \"\"Family partnership\"\" (I do not participate in her business in any way other than giving her money for initial tools/materials purchase)? Yes. Do I understand correctly that she did not have to do regular estimated tax payments as business was not expected to generate income this year? You're asking or saying? How would we know what she expected? In any case, you can use your withholding (adjust the W4) to compensate.\"", "title": "" }, { "docid": "eb6a63bb1abd8ee6d5c4b1cde0087a9f", "text": "I took littleadv's advice and talked to an accountant today. Regardless of method of payment, my US LLC does not have to withhold taxes or report the payment as payments to contractors (1099/1042(S)) to the IRS; it is simply a business expense. He said this gets more complicated if the recipient is working in the US (regardless of nationality), but that is not my case", "title": "" }, { "docid": "3d7f9fe5894143a3984af1d6e43a76a0", "text": "\"If you have a single member LLC there is no need to separate expenses in this way since it is simply treated as part of the owner's normal tax returns. This is the way I've been operating. Owner of Single-Member LLC If a single-member LLC does not elect to be treated as a corporation, the LLC is a \"\"disregarded entity,\"\" and the LLC's activities should be reflected on its owner's federal tax return. If the owner is an individual, the activities of the LLC will generally be reflected on: Form 1040 Schedule C, Profit or Loss from Business (Sole Proprietorship) (PDF) Form 1040 Schedule E, Supplemental Income or Loss (PDF) Form 1040 Schedule F, Profit or Loss from Farming (PDF) An individual owner of a single-member LLC that operates a trade or business is subject to the tax on net earnings from self employment in the same manner as a sole proprietorship. If the single-member LLC is owned by a corporation or partnership, the LLC should be reflected on its owner's federal tax return as a division of the corporation or partnership. https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies\"", "title": "" }, { "docid": "316710461de83750af605d1897addf25", "text": "Chris, since you own your own company, nobody can stop you from charging your personal expenses to your business account. IRS is not a huge fan of mixing business and personal expenses and this practice might indicate to them that you are not treating your business seriously, and it should classify your business as a hobby. IRS defines deductible business expense as being both: ordinary AND necessary. Meditation is not an ordinary expense (other S-corps do not incur such expense.) It is not a necessary expense either. Therefore, you cannot deduct this expense. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses", "title": "" }, { "docid": "819197acdc0e88afc44350dcccd999eb", "text": "\"I believe you have to file a tax return, because state tax refund is considered income effectively connected with US trade or business, and the 1040NR instructions section \"\"Who Must File\"\" includes people who were engaged in trade or business in the US and had a gross income. You won't end up having to pay any taxes as the income is less than your personal exemption of $4050.\"", "title": "" }, { "docid": "8ba0fc654895d48fb795dea7fe3b64af", "text": "Yes, use a separate Form 8829 for each home used for business during the year. The top of 8829 includes that exact instruction.", "title": "" }, { "docid": "5d86ebab266bf0a5d9f55be7a5222389", "text": "I am assuming this is USA. While it is a bit of a pain, you are best off to have separate accounts for your business and personal. This way, if it comes to audit, you hand the IRS statements for your business account(s) and they match your return. As a further precaution I would have the card(s) you use for business expenses look different then the ones you use for personal so you don't mess another one up.", "title": "" }, { "docid": "32637ccc9962c2adcab62d05df912a25", "text": "The short answer is you are not required to. The longer answer depends on whether you are referring to your organization as a sole proprietorship in your state, or for federal taxation. For federal tax purposes, I would suggest filing each side job as a separate Sch C though. The IRS uses the information you provide about your sole proprietorship to determine whether or not your categorization of expenses makes sense for the type of business you are. This information is used by the IRS to help them determine who to audit. So, if you are a service based business, but you are reporting cost of goods sold, you are likely to be audited.", "title": "" }, { "docid": "f06119600d3aea07f3eb0978ad02434e", "text": "You would report it as business income on Schedule C. You may be able to take deductions against that income as well (home office, your computer, an android device, any advertising or promotional expenses, etc.) but you'll want to consult an accountant about that. Generally you can only take those kinds of deductions if you use the space or equipment exclusively for business use (not likely if it's just a hobby). The IRS is pretty picky about that stuff.", "title": "" }, { "docid": "621d30c4812c6b44ec2e8bab6810ce01", "text": "This depends on the nature of the income. Please consult a professional CPA for specific advise.", "title": "" } ]

[ { "docid": "bf0330082ac65d66aa4934120480a8fe", "text": "You need to give specific dates! In the United States, you have three years to file an amended tax return. https://www.irs.gov/uac/Newsroom/Ten-Facts-about-Amended-Tax-Returns Did the restaurant fail in 2012? If so, that's probably the year to take the loss. If you need to amend your 2012 return, which you filed in 2013, you should have until 2016 to file this. The exact date may be based on when you filed 2012 taxes!", "title": "" } ]

[ { "docid": "ade1f187fc1c0403179210d8806b6971", "text": "Yes, you will be able to claim it as an expense on your taxes, but not all in the current year. It is split into three categories: Current Expenses - Assets purchased such as inventory would be able to be claimed in the current year. Assets - Vehicles, Buildings, and equipment can be depreciated over time based on the value you purchased them for and the CCA class. Goodwill - In tax terms this is the value of the business purchase that is not eligible in 1 or 2 and is called Eligible Capital Property. This can be expensed over time. From info at CRA website: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/byng/menu-eng.html", "title": "" }, { "docid": "5d814567aa5f5a1eaf61596718a3f55d", "text": "If you didn't receive the money in 2012 or have constructive receipt you really can't claim the income. If the company is going to give you a 1099 for the work they aren't going to give you one until next year and if you claim it this year you will have a hard time explaining the income difference. On the other hand if this isn't miscellaneous income, but rather self employment income and expenses you should be able to claim the expenses in 2012 and if you have a loss that would carry over to 2013. Note it is possible to use an accrual basis if you are running a business (which would allow you to do this), but it is more complex than the cash accounting individual tax payers use.", "title": "" }, { "docid": "dc95981f0c9cdf734451c8280615c376", "text": "The business and investment would be shown on separate parts of the tax return. (An exception to this is where an investment is related and part of your business, such as futures trading on business products) On the business side of it, you would show the transfer to the stocks as a draw from the business, the amount transferred would then be the cost base of the investment. For taxes, you only have to report gains or losses on investments.", "title": "" }, { "docid": "d7a167abd6c63e3410c1c6b5d9916b05", "text": "It just had less cash. That doesn't necessarily mean that the company had a net loss for the year. Just like having more cash doesn't mean the company made a profit. What if a company had revenue of $1 million, expenses of $2 million, and took out a loan of $5 million? They had a net loss of $1 million, but they have $4 million more in cash.", "title": "" }, { "docid": "1169f9db654b7e89de8d8bc0a26b24e1", "text": "The preparation for starting up of the company has lasted already more than 2 years. Let's say the company starts officially in January next year. So, in January 2014... 8 million USD is invested to purchase the equipments and the company will start selling their prdocuts right away. Imagine the company will be selling the same amount of products each year at the same price for 5 years. After 5 years it will sell the equipments for 6 million USD and cease to exist. The depreciation of equipments is divided into those 5 years. So, each year the depreciation of equipments is 400.000 USD. In despite of this, the company will make 500.000 USD per year as a profit before tax. So, the equipments are bought in Januardy 2014 (first month of the existence of the company) and sold in December 2018 (last month of the existence of the company). This is the NPV that I calculated. Is it correct?", "title": "" }, { "docid": "e3cd89c0d64142d65db6089237dac981", "text": "How do I account for this in the bookkeeping? Here is an example below: This is how you would accurately depict contributions made by an owner for a business. If you would want to remove money from your company, or pay yourself back, this would be called withdrawals. It would be the inverse of the first journal entry with cash on the credit side and withdrawals on the debited side (as it is an expense). You and your business are not the same thing. You are two different entities. This is why you are taxed as two different entities. When you (the owner) make contributions, it is considered to be the cash of the business. From here you will make these expenses against the business and not yourself. Good luck,", "title": "" }, { "docid": "7c9402e6b60744e382aaead94dae4f43", "text": "make assume should be make assumptions*. I feel like there are other reasons that the 5% in year 2 could have cost less than the 5% in year 1 besides a falling stock price (this is what I'm trying to figure out). In your opinion, how do you think the investment is performing.", "title": "" }, { "docid": "2e3fd15a04772d1e2dee131172b03474", "text": "See this spread sheet I worked up for fun. https://docs.google.com/spreadsheets/d/1ZhI-Rls4FpwpdpEYgdn20lWmcqkIEhB-2AH0fQ7G2wY/edit?usp=sharing If you are really crazy you can do what I did and model the rates (modified normal) and expenses (large items like the roofing being replaced on exponential) distribution and run a monte carlo simulation to get maximum likely losses by years and ranges of final values. P.S. As a side note, this spreadsheet makes a lot of assumptions and I would consider it absolutely necessary to be able to build a sheet like this and understand all the assumptions and play with it to see how quickly this can turn into a losing investment before making any business investments.", "title": "" }, { "docid": "937e178303c71f9a48e8980a920490ce", "text": "This loss would be unrealized and, assuming you're a cash-basis tax-payer, you would not be able to take a loss on your 2014 tax return. This is similar to if you held a stock that lost 50% of its value. You wouldn't be able to claim this loss until you finally sold it. The link that User58220 posted may come into play if you converted your UAH back to USD.", "title": "" }, { "docid": "d52ea9db44206476ac686502ec2c2d92", "text": "\"You have a sequence of questions here, so a sequence of answers: If you stopped at the point where you had multiple wins with a net profit of $72, then you would pay regular income tax on that $72. It's a short term capital gain, which does not get special tax treatment, and the fact that you made it on multiple transactions does not matter. When you enter your next transaction that takes the hypothetical loss the question gets more complicated. In either case, you are paying a percentage on net gains. If you took a two year view in the second case and you don't have anything to offset your loss in the second year, then I guess you could say that you paid more tax than you won in the total sequence of trades over the two years. Although you picked a sequence of trades where it does not appear to play, if you're going to pursue this type of strategy then you are likely at some point to run into a case where the \"\"wash sale\"\" rules apply, so you should be aware of that. You can find information on this elsewhere on this site and also, for example, here: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02 Basically these rules require you to defer recording a loss under some circumstances where you have rapid wins and losses on \"\"substantially identical\"\" securities. EDIT A slight correction, you can take part of your losses in the second year even if you have no off-setting gain. From the IRS: If your capital losses exceed your capital gains, the amount of the excess loss that you can claim on line 13 of Form 1040 to lower your income is the lesser of $3,000, ($1,500 if you are married filing separately)\"", "title": "" }, { "docid": "aa4741c68677d146703292d52bc6bff0", "text": "You are not the person or entity against whom the crime was committed, so the Casualty Loss (theft) deduction doesn't apply here. You should report this as a Capital Loss, the same way all of the Enron shareholders did in their 2001 tax returns. Your cost basis is whatever you originally paid for the shares. The final value is presumably zero. You can declare a maximum capital loss of $3000, so if your net capital loss for the year is greater than that, you'll have to carry over the remainder to the following years. IRS publication 547 states: Decline in market value of stock. You can't deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. You report a capital loss on Schedule D (Form 1040). For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Pub. 550.", "title": "" }, { "docid": "a440dc953dc925288491d3b524bca32d", "text": "You can always reduce the income by the direct expenses required to earn it, and figure out whether it is ultimately a net profit or loss. The net profit is taxable income. The loss may be tax deductible if the underlying thing is tax deductible. For the book, the $50 revenue required a $100 expense, so that's a $50 net loss. You don't owe any income tax since it's a loss. You could take the loss as a tax deduction if you have a business trading books, or if buying the book would be tax deductible for some reason. Note that in the latter case you can only deduct the $50 not the $100. For the airline ticket, it is to compensate you for the losses you took as a result if the delayed flight. So you tally up the $22 meal you had in the airport waiting for news, the $110 on the motel room you rented or forfeited, any other way you can peg a cash value to any losses you took. Total them up, again, a net loss is only deductible if the travel is already deductible. Note that if the actual expenses (book, flight) were tax deductible for some reason, the cash-back reduces the amount of your tax deduction, so it has the same effect as the sale/gift being taxable income.", "title": "" }, { "docid": "14f144db69e3441a4aad7a98c912dc3d", "text": "\"In the US tax system, you cannot \"\"write-off\"\" capital assets. You have to depreciate them, with very specific exceptions. So while you may be purchasing $4500 of equipment, your deduction may be significantly less. For example, computers are depreciated over the period of 5 years, so if you bought a $1000 computer - you write off $200/year until it is completely depreciated, not $1000 at once. There are exceptions however, for example - IRC Sec. 179 is one of them. But you should talk to a tax adviser (EA/CPA licensed in your State) about whether it is applicable to the specific expense you want to \"\"write off\"\" and to what extent. Also, keep in mind that State laws may not conform to the Federal IRC. While you may be able to use Sec. 179 or other exceptions and deduct your expenses on your Federal return, you may end up with a whole different set of deductions on your State return. And last but not least: equipment that you depreciated or otherwise \"\"wrote off\"\" that is later sold - is income to you, since depreciation/deduction reduces basis. Ah, and keep in mind - the IRS frowns upon Schedule C business that consistently show losses. If you have losses for more than 3 in the last 5 years - your business may be classified as \"\"hobby\"\", and deductions may be disallowed. But the bottom line is that yes, it is possible to end up with 0 tax liability with business income offset by business deductions. However, not for prolonged periods of time (not for years consistently, but first year may fly). Again - you should talk to a licensed tax adviser (EA/CPA licensed in your State). It is well worth the money. Do not rely on answers on free Internet forums as a tax advice - it is not.\"", "title": "" }, { "docid": "d5a1458ae217b838333d1a4d8690a177", "text": "You need to submit an updated return. The problem is that once three years have passed you can't update the return to get any kind of refund, but if they are going after you for the sale price of the stocks, not knowing the cost, your goal is to show them there was no gain, and in fact you'd have had the loss if you were aware of the account. This is less than ten years back, so the broker should be able to give you the statements pretty easily.", "title": "" }, { "docid": "6f35493317b0fa9767a0827ede4a4505", "text": "I appreciate it. I didn't operate under selling the asset year five but other than that I followed this example. I appreciate the help. These assignments are just poorly laid out. Financial management also plays on different calculation interactions so it is difficult for me to easily identify the intent at times. Thanks again.", "title": "" } ]

[ { "docid": "e8c6bd900f8d5b7b20accdc0347b2060", "text": "Is the business an S-Corp, LLC or Sole Prop? I am going to guess based on the question that it is an LLC that you never closed with the state and you live in a state (NY) that charges a fee for having an LLC in the state in which case you owe those fees to the state. I am not aware of any taxes on the mere existence of a business by the IRS. I think you are going to find out that the are no taxes owed to the IRS for this nonexistent activity.", "title": "" }, { "docid": "cecc860897423d6c529366fcac3bc914", "text": "\"You need to hire a tax professional and have them sort it out for you properly and advise you on how to proceed next. Don't do it yourself, you're way past the stage when you could. You're out of compliance, and you're right - there are penalties that a professional might know how to mitigate, and maybe even negotiate a waiver with the IRS, depending on the circumstances of the case. Be careful of answers like \"\"you don't need to pay anything\"\" that are based on nothing of facts. Based on what you said in the question and in the comments, it actually sounds like you do have to pay something, and you're in trouble with the IRS already. It might be that you misunderstood something in the past (e.g.: you said the business had filed taxes before, but in fact that might never happened and you're confusing \"\"business filed taxes\"\" with \"\"I filed schedule C\"\") or it might be the actual factual representation of things (you did in fact filed a tax return for your business with the IRS, either form 1120 of some kind or 1065). In any case a good licensed (CPA or EA) professional will help you sort it out and educate you on what you need to do in the future.\"", "title": "" } ]

[ { "docid": "7691b04c045df57a892e781356f4004f", "text": "Washington State doesn't have a state income tax for individuals, so unless you've got a business there's nothing to file. Find out more on their website.", "title": "" }, { "docid": "6f4290ed479d97b76cb8e3e8ecc89e8f", "text": "Starting and running a business in the US is actually a lot less complicated than most people think. You mention incorporation, but a corporation (or even an S-Corp) isn't generally the best entity to start a business with . Most likely you are going to want to form an LLC instead this will provide you with liability protection while minimizing your paperwork and taxes. The cost for maintaining an LLC is relatively cheap $50-$1000 a year depending on your state and you can file the paperwork to form it yourself or pay an attorney to do it for you. Generally I would avoid the snake oil salesman that pitch specific out of state LLCs (Nevada, Delaware etc..) unless you have a specific reason or intend on doing business in the state. With the LLC or a Corporation you need to make sure you maintain separate finances. If you use the LLC funds to pay personal expenses you run the risk of loosing the liability protection afforded by the LLC (piercing the corporate veil). With a single member LLC you can file as a pass through entity and your LLC income would pass through to your federal return and taxes aren't any more complicated than putting your business income on your personal return like you do now. If you have employees things get more complex and it is really easiest to use a payroll service to process state and federal tax with holding. Once your business picks up you will want to file quarterly tax payments in order to avoid an under payment penalty. Generally, most taxpayers will avoid the under payment penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. Even if you get hit by the penalty it is only 10% of the amount of tax you didn't pay in time. If you are selling a service such writing one off projects you should be able to avoid having to collect and remit sales tax, but this is going to be very state specific. If you are selling software you will have to deal with sales tax assuming your state has a sales tax. One more thing to look at is some cities require a business license in order to operate a business within city limits so it would also be a good idea to check with your city to find out if you need a business license.", "title": "" }, { "docid": "7bd542cb4e6e88dd0fb8aa378fa34d0a", "text": "\"You can make a custom category for \"\"Website expenses\"\" under Other Expenses as well. If the domain name only costs a very small amount, like $10, I think expensing it would be reasonable. Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.\"", "title": "" }, { "docid": "18cd8234a214ff8a7f311bcf36715bc1", "text": "If you need to shop coins, you could do your personal improvement, however, this may be tricky because of even easy documentation errors fee extra. For many little employer proprietors, the high-quality picks the use of a business enterprise company, which is a fee-powerful preference to make sure your documentation is accurate and filed right away with conditions. If you're concerned in Delaware LLC with as little quotes as viable, begin with the aid of considering conditions wherein you'll include. You do no longer require work within the state you select, however it may be more reasonable for pick out your home circumstance.", "title": "" }, { "docid": "d5a7e6714172567de547d1bb7a74903d", "text": "\"What is the right way to handle this? Did you check the forms? Did the form state $0 tax due on the FTB LLC/Corp form (I'm guessing you operate as LLC/Corp, since you're dealing with the Franchise Tax)? The responsibility is ultimately yours. You should cross check all the numbers and verify that they're correct. That said, if the CPA filled the forms incorrectly based on your correct data - then she made a mistake and can be held liable. CPA filing forms from a jurisdiction on the other end of the country without proper research and knowledge may be held negligent if she made a grave mistake. You can file a law suit against the CPA (which will probably trigger her E&O insurance carrier who'll try to settle if there's a good chance for your lawsuit to not be thrown away outright), or complain to the State regulatory agency overseeing CPAs in the State of her license. Or both. Am I wrong for expecting the CPA should have properly filled out and filed my taxes? No, but it doesn't shift the responsibility from you. How can I find out if the CPA has missed anything else? Same as with doctors and lawyers - get a second opinion. Preferably from a CPA licensed in California. You and only you are responsible for your taxes. You may try to pin the penalties and interest on the CPA if she really made a mistake. California is notorious for very high LLC/Corp franchise tax (cost of registering to do business in the State). It's $800 a year. You should have read the forms and the instructions carefully, it is very prominent. It is also very well discussed all over the Internet, any search engine would pop it up for you with a simple \"\"California Franchise Tax for LLC/Corp\"\" search. CA FTB is also very aggressive in assessing and collecting the fee, and the rules of establishing nexus in CA are very broad. From your description it sounds like you were liable for the Franchise tax in CA, since you had a storage facility in CA. You may also be liable for sales taxes for that period.\"", "title": "" }, { "docid": "e7ccac55c68e68fb150691852e53e0c9", "text": "Havoc P's answer is good (+1). Also don't forget the other aspects of business income: state filing fees, county/city filing fees, business licenses, etc. Are there any taxes you have to collect from your customers? If you expect to make more this year, then you should make estimated quarterly tax payments. The first one for 2011 is due around the same time as your federal income tax filing.", "title": "" }, { "docid": "7b171a55ca69f689ee46c4199f8dc686", "text": "If thinking about it like a business you normally only pay taxes on Net income, not gross. So Gross being all the money that comes in. People giving you cash, checks, whatever get deposited into your account. You then pay that out to other people for services, advertisement. At the end of the day what is left would be your 'profit' and you would be expected to pay income tax on that. If you are just an individual and don't have an LLC set up or any business structure you would usually just have an extra page to fill out on your taxes with this info. I think it's a schedule C but not 100%", "title": "" }, { "docid": "05575c7ecd138f1d959b8ffd50b5d3d2", "text": "I have researched this question extensively in previous years as we have notoriously high taxes in California, while neighboring a state that has zero corporate income tax and personal income tax. Many have attempted pull a fast one on the California taxation authorities, the Franchise Tax Board, by incorporating in Nevada or attempting to declare full-year residence in the Silver State. This is basically just asking for an audit, however. California religiously examines taxpayers with any evidence of having presence in California. If they deem you to be a resident in California, and they likely will based on the fact that you live in California (physical presence), you will be subject to taxation on your worldwide income. You could incorporate in Nevada or Bangladesh, and California will still levy its taxation on any business income (Single Member LLCs are disregarded as separate corporate entities, but still taxed at ordinary income rates on the personal income tax basis). To make things worse, if California examines your Single Member LLC and finds that it is doing business in California, based on the fact that its sole owner is based in California all year long, you could feasibly end up with additional penalties for having neglected to file your LLC in California (California LLCs are considered domestic, and only file in California unless they wish to do business in other states; Nevada LLCs are considered foreign to California, requiring the owner to file a domestic LLC organization in Nevada and then a foreign LLC organization in California, which still gets hit with the minimum $800 franchise fee because it is a foreign LLC doing business in California). Evading any filing responsibility in California is not advisable. FTB consistently researches LLCs, S-Corporations and the like to determine whether they've been organized out-of-state but still principally operated in California, thus having a tax nexus with California and the subsequent requirement to be filed in California and taxed by California. No one likes paying taxes, and no one wants to get hit with franchise fees, especially when one is starting a new venture and that minimum $800 assessment seems excessive (in other words, you could have a company that earns nothing, zero, zip, nada, and still has to pay the $800 minimum fee), but the consequences of shirking tax laws and filing requirements will make the franchise fee seem trivial in comparison. If you're committed to living in California and desire to organize an LLC or S-Corp, you must file with the state of California, either as a domestic corporation/LLC or foreign corporation/LLC doing business in California. The only alternatives are being a sole proprietor (unincorporated), or leaving the state of California altogether. Not what you wanted to hear I'm sure, but that's the law.", "title": "" }, { "docid": "86f371260e89d31a0477118e8f490e2c", "text": "\"Actually, calculating taxes isn't that difficult. You will pay a percentage of your gross sales to state and local sales tax, and as a single-owner LLC your profits (after sales taxes) should pass through to your individual tax tax return (according to this IRS article. They are not cumulative since they have different bases (gross sales versus net profit). That said, when determining if your future business is profitable, you need to ask \"\"what aspects of the business can I control\"\"? Can you control how much each item sells for? Increasing your prices will increase your gross margins, which should be higher than your fixed and variable costs. If your margins do not exceed your costs, then you will note be profitable. Note that as a vendor you are at a slight disadvantage to a retailer, since tax has to be baked in to your prices. A retailer can advertise the pre-tax price, and pass-through sales tax at the point of sale. However, people expect to pay more at a vending machine, so the disadvantage is very small (you aren't directly competing with retailers anyways).\"", "title": "" }, { "docid": "43b87ab9579364ecb540986c555633c2", "text": "Normally you could either head down to the office supply store and pick up a copy of a tax program, or you could head over to the IRS office and pick up the instructions and forms. However, in your case you should be talking to a tax lawyer. The unfiled taxes are bad enough but you own a business outside the USA and most likely have bank accounts also. That brings you into the realm of FATCA.", "title": "" }, { "docid": "0ddf5935ce37f66c96defd0182a0c28d", "text": "\"This may be closed as not quite PF, but really \"\"startup\"\" as it's a business question. In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit.\"", "title": "" }, { "docid": "d402dc885d5d6ef6afda8b49de969880", "text": "You're doing business in the US and derive income from the US, so I'd say that yes, you should file a non-resident tax return in the US. And in Connecticut, as well, since that's where you're conducting business (via your domestic LLC registered there). Since you paid more than $600 to your contractor, you're probably also supposed to send a 1099 to him on that account on behalf of your LLC (which is you, essentially, if you're the only member).", "title": "" }, { "docid": "ac8916af592d24f229674bf1f89c93c2", "text": "If this is something you plan to continue doing it would make sense to create it as it's own business entity and then to get non-profit status eg: 501c3. Otherwise I'm pretty sure you have to think of it as YOU receiving the money as a sole proprietor - and file a couple more tax forms at the end of the year. I think it's a Schedule C. So essentially if you bring in $10,000, then you spend that $10,000 as legit business expenses for your venture your schedule C would show no profit and wouldn't pay taxes on it. BUT, you do have to file that form. Operating this way could have legal implications should something happen and you get sued. Having the proper business entity setup could help in that situation.", "title": "" }, { "docid": "f9a15d4ecc758b477a3b68fb24dd21a4", "text": "\"You can hire a good CPA for a really low price. They can advise you on how to do exactly what you said and many other aspects of your business. Mine does this as a courtesy with the filing of my taxes. And the filing of my taxes is not all that much. It is great value for the money. Recently I had to make a decision that is a potential audit situation and can go badly if not properly documented. It was not hard to document (with the CPA's help), but now that it is so I don't lose mental energy on if I am going to get \"\"caught\"\" by the IRS. Let them come, I have the necessary documentation. Beyond the IRS, I really like the documentation that you are trying to put behind this loan. Having this in writing helps smooth this potentially bad situation between you and the BIL. I would go above and beyond writing conditions and contingencies down in order to keep this relationship happy. With these kinds of things, cover the applicable 5 \"\"Ds\"\" of partnership agreements: However, I would add another: Boom. What happens if your business takes off? Perhaps there should be a clause to retire the loan prior to you expanding beyond a certain level. Please understand I am not suggesting that any of these bad things are going to happen to you (except the Boom, I really hope that happens to you), but it is a way to communicate contingent actions if one of the risks of small business materializes. Having agreements ahead of time helps avoid crisis.\"", "title": "" }, { "docid": "75546585b13b415f40ba7b912437fc1a", "text": "\"Depending on the nature of the expenses, you will enter them under Deductions, on lines 9 through 20. Did you rent an office? Add the rental expense to line 13. Fee for a business license? Line 14. Everything else that doesn't fall into any specific category goes on line 20 (You'll need to attach a small statement that breaks out the expense categories, e.g. office supplies, phone, legal fees, etc.) Expenses that are entered in the Income section are costs directly related to sales, such as merchant fees that you pay to a bank if you take payments by credit card. Since you said the partnership has \"\"zero money coming in,\"\" I assume that it currently has no revenues, so all the fields in the Income section would be zero.\"", "title": "" } ]

[ { "docid": "221c2facfbbbc27225c5f7d9f28af460", "text": "You don't say what country you live in. If it's the U.S., the IRS has very specific rules for business use of a car. See, for starters at least, http://www.irs.gov/publications/p463/ch04.html. The gist of it is: If you use the car 100% for business purposes, you NEVER use it to drive to the grocery store or to your friend's house, etc, then it is a deductible business expense. If you use a car party for business use and partly for personal use, than you can deduct the portion of the expense of the car that is for business use, but not the portion that is for personal use. So basically, if you use the car 75% for business purposes and 25% for personal use, you can deduct 75% of the cost and expenses. You can calculate the business use by, (a) Keeping careful records of how much you spent on gas, oil, repairs, etc, tracking the percentage of business use versus percentage of personal use, and then multiplying the cost by the percentage business use and that is the amount you can deduct; or (b) Use the standard mileage allowance, so many cents per mile, which changes every year. Note that the fact that you paid for the car from a business account has absolutely nothing to do with it. (If it did, then everyone could create a small business, open a business account, pay all their bills from there, and all their personal expenses would magically become business expenses.) Just by the way: If you are going to try to stretch the rules on your taxes, business use of a car or personal computer or expenses for a home office are the worst place to do it. The IRS knows that cars and computers are things that can easily be used for either personal or business purposes and so they keep a special eye out on these.", "title": "" } ]

[ { "docid": "85110d666ba177dfbde6ed4aae613120", "text": "Yes, truckloads of cash. /s It's exactly the same as your example, when people say to pay for a car in cash, they don't meany physical bills, but rather the idea that you aren't getting a loan. In most acquisitions, the buyer will usually pay with their own stock, pay in cash, or a combination of both.", "title": "" }, { "docid": "a2f90aea0d5c4bccafa3f3047a28797e", "text": "\"Assuming its in the US: No, it is not, and such things are usually treated as \"\"red flags\"\" for audit (and no, golf club memberships are not deductible either). The food expenses are not deductible in their entirety as well, only up to 50% of the actual expense, and only if it is directly business related. From what you've described, it sounds like if you have an audit coming you'll be in trouble. The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions.\"", "title": "" }, { "docid": "3cef4b15724a32fdbb940c05a10463e0", "text": "I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses. See IRS Tax Topic 409, end of the first paragraph. The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510. This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price. Also, you'd need to have records to verify your business use. But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle. That's why it's a sales tax, not a value-added tax. Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year. (If you have already filed your taxes for that year, you can go back and amend them.) However, this takes the place of your state income tax deduction for the year; you can't deduct both. See Tax Topic 503. So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year. Also, note that state taxes are not deductible on your state income tax return. Again, this deduction applies whether you sell the car or not.", "title": "" }, { "docid": "ca816def6c13f526c18f1951bde048f8", "text": "lets sat If I buy a house on company's name, It will declared as expense and will deduct from profit. but I am not sure If I can rent it out as a IT LTD company. that's my questions. Buying a house is not an expense, it is a transfer of assets. The house itself, is an asset. So if you have $100,000 in cash, buy a house for $35,000, your total assets will remain the same ($100,000), but your asset mix will be different (instead of $100,000 in cash, you now have $65,000 in cash, and $35,000 in property). You can expense the costs associated with buying the house (e.g. taxes, interest, legal fees), but the house itself stays on the asset side of your balance sheet. To refine the example above, if you buy the house for $35,000, and pay $5,000 in misc fees related to purchasing the house, your assets are now $95,000 ($60,000 in cash, $35,000 in house): the $5,000 reduction is from the actual fees associated with the purchase. It is these fees that lower your profit. Being not familiar with UK rules, in Canada and the US, and likely the UK, you would then depreciate the house over its useful life. The depreciation expense is deducted from your annual net income. If you rent out the house, what you can do is expense any maintenance fees, taxes, etc., on the house itself. This expense will count as a negative towards the rental income, lowering your effective taxable income from the rental. E.g. rent out a flat at $1,000/month, but your property taxes are $3,500/year, so your net income for tax purposes (i.e. your taxable income in this case) is $12,000-$3,500=$8,500.", "title": "" }, { "docid": "0cc576b5888470d7003f4abf92ab4d38", "text": "No. Net profit is calculated after taxes. Loan interest is an expense, so it will result in the company paying less taxes (it acts as a tax shield), so net profit should still be positive. How much will depend on tax and interest rate. Only the portion of the $1.000.000 that correspond to interest is an expense. Principal payments are not.", "title": "" }, { "docid": "fb32ab169c1794b67f1a1ee65fd22d70", "text": "If you buy a car using a loan, the dealer gets benefited by the financing institution by the way of referring fee paid to the dealer by the institution, and that too if the dealer has helped in financing the purchase. Otherwise for the dealer it doesn't matter if one pays in full or through financing. The dealer is paid in full in either cases. Hence the dealer may slightly get disappointed that you are not taking a loan.", "title": "" }, { "docid": "f44b20011b4c0ef83ce99bfe19e6e1ca", "text": "It's not quite clear what you are asking, so I'll answer a few possible interpretations. Businesses pay taxes on their profits. So if your business took a million pounds in revenue (e.g. sold a million pounds worth of stuff) then you would subtract (roughly speaking) everything the business spent on making and selling that stuff, and pay taxes only on the profit. VAT however is a different matter, and you would have to pay VAT on all of that income (technically the VAT portion isn't even income - it's tax you are forced to collect on behalf of the government). If your business made a million pounds pounds profit, it would pay tax on all of that million (subject to what a tax accountant can do to reduce that, which ought to be considerable). You can't subtract your personal living expenses like that. However the company can pay you a salary, which counts as an expense and the company doesn't pay tax on that. You might also take some money from the company as dividends. Both salary and dividends count as personal income to yourself, and you will need to pay personal income tax on them. As for the Ferrari, it depends on whether you can justify it as a business expense. A lot of companies provide cars for their employees so that they can use them for business - however you have to be able to show that IS for business, otherwise they are taxed like salary. The rules for company cars are quite complicated, and you would need an accountant. If this is a real rather than hypothetical situation, definitely get a tax accountant involved.", "title": "" }, { "docid": "7348a5a39e5d09a5d84942986787e34e", "text": "\"Disclaimer: This should go without saying, but this answer is definitely an opinion. (I'm pretty sure my current accountant would agree with this answer, and I'm also pretty sure that one of my past accountants would disagree.) When I started my own small business over 10 years ago I asked this very same question for pretty much every purchase I made that would be used by both the business and me personally. I was young(er) and naive then and I just assumed everything was deductible until my accountant could prove otherwise. At some point you need to come up with some rules of thumb to help make sense of it, or else you'll drive yourself and your accountant bonkers. Here is one of the rules I like to use in this scenario: If you never would have made the purchase for personal use, and if you must purchase it for business use, and if using it for personal use does not increase the expense to the business, it can be fully deducted by the business even if you sometimes use it personally too. Here are some example implementations of this rule: Note about partial expenses: I didn't mention partial deductions above because I don't feel it applies when the criteria of my \"\"rule of thumb\"\" is met. Note that the IRS states: Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. At first read that makes it sound like some of my examples above would need to be split into partial calulations, however, I think the key distinction is that you would never have made the purchase for personal use, and that the cost to the business does not increase because of allowing personal use. Partial deductions come into play when you have a shared car, or office, or something where the business cost is increased due to shared use. In general, I try to avoid anything that would be a partial expense, though I do allow my business to reimburse me for mileage when I lend it my personal car for business use.\"", "title": "" }, { "docid": "53a20d80b0a4b1fc95cd358082d398ce", "text": "No, you can't claim personal expenses as business expenses. What is the alternative to paying someone to do your chores? Letting the chores go undone. How does it affect your business if your household chores go undone? It doesn't; it only affects your personal life--that's why they are personal expenses.", "title": "" }, { "docid": "4e41f2d5ccac706564bf5b0af4e17ff6", "text": "Unless you own a business and the car is used in that business you can't write off your auto repairs. If you start a sole-proprietorship in your own name there are all sorts of things you can write off as long as there is a reasonable expectation of profit. This includes a portion of your car repairs, a portion of your home expenses (assuming it's a home-based business), any tools used in the business, all kinds of stuff. The portion of your auto is based on total miles driven in the year vs. total miles driven for business purposes. Eligible auto expenses include repairs, gas/oil, insurance, parking, and interest on the auto loan. There are some things to remember: I'm no expert on California business law. Talk to a lawyer and an accountant if you wish to go this way. Many offer a half-hour free session for new clients.", "title": "" }, { "docid": "c6c5338768d8d4a1502efcaa15ed74fd", "text": "Sounds like a trick question. If it's hired for a limited time, equivalent to an operating lease, then you only pay a running cost as it's used, and it's neither an asset or a liability, but just a running cost like salaries. If it's hired in a way that fulfils the criteria for a financial lease, i.e. you treat it like it's being purchased, then it's both a liability and an asset. It goes on both sides of the balance sheet. Just like when you buy something on credit and recognize the liability to pay as a debt, and the item owned as an asset. edit: presuming the relevant company is the one paying.", "title": "" }, { "docid": "aec159d832b416596b4ba5e39324d200", "text": "An expense is an expense. You can deduct your lease payment subject to some limitations, but you don't make out by having more expenses. Higher expenses mean lower profit. Is leasing better than owning? It depends on the car you'd buy. If your business doesn't benefit from flashiness of your car, then buying a quality used car (a few years old at most) would probably be a wiser decision financially. I'd think hard about whether you really need an up-to-date car.", "title": "" }, { "docid": "b54f359812447b459ce484e396958a5f", "text": "Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature.", "title": "" }, { "docid": "c6dbd951582b3e30962e024dba0282d1", "text": "\"The answer to your question is...it depends. Depending on the state you, your friend, and the LLC are located in, it can be very easy to run afoul of state banking laws, or to somehow violate some other statute pertaining to the legal activities an LLC may undertake by doing something like a loan. It is not unusual (or illegal) for officers or employees of a business entity to be loaned money by the company they work for, so something of this nature wouldn't be an issue with regulatory agencies. Having your LLC loan money to a friend who isn't an employee or officer of your LLC just might not be kosher though. The best advice I can give is that you should call the state banking commission or similar agency in your state and ask them whether what you want to do is alright. The LAST thing you want is to end up with auditors or regulators sniffing around your business, even if you haven't done anything wrong, and you certainly don't want to run the risk of accidentally \"\"piercing the corporate veil\"\", as someone else here astutely pointed out. Good luck!\"", "title": "" }, { "docid": "beea3f671766c0cef4427097bdc05788", "text": "Funds earned and spent before opening a dedicated business account should be classified according to their origination. For example, if your business received income, where did that money go? If you took the money personally, it would be considered either a 'distribution' or a 'loan' to you. It is up to you which of the two options you choose. On the flip side, if your business had an expense that you paid personally, that would be considered either a 'contribution of capital' or a 'loan' from you. If you choose to record these transactions as loans, you can offset them together, so you don't need two separate accounts, loan to you and loan from you. When the bank account was opened, the initial deposit came from where? If it came from your personal funds, then it is either a 'contribution of capital' or a 'loan' from you. From the sound of your question, you deposited what remained after the preceding income/expenses. This would, in effect, return the 'loan' account back to zero, if choosing that route. The above would also be how to record any expenses you may pay personally for the business (if any) in the future. Because these transactions were not through a dedicated business bank account, you can't record them in Quickbooks as checks and deposits. Instead, you can use Journal Entries. For any income received, you would debit your capital/loan account and credit your income account. For any expenses, you would debit the appropriate expense account and credit your distribution/loan account. Also, if setting up a loan account, you should choose either Current Asset or Current Liability type. The capital contribution and distribution account should be Equity type. Hope this helps!", "title": "" } ]