What have you guys done related to registering your pipe making business, tax numbers, etc? Nothing? Lot's of stuff?
I know local requirements will dictate some of this, but many guys are operating out of a garage or basement and selling their pipes. How do you all keep in legal and above board? (That's a big presumption isn't it?)
Small Business Question
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LexKY_Pipe
- Posts: 875
- Joined: Thu Nov 23, 2006 8:00 pm
- Location: Lexington, Kentucky USA
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ToddJohnson
- Posts: 1366
- Joined: Thu Nov 23, 2006 8:00 pm
- Location: Nashville, TN
- Contact:
Hi Craig,
A Fed. ID. Tax no. is usually helpful for large in-state purchases--which are generally few in this business. I think the best thing to do is get a business credit card and business account so that you keep things seperate. This makes things much easier come tax season. There are certain benefits to being registered as a corporation, but these are going to be negligable if you're selling 10 pipes a year. It is easier to depreciate tools and equipment as a corporation (check for new tax benefits in this regard applicable for 2004 and later), but, again, if you have few tools, the tax benefits are not significant. Also, if your coropration is an entity distinct from yourself, you can contract yourself to do labor. For instance, every time I spend a significant period of time updating my shop, building new tables, installing new equipment, my corporation hires Todd Johnson at union wage for X hours. The corporation deducts the labor costs, and as long as I, as an individual, earn less than (I think) $12,000/year, the "income" I derive from this work (i.e. wages paid to me by the corporation), is not taxable. The downside is that my individual income is very small and I've had to do a sell-job and a lot of explaining to the bank both times I've purchased a home. Anyway, that's a lot of jibber jabber, but I guess the short answer is that it's complicated and you should consult a tax advisor/financial planner. I hope some of that was helpful and served to answer something in your question. You can imagine that this stuff is still fresh in my mind
Todd
A Fed. ID. Tax no. is usually helpful for large in-state purchases--which are generally few in this business. I think the best thing to do is get a business credit card and business account so that you keep things seperate. This makes things much easier come tax season. There are certain benefits to being registered as a corporation, but these are going to be negligable if you're selling 10 pipes a year. It is easier to depreciate tools and equipment as a corporation (check for new tax benefits in this regard applicable for 2004 and later), but, again, if you have few tools, the tax benefits are not significant. Also, if your coropration is an entity distinct from yourself, you can contract yourself to do labor. For instance, every time I spend a significant period of time updating my shop, building new tables, installing new equipment, my corporation hires Todd Johnson at union wage for X hours. The corporation deducts the labor costs, and as long as I, as an individual, earn less than (I think) $12,000/year, the "income" I derive from this work (i.e. wages paid to me by the corporation), is not taxable. The downside is that my individual income is very small and I've had to do a sell-job and a lot of explaining to the bank both times I've purchased a home. Anyway, that's a lot of jibber jabber, but I guess the short answer is that it's complicated and you should consult a tax advisor/financial planner. I hope some of that was helpful and served to answer something in your question. You can imagine that this stuff is still fresh in my mind
Todd
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LexKY_Pipe
- Posts: 875
- Joined: Thu Nov 23, 2006 8:00 pm
- Location: Lexington, Kentucky USA
I've been thinking for a while that we should band together in an
affiliation that would enable us to get group rates on health, disability and liability insurance.
Any thoughts on this??
Also as far as Tax ID - you can use your SS# if you are going to operate as a sole prop.
Todds' suggestions are right on - esp. about the business CC. :thumb:
affiliation that would enable us to get group rates on health, disability and liability insurance.
Any thoughts on this??
Also as far as Tax ID - you can use your SS# if you are going to operate as a sole prop.
Todds' suggestions are right on - esp. about the business CC. :thumb:
