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Home Business Legalities And Tax
Advantages |
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by: Dean
Phillips |
Most cities and/or
counties require you to have a business
license and/or permit.
Check with your local government
municipalities to find out what
the requirements are for
where you live. Depending on where you
live, you should be
able to get this information from your local
courthouse or
townhall.
Zoning may also be an issue.
Municipal ordinances can be
very restrictive about what types of
businesses are allowed
in a residential district. This also
applies if you plan on
placing a sign outside of your home.
Again, check with your
local government municipalities to find
out what the
requirements are for where you live.
In
addition, depending on how your home business is
structured--as
a sole proprietorship, partnership or
corporation--there may be
forms to file with the state. The
legal structure affects taxes
and the liability of the owner
and the home business, so it's
important to follow the
appropriate procedures. Contact your
state's Department of
Revenue for filing fees and information.
If you plan to operate your home business under a name other
than your own, you will have to register a fictitious name
with the county--usually referred to as a DBA filing (Doing
Business As). The exceptions to this regulation are
corporations and partnerships doing business under the
umbrella of the corporate or partnership name.
As a home
business owner, you may be required to file
estimated tax
returns and pay estimated taxes quarterly. If
you have
employees, you also have to submit taxes withheld
from employee
paychecks. Here are some of the taxes you may
be responsible
for:
Employment taxes -- Federal income taxes, Social
Security
and Medicare, federal unemployment and state income
taxes.
Federal self-employment tax--Required by those who
work for
themselves to cover Social Security and Medicare
contributions.
Sales tax--Each state requires a sales
tax number for any
company involved in selling tangible items.
Sales tax is
collected, reported and paid to the state either
monthly or
quarterly.
Unemployment insurance tax -- You
are required to pay
federal and state unemployment taxes if you
have more than
one employee on the books for at least 20 weeks
in a
calendar year, or if they have paid more than $1,500 in
gross wages in a calendar quarter.
Again, check with
your state's Department of Revenue for
more information.
A home business qualifies for all of the same tax deductions
regular businesses do. In the eyes of the IRS, the only
difference between most home businesses and Fortune 500
Companies is their size, and the fact that home businesses
can also deduct many household and living expenses.
Owning a home business will entitle you to deduct thousands
of dollars in every day expenses. After all, why pay more in
taxes than you have to?
Listed below are just some of
the items you are allowed to
deduct:
* Your car and car
expenses.
* Your mileage.
* Your home computer,
printer and other office equipment.
* Your home. If you're
not a homeowner, you are allowed to
deduct the area where your
home office is set-up.
* If you're a homeowner, you may
deduct a portion of your
property taxes and utilities.
*
Your travel expenses.
* Your restaurant meals, entertainent,
dinner parties.
* You may pay wages, tax free, to two of
your children, if
they are involved with the business.
*
You may deduct your families health insurance.
NOTE: To
qualify for the above tax deductions, you must be
actively
working your home business.
In closing, since tax laws are
continually changing, I
highly recommend you consult with your
accountant or tax
advisor to learn more about applying the
aforementioned
deductions to your home business.
About the author:
Dean Phillips
is an Internet marketing expert, writer,
publisher and
entrepreneur. Questions? Comments? Dean can be
reached at
mailto: dean@lets-make-money.net
Visit his website at: http://www.lets-make-money.net/
Circulated by Article Emporium and Software4yoursuccess.com
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