Any small business owners here ?

**sweeps** · 12-14-2005, 05:19 PM

Re: Any small business owners here ?

1. I do software development as a side-gig.

2. It's a simple cash-based business and I have no expenses so I just file Schedule C-EZ.

3. I have extra taxes taken out of my primary job's paycheck to compensate for the income, so there's no need to make quarterly tax payments. An EIN is not necessary; in fact you don't even need to name your business in this situation.

4. I do my own taxes. The last few years I've used free e-filing.

5. You can, of course, claim various expenses (use of home, use of computer, travel, etc.). The rules can become complicated though, so be sure to read the instructions carefully. In my situation, the write-offs are so small it's not worth the effort nor the audit risk.

Be aware that you have to pay 13% or so in Social Security and Medicare tax (Schedule SE). However, you get to claim half of that as a deduction. Also once you hit a certain level (roughly $90,000 in income), you don't have to pay Social Security tax on anything higher (although you have to pay Medicare tax on an unlimited amount of income).

Good luck on your business!

**jmjj215** · 12-14-2005, 05:43 PM

Re: Any small business owners here ?

and I have no expenses

not worth it to keep track? I hear you there.

On the self-employoment tax (15.3%, 1.45% medicare, 6.2% social insecurity up to 90k as Sweep mentioned)...one thing I'm considering for next year is to set up my now-sole proprietorship as an s-corp. One big advantage of this is that I can then pay myself a set reasonable salary from the s-corp and I will have to pay the SE tax on that, but the rest of the profits are simply that - profits, and are not subject to the SE tax. At 15.3%, it's a no brainer.

Don't get bogged down with all the legal stuff right of the bat, especially with the taxes. Sole proprietorships are easy to run and do paperwork for. Keep good records of all expenses, remember your mileage. Focus on making some money!

**jmjj215** · 12-14-2005, 05:44 PM

Re: Any small business owners here ?

Oh, along with Sweeps, I withhold extra from my "job" paycheck to cover what I estimate to be my tax liability from the business. Hopefully we won't get hammered too hard. Although I don't mind paying Sam come April 15th, better than letting him borrow the money for free...jerk.

**sweeps** · 12-14-2005, 05:48 PM

Re: Any small business owners here ?

Thanks for clarifying the numbers, Jesse. If and when you decide to do an S-Corp, let us know.. I'd like to hear how it went.

**Snoopy2645** · 12-14-2005, 05:51 PM

Re: Any small business owners here ?

Well I dont but my dad was in the car business my whole life now that he is gone my brother took over. I know my dad did the schedule c & he paid yearly but he paid a fine for not paying quarterly which always made my mom mad which btw she is an accountant now but wasnt at the time. My dad had a personal accountant he was good friends with that he used, just to get his things right I guess. I know he could have done it but he didnt want to mess with it.

ANy other things to consider well I know it takes money & risk but stick with it & you will succeed to be sucessful be friendly & helpful my dad had a used car lot & he would always fix peoples cars even if they called 6 months down the road & needed a jump start because he believed one person could tell 100 people what a great place it was & thats what made him sucessful. My dad started out in a little shack & bought & sold places until he had a nice carlot with much nicer cars. Took time though. So remember you dont always start at the top.

**meaghanchan** · 12-15-2005, 02:56 AM

Re: Any small business owners here ?

1. Optional question, what type of business do you own and how long have you had it ?

Animation; I've been working 'permalance' for the past year and a half. I'd take a full-time employee position if it came along, it just hasn't yet.

2. I'm wondering what type of business structure (Schedule C, corporation, LLC etc) most small business owners are using ?

No formal structure, just file a schedule C

3. Do you have to file Schedule C once a yr or quarterly ? Also, do you need an EIN for sole proprietership ?

I send a check to the IRS quarterly, although I don't think I have to fill out anything other than the 1040-ES to estimate how much I owe.

4. Do you use a personal accountant or do you do the taxes yourself ?

I did my taxes myself last year; I'm hiring an accountant this year because I think it might save me money. If it doesn't I'll go back to doing them myself.

5. Anything else I need to be to consider or any other helpful hints suggestions etc ?

I kind of fell into being my own business. Out of college, I thought I'd get a job and be an employee, then I was hired and found out that I wasn't an employee, I was an 'independent contractor'. Go figure. It was a lot easier than I figured, and the only big pains (besides no health insurance no 401(k), etc) are the 15.3% self-employment tax and the remembering to save up money for taxes.
Last year I didn't have an account just for that purpose; I'd look at the money in my checking account, and it was hard to deny myself stuff. I didn't file quarterly that year, and so by the end I had about $3000, just sitting in my checking account. Telling myself that I couldn't afford any new clothing, or to eat out once in a while, was really hard. This year I have an ING account set up just for taxes. It makes it a lot easier, because now my checking account only has what I can *actually spend* in it. It's good.

**jmjj215** · 12-15-2005, 04:26 AM

Re: Any small business owners here ?

Yeah, if you aren't having the quarterly estimate automatically withheld from another source, you definitely will want to segregate that money as meag did.

Snoopy, I'm surprised your dad operated as a sole proprietorship doing used car deals. It's very cool that he went out of his way to make a good mark for himself - it seems we see less of that these days. But that's the advantage of a small biz over large corps - small businesses are nimble, and actually care about the customer!

**DivaJen** · 12-15-2005, 06:14 AM

Re: Any small business owners here ?

1. Optional question, what type of business do you own and how long have you had it ?
DivaTribe is a sole proprietorship, as is the freelance business that DH runs (web development). DT started in late 2001 (but wasn't always a business). The web biz started as it exists today in 1998 (if I recall). Before that it ran under another name and also included software for teachers that DH wrote. He was doing that when we met, in 1994.

2. I'm wondering what type of business structure (Schedule C, corporation, LLC etc) most small business owners are using ? Both of ours are sole proprietorships.

3. Do you have to file Schedule C once a yr or quarterly ? Also, do you need an EIN for sole proprietership ? The web biz does quarterly taxes; DT files once a year.

4. Do you use a personal accountant or do you do the taxes yourself ? We have a CPA.

5. Anything else I need to be to consider or any other helpful hints suggestions etc ? Like others, Dh and I save money aside to cover taxes. It's easy to see the money coming in and think, wow look at that balance! But when it's time to come up with tax money, you need to have the cash available.

**jmjj215** · 12-15-2005, 09:31 AM

Re: Any small business owners here ?

Jen, you don't get in trouble for underwithholding taxes for DT? Or do your DH's quarterlies cover the DT liability as well?

**Russell** · 12-15-2005, 09:54 AM

Re: Any small business owners here ?

Thanks everyone for the information!!

**DivaJen** · 12-15-2005, 10:03 AM

Re: Any small business owners here ?

Originally posted by jmjj215

Jen, you don't get in trouble for underwithholding taxes for DT? Or do your DH's quarterlies cover the DT liability as well?

What he withholds covers it all. DT isn't super-profitable.

Any small business owners here ?