Taxes, taxes, taxes

If I was just starting out, I would run a year or two as a sole-proprietor. Then you can see if your income matches your dreams. You may make a lot of money, You might make a little money or might go broke. Keep it simple at first. Most Owner Operators do not end up making enough money to justify forming a corp. If your net income justifies it, then by all means form a corp.

The gross money is big in this industry, but we have a lot of expenses. Our net is much smaller. Educate yourself, a good book to gain information is (Professional Edition - J.K. Lasser's -Your Income Tax) it's hard back about 950 pages. Lot's of good information.

When you talk to a CPA or a tax man, you need to know enough to read between the lines and figure out if he knows what he is doing. You need to know if he has your best interest in mind or if he just wants create extra income for himself at your expense.

 

Now I could be wrong. But I've spoken with a guy who said he doesn't pay taxes at all he just keep all his receipts and that's all he does every year and has been doing it for 5 years. Has he been lucky or is this right. Please only respond with facts not assumptions

 

Its possible that he hasn't paid in, but when you hear that from someone there are questions that you should ask them. Did he make quarterly payments? Some people make those payments, and at the end of the year don't owe anything extra. If he didn't pay quarterly and owes nothing, then he didn't make any money, he either broke even or lost money.

Having to write a check to the IRS sucks, but its not a bad thing, it means that you are making money.

 

He doesn't pay them at anytime but he writes everything off so I'm guessing it kind of breaks him even.

 

My advice is that if you want to run a business efficiently, get yourself a CPA. They are trained to keep you out of trouble.

 

An industry expert recommends to set aside 9% of your gross revenue every week to save for quarterly taxes. It's not a perfect number but should keep you out of trouble. As to the LLC, it would have to be setup to be taxed as an S-Corp to have the company pay your wages & and taxes. and only pay income tax on the profit. However it's suggested that you only come out ahead if your gross revenue is $60k-$70k