I'm starting up a small business and I don't know anything about taxes. Can anyone help me out here?

Question

It's an online retail business.

I'm in Oklahoma and the business is run from my home.

Answer 1

To get started, I suggest contacting the Small Business Administration (SBA) – links below. Entrepreneur also offers a great site dedicated to money & finance – see below.

I listed a couple IRS links as well.

Hope that helps!

Answer 2

There are a lot of different taxes out there. I'll answer from the state of Illinois, since I don't know where you are located. For example, if you have a payroll, you would be dealing with 7 taxes (if you allow me to count workers comp as a payroll tax, since it is driven by your payroll $.) There's an annual fee (OK, let's just call it another tax), if you are incorporated. Depending on your legal form of incorporation, if you choose that route, you could be dealing with corporate federal and state income taxes. If you set up shop in a commercial building (as opposed to your house), you may have to deal with real estate taxes and a business license. Lastly, sales tax is a thorny issue. Iliinois would tell you to collect it (see the Illinois Department of Revenue web site for their opinion), while your customers may not want to pay it. A lesson I learned the hard way: Don't fence with the taxman.

Answer 3

The VERY BEST thing you can do is to hire an accountant that's versed in taxes. More small business' fail because the owners didn't handle their finances properly, and an accountant will know what to do for your specific case. Their fees are tax deductable as a business expense, by the way.

Answer 4

Here's what I did. I started off freelance as a contractor using my social security as a tax id number. As long as the checks are being made out to your name, this works great. So keeping your own records - the irs needs to see (and can verify) bank statements, etc. This will show your income and then you need to show how that money was spent (deductions) as you will only be taxed on net profit, not gross profit - meaning you don't get taxed on business expenses like electric, ISP, rent, equipment costs, taking a client out to dinner, etc. (anything that can be considered the cost of business).

You can also deduct portions of your home expenses. If your business is taking up 1 room in your 2 room apartment, then 1/2 of the rent can be considered due from the business - and 1/2 the electric, and phone, etc. If you use your car for business trips to the PO, staples or the bank - and it is 1/2 of the car usage (as recorded in a car log that shows where every miles was driven to) - then you can deduct 1/2 of your car payment, your car insurance and your gasoline charges as business expenses (as well as postage and office supply charges).

So what you want to do is save every receipt you can and I used Turbo Tax to file my state and federal taxes.

Then we bought another company and suddenly we were incorporated. If you are operating with a business name, and are receiving checks made out to a business name, then you must incorporate (we were told). Then you will have to file taxes for your Business Tax ID number in addition to you own.

The most important thing I can tell you about that is that money paid to your company (checks made out to your company) must go into the company acct and only be used to pay company expenses. The company can pay you a salary and then you can reimburse you money paid for their expenses (f you paid the rent with a personal check, they can give their share directly to you), but you must never pay personal expenses with a business check.

Otherwise everything is the same. Keep those receipts - your company will still owe you rent and electric (or can pay for it's own 1/2 of the electric bill, or whatever percentage you determine).

If you feel you are in over your head, find an accountant. A good one is worth his weight in gold and they are worth the money if they free you of this hassle and keep you safe from tax trouble.

Answer 5

contact the small business bureau nearest to you. Look in the phone book or goggle your area. good luck

Answer 6

Lots of answers here:

www.irs.gov

Answer 7

Its simple. you make money, u pay tax ..... get an accountant dude.

Answer 8

yes, you have to pay them!