I have a question about taxes in regard to business ownership IN NAME ONLY?

Question

My friend opened a business in her name for her father. He buys and resells used automobiles. She was asking me if she had to file anything special. I think she said he did cash deals only, and I wasn't sure how that would be categorized.

How can I help her sort through this?

Answer 1

If he is buying and selling used cars, there must be a license involved, and one or more companies that will have records of the transactions. Technically, the profits are hers, and she will have to file taxes for them. Any money her father keeps would be wages, a W-2 item. She probably needs to get a local accountant involved very quickly.

Answer 2

Doesn't matter how transactions are done (cash or otherwise) the IRS expects the money to be reported. A large part of whether your friend needs to reports depends on the structure of the company (is it a partnership, sole proprietorship, LLC, LLP, etc). Most small business structures treat the profits of the business as income for the owner/owners. So, depending on the structure, your friend might have some tax liability.

Answer 3

What they said, I agree with all of it. Definitely she doesn't just want to let it slide, Eventually the IRS will find her and want their cut. Get an Accountant involved, use a CPA. A one man shop ought to be able to handle it, not a necessarily a big firm. Course with it being tax time that could be a thing to find someone not already swamped.

Answer 4

definite, the automobile could be titled interior the corporation call. section 179 is largely speeded up depreciation of an asset - and basically the criminal proprietor of an asset could depreciate the asset using fact a $cost of the asset could be indexed on your company tax return for that $cost to be written-off.

Answer 5

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