What was the route that you took? Did you start by being psuedo-in business, off the books... then decide to make an official go at it? If so, when you became 'official', did you form a sole proprietorship? S-Corp for the protection, LLC? Other? Why?
Interested in hearing your stories and opinions.
Regards,
Joe C.
So would the I.R.S!
Funny that shows up around tax time....
Joe,
One of the best places to study small business and how to get going is looking at the PBS Show "Small Business School". It's a wealth of info for any small or future business owner.
Check their web site for past episodes (In text form) and for shows that are airing now:
There's no such thing as "psuedo-in business".
If you're getting paid, you're in business, even if it's not your primary support. You may be making less than is required to file an income tax return, but you still may owe sales taxes, need an inexpensive license, etc... If someone contracted you to do something, they can certainly still sue you, regardless of your legal "business" status.
Many small business are destroyed because the owner doesn't pay taxes or properly register.
The good news is that it's not hard to be legit. Often, all that is needed is a simple accounting system and a small fee paid to local authorities. A separate bank account also makes things easier.
Single member LLC's in my state don't offer much protection to a sole proprietor, who is actually doing the work, for liability. You do the work, you screw up, you're still liable. They can help if you sub out work, or have an employee.
C and S corps may cost you more in taxes, as the corporation may have to file a tax return of it's own.
1.) Check your library, there are some really good books out there. The more you can learn, the more you'll save in the next steps. I wish I can remember the name of the books I read a few years back. Steps 1,2, and 3, will save you much money at step 4, if you do the legwork. 2.) Check your state's web page for something along the lines of "Doing Business in ", many states have wonderful guides on getting started. Also check with your local Chamber of Commerce for resources. 3.) Look for local SCORE (Service Corps of Retired Executives) classes, meetings, and resources. They're free and can be excellent. 4.) Get some referrals from local self-employed folks for a CPA, and a lawyer. Lots of these folks can get you up and running for a few hundred bucks each. This usually includes getting set up with Quick Books, Peachtree, etc... for accounting. Paying a little bit NOW can save big bucks LATER, if you happen to get nailed by a taxing or regulatory authority. The leg work you've already done will help these guys help you faster, which equals cheaper.I've had several small side businesses, running parallel to my "real job" over the years. Just because a business is part-time doesn't release you from taxes, legal, regulatory, etc... requirements. Business is business, how many hours are devoted to is up to the owner.
The CPA can be worth his weight in gold if the business goes through slow periods and the IRS attempts to call it a hobby.
Good luck!
Barry
I forgot to mention one thing...
Even if you're LOSING money, you're still in business. Losses may reduce the taxes due on your spouse's or "day gig" income. Professional advice can help you get what you're due without the tax authorities pressuring you to call a profit pursuing business a hobby.
Barry
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