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I posted on the wrong account. Can someone help me out

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<p><strong>I posted on the wrong...
<p><strong>I posted on the wrong account.  If someone can help me out, I would appreciate it.  If not I'll wait for Just Answer to transfer my funds to my active account and repost the question. </strong>Ok, I've asked a similar quesiton before, I just want to make sure I have all of my bases covered. I currently receive a duty related injury police pension, obviously it was because I was injured in the line of duty. My pension is not taxed federally or by the state. I am employed also at a hospital and bring in around $25,000. Now that I have done my research and weeded out all of the scam work at home employment, I am ready to start earning money. I do not have the money to consult an accountant or tax attorney. Should I keep my income from my present employer and any money I make from at work home separate if I do not create my own business. I would not have any employees if I created my own business. If I do create a business should I do a sole proprioritorship (sp) or LLC or are they the same. Where do I have to register my business if its better that I create one? If I do not create a business do I need a need a federal tax id # XXXXX any reason? If I do create a business, (remember I'm almost broke) is there software out there that will keep track of any taxes I have to pay? If I create a business, I assume I should start a business bank account? Since I will be working, but I am the owner, can I just take money out of the capital or do I have to treat myself as an employee? If I do not create a business, can I still claim equipment I need as a write off on my taxes? If not, what kinds of things can I write off for just a transcrption/data entry at home business? I know a lot of questions, but I'll take care of ya in the end for whomever answers. Thank you in advance.</p><p><strong>Well crap!!! I didn't realize I had two accounts.  All of my feedback is under another sign on.  If someone answers this question, I'll take care of you.  If not, when someone in billing at Just Answer transfers my funds to my active account, I will repost.  I really would appreaciate some help though.  <img src="/tinymce/jscripts/tiny_mce/plugins/emotions/images/smiley-embarassed.gif" border="0" alt="Embarassed" title="Embarassed" width="18" height="18" /></strong></p><p> </p>
Submitted: 7 years ago.Category: Tax
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Answered in 15 hours by:
7/29/2010
Tax Professional: Robin D., Senior Tax Advisor 4 replied 7 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello and thank you for using Just Answer.

I am going to attempt to address all your concerns about starting a business but please let me know if I forget something.

The IRS has a really good site for information and at end I will give you a link to that.

 

Your form of business determines which income tax return form you have to file. A sole proprietor is someone who owns an unincorporated business by himself or herself. An LLC can be treated like a Sole Proprietor or you can choose to have it treated as a corporation.

If you decide to use the LLC structure and treat it as a corporation you will need an EIN. You are not required to have one if you are a Sole Proprietor but can apply for one if you choose. It would act as the business identification number and serve to keep your Social Security Number private from businesses that you may do work with. You can apply for an EIN online at the IRS.gov site.

All businesses except partnerships must file an annual income tax return. As a Sole Proprietor or LLC not treated as a corporation you would be filing a Schedule C. You must pay the tax as you earn or receive income during the year. Generally, you must pay taxes on income, including self-employment tax , by making regular payments of estimated tax during the year. Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Your payments of SE tax contribute to your coverage under the social security system.

You may choose any record keeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes. Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. These documents contain information you need to record in your books. You must be able to prove certain elements of expenses to deduct them. You do this by keeping all receipts.

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit. You have to show a profit during at least three of the last five tax years for the IRS to accept that you are in a business and not just a hobby. Hobbies are allowed to use expenses that are as much as the earnings but that is all. Deductions for hobby activities are claimed as itemized deductions on Schedule A not on the Schedule C. All the income is shown on Line 21 of the 1040, again not on the a Schedule C.

 

As far as software out there that is going to assist you with your record keeping, you will need to use a program that you will feel comfortable with. I really cannot advise on any one particular program. If you are familiar with Quick Books, I know many small businesses that use that and they seem pleased with the support.

 

I do not see at this point that you need to incorporate your business. You can always do that later when and if your business grows to a point that you need to do that. Keeping it simple at first, will allow you to grow your knowledge with the business.

 

In Illinois, most business are required to be registered and/or licensed by the IDOR. If you plan to hire employees, buy or sell products wholesale or retail, or manufacture goods, you must register with the IDOR. If you are only offering a service it does not appear that you are required to register. Some municipalities and counties impose their own taxes in addition to the state and federal taxes that most businesses are responsible for. As a new business, you should contact your local revenue department to determine if additional taxes apply to your business activity. Many communities restrict advertising, regulate pricing or require zoning permits. Contact your city or county clerk for information on local restrictions.

 

I know the above is a lot to go over. Please let me know if you have a specific question remaining.

 

Here is the link I promised you to the IRS information:

http://www.irs.gov/businesses/small/index.html

 

I sincerely XXXXX XXXXX information is helpful and best of luck with your endeavor,

 

 

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