Opening Home Business, What Do I Need To Know?
Posted by admin on February 14th, 2010 at 05:59am
My husband and I have been planning to open a home based business for just over a year. Our plans are to open it by the end of 2008. My main concerns are taxes. We can not foresee our profits, but we are expecting under $50,000 for the first year. It will just be my husband and I (no employees). What taxes will we have to pay?
We will have a separate building on our property which the business will be primarily run out of, can we use this for any deductions? I am looking for any information that will help us to get the business started and have everything run smoothly. Any help would be appreciated, the more detailed the better.
Under Home Business
1 Comment for Opening Home Business, What Do I Need To Know?
1. LISA | February 14th, 2010 at 6:31 am
Go to Barnes and Noble and get the book “6 week start up” by Rhonda Abrams, it will be a huge help to you.
As far as taxes, you will have to pay self employment tax on your income each quarter, and a higher percentage of social security contribution. You call the IRS and get an EIN number that is a tax ID for your business, and you begin filing your self employment payments every 3 months. At the end of the year you file a regular 1040 with a schedule C, and pay the difference or get a refund.
Get a separate bank account for all the monies from the business, and keep it separate, makes it much easier to do your taxes at the end of the year. If book-keeping isn’t your thing, there are a lot of local book keepers who will do yours monthly for a small fee (mine is $65 a month, she does all my numbers with my blessing, and that includes payroll for 12 employees.)
As far as the deduction for the building, there is an IRS form for business use of your home that allows you to pro-rate a percentage of your costs according to how much square footage is dedicated to the business. Since you’re using a separate building, that won’t apply. You’ll have to keep a record of all the costs associated with the separate facility and declare them on your Schedule C. (Utilities, maintenance, etc.) Good luck!
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