| -- End Ad Box ---> | | | | any company involved in selling tangible items. Sales |
| Even if you work out of your home, most cities and/or | | | | tax is collected, reported and paid to the state either |
| counties require you to have a business license and/or | | | | monthly or quarterly. |
| permit. Check with your local government municipalities | | | | Unemployment insurance tax -- You are required to |
| to find out what the requirements are for where you | | | | pay federal and state unemployment taxes if you |
| live. Depending on where you live, you should be able | | | | have more than one employee on the books for at |
| to get this information from your local courthouse or | | | | least 20 weeks in a calendar year, or if they have paid |
| townhall. | | | | more than $1,500 in gross wages in a calendar quarter. |
| Zoning may also be an issue. Municipal ordinances can | | | | Again, check with your state's Department of |
| be very restrictive about what types of businesses | | | | Revenue for more information. |
| are allowed in a residential district. This also applies if | | | | A home business qualifies for all of the same tax |
| you plan on placing a sign outside of your home. Again, | | | | deductions regular businesses do. In the eyes of the |
| check with your local government municipalities to find | | | | IRS, the only difference between most home |
| out what the requirements are for where you live. | | | | businesses and Fortune 500 Companies is their size, |
| In addition, depending on how your home business is | | | | and the fact that home businesses can also deduct |
| structured--as a sole proprietorship, partnership or | | | | many household and living expenses. |
| corporation--there may be forms to file with the state. | | | | Owning a home business will entitle you to deduct |
| The legal structure affects taxes and the liability of the | | | | thousands of dollars in every day expenses. After all, |
| owner and the home business, so it's important to | | | | why pay more in taxes than you have to? |
| follow the appropriate procedures. Contact your | | | | Listed below are just some of the items you are |
| state's Department of Revenue for filing fees and | | | | allowed to deduct: |
| information. | | | | - Your car and car expenses. |
| If you plan to operate your home business under a | | | | - Your mileage. |
| name other than your own, you will have to register a | | | | - Your home computer, printer and other office |
| fictitious name with the county--usually referred to as a | | | | equipment. |
| DBA filing (Doing Business As). The exceptions to this | | | | - Your home. If you're not a homeowner, you are |
| regulation are corporations and partnerships doing | | | | allowed to deduct the area where your home office is |
| business under the umbrella of the corporate or | | | | set-up. |
| partnership name. | | | | - If you're a homeowner, you may deduct a portion of |
| As a home business owner, you may be required to | | | | your property taxes and utilities. |
| file estimated tax returns and pay estimated taxes | | | | - Your travel expenses. |
| quarterly. If you have employees, you also have to | | | | - Your restaurant meals, entertainent, dinner parties. |
| submit taxes withheld from employee paychecks. | | | | - You may pay wages, tax free, to two of your |
| Here are some of the taxes you may be responsible | | | | children, if they are involved with the business. |
| for: | | | | - You may deduct your families health insurance. |
| Employment taxes -- Federal income taxes, Social | | | | NOTE: To qualify for the above tax deductions, you |
| Security and Medicare, federal unemployment and | | | | must be actively working your home business. |
| state income taxes. | | | | In closing, since tax laws are continually changing, I |
| Federal self-employment tax--Required by those who | | | | highly recommend you consult with your accountant or |
| work for themselves to cover Social Security and | | | | tax advisor to learn more about applying the |
| Medicare contributions. | | | | aforementioned deductions to your home business. |
| Sales tax--Each state requires a sales tax number for | | | | |