Today TaxMama hears from Carrie in the Tax Quips Forum, with a common question. “I am reading through your new edition of Small Business Taxes Made Easy and want to clarify. Should I treat my new network marketing business as a sole proprietorship business?”
You have excellent taste! I am glad you bought the book. It was written specifically to help you set up your business properly.
But I can’t answer your question. No one can, because… I have no idea how much money you’re generating, what your needs are for health benefits and retirement benefits, what kind of liability your business generates, whether or not you will be hiring employees/ whether or not those employees are your children. Or anything else about you and your goals and needs.
Please go back to Chapter 1, where it talks about building an advisory team. One of the first members of that team should be your tax professional. Get a good one. Then read Chapter 2 and 3 about business plans and entities. Next make a list of your long and short-term expectations for this business and your financial needs. Now, sit down and discuss these issues with your tax pro.
In the meantime, if you don’t do anything thinking or planning, you ARE a sole-proprietor (Schedule C) business, by default.
Please, DO some planning. Do it right – and your business will not only prosper, you’ll get to keep most of your profits.
And remember, you can find answers to all kinds of questions about setting up your business and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]