Today TaxMama hears from Cheryl in Ohio, who tells us, “ I started a doggy daycare business in Oct. 2008. I am a 50% partner (LLC). I worked at my regular job until the end of Sept. 2008. I have my W-2 form from that employer. What do I need to file this year? I am at a total loss!”
That’s an interesting business idea. Are you really getting folks to drop off their dogs each morning as they go to work? And all the dogs get along? Hmmm….
What do you do for your taxes? Well, you and your partner need to decide QUICKLY, if you want to file your business tax returns as a partnership or a corporation, and which kind of corporation. You have until Monday to make this decision because corporation returns (or extensions) are due on Monday. Here’s how to find a tax professional. http://snurl.com/preparer
The simplest way to handle this if you haven’t done any tax planning at all up to this point, is to file as a partnership. That gives you another month to get your act together and get an appointment with a tax pro who can help you with some other decisions – and help you get your tax return prepared.
Hopefully, when you started your business, you opened a separate bank account for it, and you started keeping books? If not, you’re going to need an extension for your personal tax return, as well as your partnership tax return, while you get your bookkeeping done for the year. You’ll find a link to FileLater on this page – to help you get the extensions done electronically, so you have proof they were filed. http://www.taxmama.com/resources/tax.html
Now, once the partnership return is done, you’ll be able to use the information from the partnership’s K-1 forms in your own tax return. The data will go on Schedule E, page 2.
You can read more about partnerships in IRS Publication 541 http://www.irs.gov/publications/p541/index.html
And more about business recordkeeping and deductions in IRS Publication 334
For tips on how to keep your taxes lowest and more in-depth information about deductions and credits available to you, there’s always TaxMama’s 100% Home-Based Business Tax Solution http://snurl.com/homebiz-tax
To help you decide how to organize your LLC and what form it should take, quickly get your hands on Fred Daily’s book Tax Savvy for Small Business http://www.taxattorneydaily.com/publications.php or TaxMama’s book, Small Business Taxes Made Easy http://www.taxmama.com/AskTaxMama/book You may be able to find them in e-book form from Amazon.com. You’ll be able to download them and read them right away.
And remember, you can find answers to all kinds of questions about starting a new business and other tax issues, free. Where? Where else? At 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 subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- MarketWatch – TaxWatch Column :: How to Find a Tax Professional
- TaxMama’s Resources :: Where you’ll find a link to the FileLater extension service
- IRS Publication 541 :: Partnerships
- IRS Publication 334 :: Small Businesses
- TaxMama’s e-book :: The 100% Home-Based Business Tax Solution
- Attorney Frederick Daily’s website :: Where you’ll find a link to his books, especiall Small Business Tax Savvy
- TaxMama’s Book :: Small Business Taxes Made Easy.