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Old 10-15-2007, 03:12 PM   #1
wlgorman
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Starting a business need to know requirements

I know I can call the IRS and ask them but who wants to do that???

Im in the process of developing a home-based CAD business. I will do outsource work for big engineering firms, patent drawings, paper-to-CAD conversions, etc.

Does anyone know if I will need a business license or a tax I.D. to do this at home? Do I need to report profit to the IRS? I would like to be able to write items off as business expense what would I need in order to do that?
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Old 10-15-2007, 03:16 PM   #2
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Do I need to report profit to the IRS?
BWAAAA HA HA HA HA!!!!^^^

Seriously though, If your business takes off and you need some help, let me know. I'm expent in CAD and 3D CAD.
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Old 10-15-2007, 03:18 PM   #3
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Wow,what a loaded question.

1. Yes, you will need to get a tax ID to report sales taxes to the State of Texas. Most likely, it will be considered data entry which is taxable.

2. You can have a soleproprietarship, a LLP, and Inc, etc. It depends on how much legal protection you want and how much money you want to spend. I think Inc is the most expensive but protects you the best. Sole proprietarship, no protection but doesn't cost a penny to get. Also, it is the easiest tax-wise, you have an attachment to your regular tax return that lists your losses and profits, which adds or subtracts to any other income you may have. Then you are taxed as always (employed or self-employed).

3. I recommend getting with an accountant or lawyer and figure out what is best for you. I got a good accountant to recommend if you need one.
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Old 10-15-2007, 03:19 PM   #4
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you will need to report your profit to the irs if its over a certant amount.
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Old 10-15-2007, 03:19 PM   #5
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you will need to report your profit to the irs if its over a certant amount.
I think it is $400/year.
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Old 10-15-2007, 03:23 PM   #6
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I would recommend setting up and LLC, there are many places on the web that can setup your LLC and get you everything you need to get started. It's not free but it's not rocket science either.

Call the county tax office, they might be able to provide some info as well.
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Old 10-15-2007, 03:26 PM   #7
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There you go:

Selecting a Business Structure
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Old 10-15-2007, 03:32 PM   #8
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I would try the Small Business Administration website too, just to be on the safe side. They have tons of information for the small business owner and it is all free. AND if you are doing CAD for anything that will be built.....today or 10 years from now.....you will need to carry liability insurance.
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Old 10-15-2007, 03:48 PM   #9
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lol you dont have to report profits if you dont want to, but sooner or later you will get caught, just like al capone went to prision for tax hahahhaha.
Find a good accountant, the best guy that knows all the nooks crannies and shortcuts to save you the most on tax and also directing expenses.

Last edited by Longnguyen; 10-15-2007 at 03:50 PM.
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Old 10-15-2007, 03:50 PM   #10
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take a small business class. to many people jump into a "business" w/o a clue.

write a business plan. and then have others read it and help you w/ it.
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Old 10-15-2007, 03:54 PM   #11
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Quote:
Originally Posted by RACER X View Post
take a small business class. to many people jump into a "business" w/o a clue.

write a business plan. and then have others read it and help you w/ it.
+1


didn't take a small business class, but I've been managing and running small business since I was 16. I grew up in a house where my parents ran their own business......when it came time to open the gym a business plan was the first thing that got done......then the LLC and license and bond.
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Old 10-15-2007, 03:56 PM   #12
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your ss# is your tax id.
Income vs Expense,
Just take all of us out to eat everyday and write it off as business expense or marketing.
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Old 10-15-2007, 04:53 PM   #13
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Quote:
Originally Posted by wlgorman View Post
I know I can call the IRS and ask them but who wants to do that???

Im in the process of developing a home-based CAD business. I will do outsource work for big engineering firms, patent drawings, paper-to-CAD conversions, etc.

Does anyone know if I will need a business license or a tax I.D. to do this at home? Do I need to report profit to the IRS? I would like to be able to write items off as business expense what would I need in order to do that?

Depends if you are going to have other employees or not. If not, all you are required to do is pay your taxes quarterly. I was contract for 3 years, I got a W-9 each year. Be sure and put back as much as 30% of all your income for taxes. Keep all receipts, work clothes, gas, car payments, setup a room in your house as an office only and keep your utility bills, rent/mortgage, lunches etc. Any computer equipment, software, hardware etc. All of it can be used as a tax writeoff to some extent. I highly recommend paying your taxes quarterly so you don't get penalties. You do NOT in any way need a tax ID number or an LLC. It is just considered contract income, not company profit. I couldn't stand paying my taxes like that, so contract wasn't for me. But good luck and PM me if you need more advice or opinions.
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Old 10-15-2007, 05:14 PM   #14
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Quote:
Originally Posted by Faylaricia View Post
I think it is $400/year.
400 a year irs must be nuts not even a dog survive with that money lol
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Old 10-15-2007, 05:21 PM   #15
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You do NOT in any way need a tax ID number or an LLC. It is just considered contract income, not company profit.
If you are self-employed, you will need an tax ID from the State of Texas or you are not entitled to work for compensation. They want their taxes.

Also, be careful hiring contractors. If you do, make sure they have their own tax ID and at the end of the year, hand them a form 1099. This clears you and they cannot claim you as their employer (the IRS may want to go after you for social security, unemployment payments, etc). The 1099 form is for the contractor to use as their income to report to the IRS.

Seriously, get with an accountant. A consulting session for starting a new business usually runs around 200 - 300 Dollars and is definitely worth it.
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Old 10-15-2007, 05:32 PM   #16
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Quote:
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If you are self-employed, you will need an tax ID from the State of Texas or you are not entitled to work for compensation. They want their taxes.

Also, be careful hiring contractors. If you do, make sure they have their own tax ID and at the end of the year, hand them a form 1099. This clears you and they cannot claim you as their employer (the IRS may want to go after you for social security, unemployment payments, etc). The 1099 form is for the contractor to use as their income to report to the IRS.

Seriously, get with an accountant. A consulting session for starting a new business usually runs around 200 - 300 Dollars and is definitely worth it.

State only get resale taxes only not income.
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Old 10-15-2007, 07:24 PM   #17
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I not afterall, give me a shout because my company is looking for CAD designers. In my department no less!!!
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Old 10-17-2007, 10:07 AM   #18
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State only get resale taxes only not income.
Right, sorry for any misunderstanding but that is what was meant. Income goes through attachment to regular tax return and added to total income.
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Old 10-17-2007, 11:25 AM   #19
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Old 10-17-2007, 11:57 AM   #20
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if you need a helper i can join in. Im takin some cad classes right now. WE are workin in 3d max, autocab and autodesk viz. I dont have any actual experience in the field but woudl be willing to work for a moderate pay as long as its close or from home. pm me if your interested, I can always do those simple repetitive things that often times take hours in autocad.
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