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My wifes' Avon business & tax question

 
 
Jim Caldwell
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      09-24-2003, 04:52 PM
My wife is building up her Avon sales business pretty good, and I think she
has to file/pay taxes in advance if she anticipates netting over $600 in any
quarter. She could be getting close to that. So I have obtained Quickbooks
for her (she likes accounting), and told her to start keeping complete
records so she knows what her monthly net is. I think that for income tax
purposes she would want to formally start a business, registering a name at
the courthouse, right? Or can she just file her business income tax return
under her personal name? If not for income tax purposes, it seems like a
good idea to establish a business, as she would then be able to buy what she
needs to conduct business, and not have to pay state sales tax. Also, next
year we could claim part of the car expenses she uses for Avon as a
deduction. Should we just go see a good tax preparer to advise us on this,
and tell us what we can deduct?


 
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Arthur Kamlet
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      09-24-2003, 05:00 PM
In article <bksi2m$5kbae$(E-Mail Removed)-berlin.de>,
Jim Caldwell <(E-Mail Removed)> wrote:
>My wife is building up her Avon sales business pretty good, and I think she
>has to file/pay taxes in advance if she anticipates netting over $600 in any
>quarter. She could be getting close to that. So I have obtained Quickbooks
>for her (she likes accounting), and told her to start keeping complete
>records so she knows what her monthly net is. I think that for income tax
>purposes she would want to formally start a business, registering a name at
>the courthouse, right? Or can she just file her business income tax return
>under her personal name? If not for income tax purposes, it seems like a
>good idea to establish a business, as she would then be able to buy what she
>needs to conduct business, and not have to pay state sales tax. Also, next
>year we could claim part of the car expenses she uses for Avon as a
>deduction. Should we just go see a good tax preparer to advise us on this,
>and tell us what we can deduct?


Your wife is known, in IRS terms, as a sole proprietor of her, um,
sole propriotorship.

For federal tax purposes all she needs to do is file Form 1040
Schedule C and if she has a profit of more than $433, a Schedule
SE as well. If she anticipates owing taxes, see IRS Publication
505 for estimated taxes and file Forem 1040ES to vcalculate and
pay estimated taxes 4 times/year

The IRS offers Publication 334 [The Orange Book] for small
business owners. Call 800-TAX FORM to order 9It is pretty large
for downloading)

If she has employees (not subcontractors) she will need to obtain
an EIN, and meet a lot of other requirements for payroll taxes,
and if she pays subcontractors over 600/yrear she files
form 1099-MISC for them.

There might be state and local rules as well, and a local tax
professional can indeed help her to meet these local rules and
help her organize her records to make tax preparation easier.
--

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
 
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