sole proprietor questions


C

cartesiankyle

quick sole proprietor questions...

GF is going to be starting working as an aesthetician in two
weeks.. the scoop:

she's going to be paying this lady $160/week for a room in
her salon. i know this can be deductible. she is going to
have to purchase about $500 worth of materials. that is
(on-goingly) deductable.

so here is my question: can she claim mileage driving there,
if she calls it a "client site" ?

also, do i need to have her go register a fictious name
(florida) ? get an EIN? start filing quarterly, or is this
just for llc/inc situation? paying employer taxes?

i'm also worried about the liability.. i've read an LLC
might be a better route incase something goes wrong.. but
she makes every client sign a liability waiver.. will this
be enough protection?

one one final question: i am providing some website stuff
for her business. if i generate like a quickbooks invoice,
that is considered an expense for her as well, right?

excuse the ignorance & multitude of Qs :>
 
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H

Harlan Lunsford

quick sole proprietor questions...

GF is going to be starting working as an aesthetician in two
weeks.. the scoop:
What means "GF"? Is that her initials?
she's going to be paying this lady $160/week for a room in
her salon. i know this can be deductible. she is going to
have to purchase about $500 worth of materials. that is
(on-goingly) deductable.
The room in the salon will be her main place of business and
that rent paid will be tax deductible. She has to get the
landlady to fill out a W-9 form so that a 1099-misc can be
issued end of year for the rent paid. Plus if no W9 on file
then she must withhold 28% of the rent for federal taxes.
Materials, what we call "supplies' will be deductible, yes.
so here is my question: can she claim mileage driving there,
if she calls it a "client site" ?
Driving to one's place of business is commuting, and NOT
deductible, no matter what you call is.
also, do i need to have her go register a fictious name
(florida) ? get an EIN? start filing quarterly, or is this
just for llc/inc situation? paying employer taxes?
Not an expert on Florida law, but I doubt any registration
is needed. And certainly no EIN is needed unless she will
have employees, which I doubt.
i'm also worried about the liability.. i've read an LLC
might be a better route incase something goes wrong.. but
she makes every client sign a liability waiver.. will this
be enough protection?
It's her choice, but best to obtain some type of business
insurance. a liability waver may or may not get her off the
hook in case of a suit.
one one final question: i am providing some website stuff
for her business. if i generate like a quickbooks invoice,
that is considered an expense for her as well, right?
By all means give her an invoice. What she pays you is tax
deductible for her AND it is taxable to you, and as such
goes on your tax return. Don't forget now, ya hear?

ChEAr$,
Harlan Lunsford, EA n LA
 
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M

mmm

quick sole proprietor questions...

GF is going to be starting working as an aesthetician in two
weeks.. the scoop:

she's going to be paying this lady $160/week for a room in
her salon. i know this can be deductible. she is going to
have to purchase about $500 worth of materials. that is
(on-goingly) deductable.

so here is my question: can she claim mileage driving there,
if she calls it a "client site" ?
if you're talking about driving from home to the salon and
back, no, that's called commuting and it's not deductible.
if she drive to other client sites during the day, then the
mileage between the client sites is deductible mileage, but
not the first trip in the morning from home nor the last
trip in the evening back to home.
also, do i need to have her go register a fictious name
she may want to operate under a ficticious business name and
if so, you'll need to register locally according to local
rules
(florida) ?
get an EIN? no necessary if she has no employees

start filing quarterly, - if you're talking about estimate
taxes (including FICA/Medicare) yes, she needs to make
quarterly estimate payments

or is this
just for llc/inc situation? paying employer taxes?

i'm also worried about the liability.. i've read an LLC
might be a better route incase something goes wrong..
generally, the LLC will not protect you against your own
negligence or errors, it protects you if others do something
wrong as your employees and in other circumstances
 
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B

Bill

(e-mail address removed) posted:
quick sole proprietor questions...

GF is going to be starting working as an
aesthetician in two weeks.. the scoop:

she's going to be paying this lady $160/week
for a room in her salon. i know this can be
deductible. she is going to have to purchase
about $500 worth of materials. that is
(on-goingly) deductable.

so here is my question: can she claim mileage
driving there, if she calls it a "client site" ?
No. That is her principal place of business, and she would
be "commuting" -- which is not a deductible expense for
anybody.
also, do i need to have her go register a
fictious name (florida) ? get an EIN? start filing
quarterly, or is this just for llc/inc situation?
paying employer taxes?
There is no federal _tax_ reason to register a fictitious
name -- but there will possibly be FL issues, possibly sales
tax (depending on what she plans to sell).

The EIN is unnecessary as long as she has no employees. She
can simply file a Schedule C. This will become a part of
your joint return (or not, if you file MFS). Filing
"quarterly" issue is tied to the fact that her net
self-employment earnings will require SS and Medicare tax
payments (Schedule SE), and those are "below the line"
(i.e., after all tax credits) and likely will increase your
total tax due, so you'll want to make "estimated tax
payments" -- which are due April 15 (17 this year), June 15,
Sep 15 and the final payment by Jan 15 of next year.
i'm also worried about the liability.. i've read an
LLC might be a better route incase something
goes wrong.. but she makes every client sign
a liability waiver.. will this be enough
protection?
Not a tax issue. Talk to your attorney and insurance agent.
one one final question: i am providing some
website stuff for her business. if i generate like
a quickbooks invoice, that is considered an
expense for her as well, right?
Only if you charge her a fee -- but then you'd have to
report that as _income_. Probably a complication you don't
need.

General advice: She should keep complete records, with
daily notations. A large-page-size diary would be a handy
accessory (or a computer diary, which be backed up
regularly). Please, please use a professional tax preparer
for the first year of her business. Once you've seen how
it's done properly, you may or may not decide to go it alone
.... but you'll be eternally grateful you found out how to do
it _right_.

Oh, and you should consult the professional ASAP -- _before_
your wife starts operating, just to be sure you are properly
alerted to record requirements, and you'll probably get a
lot of good advice regarding the other non-tax questions you
raised above, since a pro will likely have other small
business clients and be generally aware of related issues.

Bill
 
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S

Steve Pope

also, do i need to have her go register a fictious name
Not an expert on Florida law, but I doubt any registration
is needed. And certainly no EIN is needed unless she will
have employees, which I doubt.
You also need an EIN for many types of self-employed
retirement plans.

Note that if she's into saving up for retirement and saving
on taxes, a solo 401(K) (applicable only if she has no
employees) would allow her to defer large amounts of money.
Since the business is starting up in 2006, one has until
December 2006 to obtain the EIN (easy) and establish the
plan (something of a hassle but not expensive).

Good luck

Steve
 
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