Do I need a business license to file taxes on earned income?
Since I started working for my self, I been making a lot of cash. I just started this summer, and now making about $4000 a month, mostly cash. The cash I just stash in the safe, because I don't if its a good idea to make a deposit at the bank. Well I am making much more than I anticipated, and now I am thinking that I should get a business license. I don't exactly when I will be getting it, but I am sure it will be after the taxes are due. What I want to know, is how do I report all that earned income, including cash? Do I need a business license to do that? I am planning to move out of the house soon, since I am in college, and my family wont budge so the rent and car payments will show up under my bank statement, so don't tell me to just stash the money. I want to do this the right way.
You really do need to start studying and learning about how you should be taking care of this self employment independent contractor income cash CORRECTLY that you have been stashing in the safe and possible maxwell house coffee CD cans some where from your past and current business operation.
You can use the below information to get started on the right track for your venture into the future and that every thing continues going in the right direction for you and your dreams of your future business ventures. Good luck to you.
As a sole proprietor using the schedule C of the 1040 federal income tax return you can use your social security number.
Yes you may need to get some type of local business license in your area or state.
All of your gross income from all sources of worldwide income will be reported on your correctly completed 1040 federal income tax return.
In general, taxpayers may deduct the ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.
The independent contractor self employment income will be reported on the schedule C of the 1040 tax form and you will be responsible for the 15.3% of the social security and medicare tax on your net profit from the business operation you also may need to make some quarterly estimated tax payments for the tax year 2010. The last payment would be January 18 2011.
You would have to be sure that you handle your business deductions correctly for your business operation.
For instructions and forms go to the IRS.gov website and use the search box for publication 334 a very good place to start with examples.
Publication 463 Travel, Entertainment, Gift, and Car Expenses
Use the search box at the www.irs.gov website for Small Business and Self-Employed Tax Center
Filing Season Central is your one stop assistance center for filing your business returns. This includes Highlights of Tax Law Changes, Tax Tips, and more.
2 of the seven tax tips for starting a business enclosed below.
#4 Good records will help you ensure successful operation of your new business. You may choose any record keeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
#7 Visit the Business section of the IRS gov website for resources to assist entrepreneurs with starting and operating a new business. Go to the IRS gov website and use the search box for the below referenced material
*Starting A Business
*Operating A Business
*Closing A Business
*Publication 4591, Small Business Federal Tax Responsibilities (PDF 470.1K)
http://www.irs.gov/
http://access.wa.gov/business/taxes.aspx
