Starting a business...sorta

elSicomoro · 06-13-2004, 02:05 AM

UT might know best on this, but I'll pose it to the gallery...

Let's say that someone wanted to start a reselling business in the Commonwealth of Pennsylvania. That is, they wanted to start buying stuff and reselling it in order to make profit. We're talking collectibles--maybe baseball cards or CDs...stuff like that. And the goal is to eventually make, say, $500 a month. Could said person skirt the issue of paying taxes, so long as they claim the income at the end of the year, or would it be better for them to create a company?

blue · 06-13-2004, 06:40 AM

You pay taxes when you want...I think you're supposed to do it quarterly tho, don't know if PA has any unique laws. If it is a small business you can just report it on your individul return, end of year you're going to have a nice little debt tho.

You have no protection that way however, better off incorporating so joe dumbass can't sue your butt.

Geez I'm barely awake here and probably not making sense...I sold about that much worth of software last year, just set a little aside and claimed it as additional income on my personal return.

SteveDallas · 06-13-2004, 07:38 AM

I don't know about the company vs. no company issue... however, you seem to be asking about paying taxes no your income from this venture. Don't forget you'll also have to collect sales tax from customers.

xoxoxoBruce · 06-13-2004, 07:59 AM

If you pay it on your personal income tax, legally you pay on ALL money received, not on profit. You're not allowed to deduct costs.
If you steal $100K, then give it back, the IRS says you have to pay tax on $100K because you had control of it which makes it income.

Undertoad · 06-13-2004, 08:24 AM

If you're just taking cash and the occasional check or paypal, you're golden. $500 a month is below the IRS's noise level. It's not worth pursuing. If you ever want to make more than that, or if you want to get to the point where you take credit cards, or if you accept a lot of transactions into the high dollars, that's when you'd have to make it legitimate.

xoxoxoBruce · 06-13-2004, 08:58 AM

But wouldn't $500 PROFIT mean a considerably higher activity?
Fleamarkets and such, where it's cash and carry, can be managed, but mail, internet and interstate would attract attention, wouldn't it?

Undertoad · 06-13-2004, 09:16 AM

If you don't have a store in a physical location, you don't have to collect sales tax.

I just don't think the gob'mt is interested in these small dollar transactions. I don't think they ever were. There's more value to letting them go because you could never relaly track them anyway. There are so many people ebaying and paypalling all over the place now that it would take A.I. to figure them all out. If everyone had to collect on these things it would not make much money and would be an accounting nightmare for both the individuals and the IRS.

But $500 *profit* is a little bigger and you might consider going legit just because if you ever DO go legit you'd want all that history in place anyway. A small biz attorney can cut through these kinds of questions like butter, more accurately than we can...

elSicomoro · 06-13-2004, 10:06 AM

Thanks for the input, folks. Here's the deal...

I've been trying to find new ways to make money, since the chances of Rho working again seem slim-to-none, and her UC runs out in about a month. So, I got these crazy fucking ideas...

--Why not sell my baseball cards finally? They've been sitting around for ages.
--People seem to be buying and reselling things on eBay. I could do that!
--I'll get some really cheap CDs from Columbia House, sell them as mint and make even more profit.

The investment and overhead for this sorta thing is really low...a little money to buy CDs, a little luck in winning auctions and time to fuck around on eBay. Easy.

Apparently, doing this sort of thing isn't going to be as simple as I thought...at least, if I want to do it legitimately. But you know what? That's cool...b/c it will be worth it in the end.

richlevy · 06-13-2004, 10:15 AM

If you did do it, you would probably register in Pennsylavania as a Sole Proprietorship

I actually have a CD-ROM of instructions for creating an LLC (limited liability corporation) somewhere.

elSicomoro · 06-13-2004, 10:24 AM

Okay, so I would claim income as mine on a PA tax form. However, I would need to make estimated tax payments every quarter, right? Plus, I'd need to get an EIN from the SSA and pay the Feds quarterly too, right?

Undertoad · 06-13-2004, 10:39 AM

CDs from Columbia House: this idea is a loser IMO, and frankly ghetto, IMO. Last I looked CH's prices are less interesting after you realize that their shipping and "handling" bumps up the average price you have to pay way up, after getting all of the disks you're legally required to buy.

I liked the newsstand idea way better.

But that's all just MO

elSicomoro · 06-13-2004, 11:10 AM

The Columbia House thing could be a risk, if I pick things that nobody wants to buy on eBay. IIRC, S&H on a "free" CD from CH is $3, so I'd prefer to sell that CD for at least $5.50 to make a decent profit.

That newsstand idea was nice when I was barely making any scratch, but not now. Talk about a financial and labor intensive investment...

Katkeeper · 06-13-2004, 05:23 PM

I am a long time small business (artist) person in Pa. so that I can give you guidance on what you need to do.

If you sell anything from anywhere in Pennsylvania, you need to register, get a sales tax number and collect tax and, of course, pay it to Pennsylvania. I report quarterly. They have different requirements as to how often you need to report and pay. It is not onerous.

As for reporting your income, you have to do so, but you can deduct any expenses. If you get to the point of making a profit, these deductions can be meaningful. You report the income on your tax return. However, you must report and pay quarterly if you are making a profit. You need the advice of an accountant if you are really serious about making money at any venture. (The accountant is a business deduction.) Depending on how much of your house is devoted exclusively to business, you can deduct a %age of your utility bills, insurance, RE taxes, repair, interest, etc.

And let's not forget your vehicle. You can deduct as a business expense mileage going to the post office to mail whatever you have sold. The business expenses are one of the nicest features of a small, in-home business. When I look at my tax return and wonder how I lived on so little income, I know that it is the deduction of expenses from my business profit that have made it possible.

I keep tellng UT to have the business take over more of the house.

If you are really serious, TALK TO AN ACCOUNTANT.

Oh, and, good luck!

jdbutler · 06-14-2004, 11:53 AM

http://www.pasbdc.org/default.asp
http://www.sba.gov/gopher/Local-Info...ed-Executives/

Try these out, the small business development centers will give you free help and information and so will SCORE. Good luck.

elSicomoro · 06-14-2004, 11:57 AM

I'm talking to an attorney today...hopefully I can get things in place by the end of the summer.

Thanks again for all the input. I'll be creating a new Manifesto to track the progress of the business in the near future.

06-13-2004, 02:05 AM	#1
elSicomoro Person who doesn't update the user title Join Date: Jan 2001 Posts: 12,486	Starting a business...sorta UT might know best on this, but I'll pose it to the gallery... Let's say that someone wanted to start a reselling business in the Commonwealth of Pennsylvania. That is, they wanted to start buying stuff and reselling it in order to make profit. We're talking collectibles--maybe baseball cards or CDs...stuff like that. And the goal is to eventually make, say, $500 a month. Could said person skirt the issue of paying taxes, so long as they claim the income at the end of the year, or would it be better for them to create a company?

06-13-2004, 06:40 AM	#2
blue Operations Operative Join Date: Aug 2003 Location: Northern WI Posts: 739	You pay taxes when you want...I think you're supposed to do it quarterly tho, don't know if PA has any unique laws. If it is a small business you can just report it on your individul return, end of year you're going to have a nice little debt tho. You have no protection that way however, better off incorporating so joe dumbass can't sue your butt. Geez I'm barely awake here and probably not making sense...I sold about that much worth of software last year, just set a little aside and claimed it as additional income on my personal return. __________________ If you spot a tornado, always remember to point at it, yell "tornado!", and run like hell.

06-13-2004, 07:59 AM	#4
xoxoxoBruce The future is unwritten Join Date: Oct 2002 Posts: 71,105	If you pay it on your personal income tax, legally you pay on ALL money received, not on profit. You're not allowed to deduct costs. If you steal $100K, then give it back, the IRS says you have to pay tax on $100K because you had control of it which makes it income. __________________ The descent of man ~ Nixon, Friedman, Reagan, Trump.

06-13-2004, 08:58 AM	#6
xoxoxoBruce The future is unwritten Join Date: Oct 2002 Posts: 71,105	But wouldn't $500 PROFIT mean a considerably higher activity? Fleamarkets and such, where it's cash and carry, can be managed, but mail, internet and interstate would attract attention, wouldn't it? __________________ The descent of man ~ Nixon, Friedman, Reagan, Trump.

06-13-2004, 10:15 AM	#9
richlevy King Of Wishful Thinking Join Date: Jan 2001 Location: Philadelphia Suburbs Posts: 6,669	If you did do it, you would probably register in Pennsylavania as a Sole Proprietorship I actually have a CD-ROM of instructions for creating an LLC (limited liability corporation) somewhere. __________________ Exercise your rights and remember your obligations - VOTE! I have always believed that hope is that stubborn thing inside us that insists, despite all the evidence to the contrary, that something better awaits us so long as we have the courage to keep reaching, to keep working, to keep fighting. -- Barack Hussein Obama

06-13-2004, 07:38 AM	#3
SteveDallas Your Bartender Join Date: Jan 2002 Location: Philly Burbs, PA Posts: 7,651	I don't know about the company vs. no company issue... however, you seem to be asking about paying taxes no your income from this venture. Don't forget you'll also have to collect sales tax from customers.

06-13-2004, 08:24 AM	#5
Undertoad Radical Centrist Join Date: Jan 2001 Location: Cottage of Prussia Posts: 31,423	If you're just taking cash and the occasional check or paypal, you're golden. $500 a month is below the IRS's noise level. It's not worth pursuing. If you ever want to make more than that, or if you want to get to the point where you take credit cards, or if you accept a lot of transactions into the high dollars, that's when you'd have to make it legitimate.

06-13-2004, 09:16 AM	#7
Undertoad Radical Centrist Join Date: Jan 2001 Location: Cottage of Prussia Posts: 31,423	If you don't have a store in a physical location, you don't have to collect sales tax. I just don't think the gob'mt is interested in these small dollar transactions. I don't think they ever were. There's more value to letting them go because you could never relaly track them anyway. There are so many people ebaying and paypalling all over the place now that it would take A.I. to figure them all out. If everyone had to collect on these things it would not make much money and would be an accounting nightmare for both the individuals and the IRS. But $500 profit is a little bigger and you might consider going legit just because if you ever DO go legit you'd want all that history in place anyway. A small biz attorney can cut through these kinds of questions like butter, more accurately than we can...

06-13-2004, 10:06 AM	#8
elSicomoro Person who doesn't update the user title Join Date: Jan 2001 Posts: 12,486	Thanks for the input, folks. Here's the deal... I've been trying to find new ways to make money, since the chances of Rho working again seem slim-to-none, and her UC runs out in about a month. So, I got these crazy fucking ideas... --Why not sell my baseball cards finally? They've been sitting around for ages. --People seem to be buying and reselling things on eBay. I could do that! --I'll get some really cheap CDs from Columbia House, sell them as mint and make even more profit. The investment and overhead for this sorta thing is really low...a little money to buy CDs, a little luck in winning auctions and time to fuck around on eBay. Easy. Apparently, doing this sort of thing isn't going to be as simple as I thought...at least, if I want to do it legitimately. But you know what? That's cool...b/c it will be worth it in the end.

06-13-2004, 10:24 AM	#10
elSicomoro Person who doesn't update the user title Join Date: Jan 2001 Posts: 12,486	Okay, so I would claim income as mine on a PA tax form. However, I would need to make estimated tax payments every quarter, right? Plus, I'd need to get an EIN from the SSA and pay the Feds quarterly too, right?

06-13-2004, 10:39 AM	#11
Undertoad Radical Centrist Join Date: Jan 2001 Location: Cottage of Prussia Posts: 31,423	CDs from Columbia House: this idea is a loser IMO, and frankly ghetto, IMO. Last I looked CH's prices are less interesting after you realize that their shipping and "handling" bumps up the average price you have to pay way up, after getting all of the disks you're legally required to buy. I liked the newsstand idea way better. But that's all just MO

06-13-2004, 11:10 AM	#12
elSicomoro Person who doesn't update the user title Join Date: Jan 2001 Posts: 12,486	The Columbia House thing could be a risk, if I pick things that nobody wants to buy on eBay. IIRC, S&H on a "free" CD from CH is $3, so I'd prefer to sell that CD for at least $5.50 to make a decent profit. That newsstand idea was nice when I was barely making any scratch, but not now. Talk about a financial and labor intensive investment...

06-13-2004, 05:23 PM	#13
Katkeeper Hoodoo Guru Join Date: Jun 2001 Location: Mechanicsburg PA Posts: 296	I am a long time small business (artist) person in Pa. so that I can give you guidance on what you need to do. If you sell anything from anywhere in Pennsylvania, you need to register, get a sales tax number and collect tax and, of course, pay it to Pennsylvania. I report quarterly. They have different requirements as to how often you need to report and pay. It is not onerous. As for reporting your income, you have to do so, but you can deduct any expenses. If you get to the point of making a profit, these deductions can be meaningful. You report the income on your tax return. However, you must report and pay quarterly if you are making a profit. You need the advice of an accountant if you are really serious about making money at any venture. (The accountant is a business deduction.) Depending on how much of your house is devoted exclusively to business, you can deduct a %age of your utility bills, insurance, RE taxes, repair, interest, etc. And let's not forget your vehicle. You can deduct as a business expense mileage going to the post office to mail whatever you have sold. The business expenses are one of the nicest features of a small, in-home business. When I look at my tax return and wonder how I lived on so little income, I know that it is the deduction of expenses from my business profit that have made it possible. I keep tellng UT to have the business take over more of the house. If you are really serious, TALK TO AN ACCOUNTANT. Oh, and, good luck!

06-14-2004, 11:53 AM	#14
jdbutler If ya cant take a joke, Effya! Join Date: Mar 2004 Location: Pittsburgh, PA Posts: 288	http://www.pasbdc.org/default.asp http://www.sba.gov/gopher/Local-Info...ed-Executives/ Try these out, the small business development centers will give you free help and information and so will SCORE. Good luck. __________________ Phineas J. Twunt

06-14-2004, 11:57 AM	#15
elSicomoro Person who doesn't update the user title Join Date: Jan 2001 Posts: 12,486	I'm talking to an attorney today...hopefully I can get things in place by the end of the summer. Thanks again for all the input. I'll be creating a new Manifesto to track the progress of the business in the near future.

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)