Starting a small business
in Business, Accounting & Taxes ·
Matthew Morris28 said:Thinking about starting my own little IT shop. Mostly coding and computer repair stuff.
Most of it makes sense, except for this:
The work that doesn't require General Motors would be done at home. The catch is the house and everything on the property is in my dad's name. I don't own anything, not even a share of it. Do I actually have to rent space from him? Isn't there some other way? It feels pretty stupid to bother a retiree and drag both of us down to the IRS just to deal with all his tax filings.
Also, the landline and the internet are under his name. Say I don't need the phone, but I can't work without web access. I guess I’d have to get a new number and a new account, but business accounts are basically just more expensive versions of what people already have. Who decides that I *must* use a business account, and why can't I just use the one in my dad's name? Who gets to decide that or force my hand? Does that apply to the electric bill too? Even though I don't have my own connection for that room or anything in my name?
My little setup would basically be competing with my current employer. The company I work for is slowly dying, so I'm trying to get my own thing ready before they fold. Do I need to justify myself to them or ask for permission to start my own business?
And what's the deal with paying mandatory contributions for Social Security and Medicare if I'm working full-time at my current job where they already cover everything for me? Do I still have to pay those $600 or do I just pay the difference between what my employer pays and what my business income requires at the end of the year?
What about the estimated income tax for a new business in its first year? Do I actually pay it or not? How does that math even work? At the end of the year, does the business income just get added to my salary from my job and then calculated... or what? I'm struggling to wrap my head around it since everyone talks about a small business as if it's just an extension of a regular person.
Can you actually get a "pass" on the U.S. Chamber of Commerce dues during the first year if you request it in writing? Is that true?
Got a few more questions, but I wanted to clear these up first. Thanks in advance.
Well, software development can fall under general computer services, which means you could technically register the business at your home address. However, if you want to offer hardware repair services, you’ll likely need a dedicated commercial space that meets local zoning regulations and specific licensing requirements.
The issue is that the house and everything on the property is in my father's name. I don't own any part of it, nor am I a co-owner. Am I forced to sign a formal lease with him? Is there really no other way? It feels incredibly silly to drag a retiree into this mess, making him deal with the IRS and all those extra tax filings just because of me.
That shouldn't be an issue at all. You can just head down to a notary with your dad, and he can simply sign a consent form allowing you to use the space. You can register the business at your current residential address, provided you have the owner's permission. There's no need for a formal lease unless you actually want one for some reason.
Also, the landline and the internet connection are both in his name. Let's say I don't strictly need the phone, but I absolutely need the web access to function. I assume I'd have to set up a brand-new number and a separate internet account, but for business users, the only real difference is that it costs more. Who decides that I *must* use a business-tier connection? Why couldn't I just use the existing service registered to my father? And who has the authority to force that distinction upon me? Does this apply to the electricity too, even though I don't have a separate meter for that room and nothing is in my name?
Again, it’s really not a major hurdle. Your father can just call AT&T and sign off on transferring the line over to your business. The only change would be that the directory lists your business name instead of his. All the bills will go to the business, and you just record them in your bookkeeping.
EDIT: Just keep in mind, if you don't opt for a specific business package from AT&T (which is noticeably pricier than residential plans), you won't be able to write those expenses off. As for the electricity, you might be able to claim a portion of the bill as a business expense—maybe around 30%, if I recall correctly—but you should definitely run that by an accountant first.
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| $600or at the end of the year, do I just pay the difference between what my company contributes and the amount required by my business income? |
What’s the deal with income tax prepayments for a sole proprietorship in its first year? Am I actually expected to pay them or not? And how does the math even work? At the end of the year, is the business income just lumped together with my salary from the firm and then everything is recalculated, or...? I find it a bit difficult to wrap my head around because people always talk about a small business as if it were just an extension of the individual.
Usually, I just let my accountant lose sleep over those details, but... It seems to me there aren't any prepayments during that first year. You just tally everything up at year-end and pay the tax based on that total. The prepayment applies to the business earnings specifically, not the entire sum. Perhaps I’m mistaken, who knows; I don't care to exhaust myself over it...
Can the Chamber of Commerce membership fee be "waived" during the first year—meaning, can you opt out if you submit a written request? Is that right?
You don't even deal with the Chamber of Commerce directly, but you do have to pay the local trade association fees, which offer absolutely zero benefit to you; it's just yet another greasy little levy imposed by this country. Not to mention the corporate taxes (just because you've chosen to run a business...) or those various local permit fees...
Anyway, shoot me a DM if you're interested; I'm looking for someone I could outsource some work to... 🙂