Monroe Chat

What are the regulations or rules for having to obtain a license?

Obviously the kids who's mowing lawns doesn't need one, but what about full time babysitters or other types of businesses that take place from a home?

Wouldn't the IRS check to see if you have a business license if you are taking tax deductions on behalf of that business?

With the IRS....depending on how you incorporate.....there are various tax forms that you may have to file. A small sole proprietorship can get by with the Schedule C included with their 1040. In this instance, they will require SSN....while they do not require a Employer ID Number (EIN) (but can be included if you obtain one). Again these are for small business that are borderline hobby and business.

The IRS concern is that you file the correct forms and that you correctly report income and expenses. They could care less about a business license. They'll want to make sure that you report under the EIN or SSN, depending on how you incorporate.

It doesn't hurt to consult a CPA and lawyer....to ensure you are set-up properly and to the most advantageous for your business. I'd have to refresh on prior knowledge, in order to help further. The IRS website contains a lot of information, if you are concerned with them.

IRS Small Business / Self Employed

A few things that you may not think of immediately.....

If you are self-employed you must pay Self-Employment Tax
Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners.

If you are self-employed you must pay Estimated Taxes
This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages. Estimated tax is the method used to pay tax on income that is not subject to withholding. If you don’t make quarterly payments you can be penalized for underpayment at the end of the tax year.

I got slammed with the self employment tax many years when I delivered the Journal on a rack/store route. I'd never been audited before and it's a good thing I kept detailed records of mileage, losses & receipts. IRS never did credit the payment to SS, though.

Sometimes it doesn't pay to be honest. None of the other rack drivers claimed the income, which was pretty decent back in the day.

catnipandcarrots wrote:I got slammed with the self employment tax many years when I delivered the Journal on a rack/store route. I'd never been audited before and it's a good thing I kept detailed records of mileage, losses & receipts. IRS never did credit the payment to SS, though.

Sometimes it doesn't pay to be honest. None of the other rack drivers claimed the income, which was pretty decent back in the day.

bet that was back when you actually OWNED the route. I had a friend whose parents owned 3 routes for the Enquirer...pretty much paid for college

Thanks everyone for your help! Any other info, would be GREATLY appreciated...

I want to stay friends with the IRS and want to make sure I am "by the book" with city, state and federal guidelines.

If you haven't already, you might consider calling the City. I am sure they can tell you better than anyone here what they require.

Smalltownfeel wrote:If you haven't already, you might consider calling the City. I am sure they can tell you better than anyone here what they require.

Took care of that today and have the application... Thanks!

Next stop - tax department

Good for you and good luck.

Smalltownfeel wrote:Good for you and good luck.

Thank you very much! It's been interesting and I'm learning a lot

If any other "home business owners" would like to give me some advice on the do's and don'ts, I'd love to hear it.