Tax Service Flyers
September 3rd, 2010
Question: Do I have to claim my services on my taxes?
Suppose I started my own little county-wide computer repair business and I go to the customer’s home to install wireless networks, repair computers, etc. Would I need to claim these services and the money made from them on my taxes? It’s not really even a business. I don’t own a building or anything. I made my own little flyers and business cards and I just use my own computer experience and knowledge as a self-aid. I recently considered putting the paypal option on my website to give customers the option to pay with credit instead of cash/check. Let me know. I don’t see it any different than running my own little lawn cutting business as a child or even babysitting. Someone please shine some light on my situation.
Answer: Income is income. You probably didn’t declare the income from babysitting or lawn cutting because it wasn’t enough to require filing. The IRS is also a little shy about the publicity auditing a 12-year old kid would generate.
Not only is the income taxable, but since you are now self employed you have to pay income tax and self-employment tax of about 15%.
Now for some good news. You have flyers, business cards, a web site, etc. You are a business. If you don’t make money this year, at least you have demonstrated that your intention is to make money. Under the “hobby-loss” rules, you are presumed to be in business only if you make a profit in three out of five years. If you lose money too often, the IRS will disallow the losses unless you demonstrate that there is a profit motive and that you are taking steps to run the business properly.
Keep good records of everything you spend on your business. That includes records on the miles you drive to each home. Also record your odometer at the beginning and end of the year so that you can keep track of your business portion of your car expenses. If you start making a significant amount of money, you may need to pay estimated taxes on a quarterly basis. This is a good time for you to meet with a CPA for tax and general business advice.
I hope this helps.
GaryI hope this helps.
Gary
The Pulse: Election-night blog
Follow all the action from tonight’s crucial count here.
America’s Next Lady Liberty – Whitney Johnson
Posted in 
Tags: