Registering With State For Income

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Cambium

Cambium

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I know its a touchy subject but... I was wondering if I should file quarterly returns, register with the state, d.b.a, and the whole nine yards.

In January I filed...they kept calling me to get some more info but I wasn't doing anything with any business...I just wanted to prepare for future...

They sent me a letter with my registration number and tax id number..

My question is...do those of you who sell firewood have a taxid number and file quarterly and treat it like a business OR do you just report it with the regular tax returns at end of year as extra income...

I know the great advantages of having a business name and tax id so I wanted to hear any side of this senario from people who are selling firewood.

PM if you want... thanks.
 
Don't think you will get much help on this subject :popcorn:
 
I am pretty sure you are going to loose money. Keep track of mileage, there is a standard deduction for that. Keep track of fuel, oil, bars, chains, repairs, equipment, etc, then if you do make $ and it is under a certain $ amount I am pretty sure you can just flow it through your individual tax return.

I could run the question by the wife to get a better idea. She is a CPA and deals with CT businesses.
 
svon89 said:
I could run the question by the wife to get a better idea. She is a CPA and deals with CT businesses.
Click to expand...


That would be awesome. Thanks. I'm only thinking of doing it for 2 reasons:: 1. To have and own a business. 2. To have some kind of report that I made money for the year.

Seems like thats what banks, & dealerships want. Plus I dont want to get in trouble with neighbors, customers, or passer bys. I want everything ligit.

But if she says I'm better off not needing to...then so be it. :)
 
d.b.a. would be the easiest. I think they are $15 here. Then I believe you file
with your personal taxes.

If you were to do it as
an LLC, here they are $25 a year and the registration fees up front, then workers comp, insurance and liability.
 
Cash is King

Think Twice, File Once Simple DBA is best bet.

You'll have to charge your customers sales tax, or eat it yourself. In a tight wood market that means you'll either have to add about $12 per cord or eat it.

Next you will have to file and send in sales tax to CT quarterly. This is independent of any CT or Fed taxes on the income. Those would have to be accounted for on your 1040. Be sure to keep all receipts and a detailed mileage log. CT will want usage tax as well when you file the state return. Self-employed with no or little use tax declared is a sure flag for an audit. Trust me on that one.

The insurance is another issue. Check your policy to see if your auto and homeowners will cover business applications, or to what extent they're liability is limited.

Not to scare you, just providing some food for thought.

Take Care
 
We keep track of all of our transactions and file it under our business every year. You can read between the lines when I say we "lose" money almost every year after payroll,equipment, fuel, repairs, parts etc. Usually get enough back to support the CAD and gun habits. Our CPA has given excellent advice. Cash represents the majority of our business, a few like to pay with checks. It's similar to owning a car wash, one coffee can of quarters for Uncle Sugar and a 55 gallon drum full buried in the back yard.
 
Wonder what your customers will say about $212 wood from you when they can get it for $200 from you competition...

I am of course using 6% sales tax....here it would be $216...


Shoot, Shovel, Shut up....thats all I am saying....

Will you also need DOT numbers and all the hassle that goes with it?
 
Cambium said:
They sent me a letter with my registration number and tax id number..

My question is...do those of you who sell firewood have a tax id number and file quarterly and treat it like a business OR do you just report it with the regular tax returns at end of year as extra income...
Click to expand...
I don't sell firewood, but I have a small home-based business, so I'm in a similar situation.

You did the right thing by getting a tax ID #.

State laws determine how often you have to file. In my state, I used to have to file a sales tax report quarterly, even if no sales tax was collected in that period. But my state laws changed, and now I only have to file a report at the end of the year.

I'm pretty sure you have to collect sales tax on all reported firewood sales. They say that some businesses "forget" to report cash sales, though.

If you keep good records, you'll be able to deduct mileage, tools, saws, PPE, etc., etc, so with any luck, you will make barely make a profit.
 
mtngun said:
I don't sell firewood, but I have a small home-based business, so I'm in a similar situation.

You did the right thing by getting a tax ID #.
.
Click to expand...

Great posts all around. This year will be considered a "hobby" but next year I plan on doing over 50 for sure.

Although my delivery guy decided to go fishing today when I had promised a 2 cord delivery to someone so I might just quit now. lol Not having a truck sucks.

Hey mtngun, are there any fees with keeping the Tax ID# even if you report 0 sales? And for some reason I chose "non wage withholding"..is that right?
 
There will be positives and negatives both ways. Is it going to be a primary job, or secondery? Of course youll clear more money doing cash, But if its your primary job its hard to get any credit without proof of income. Or you pay cash and have to explain were the money come from. I have a primary job, and sell a small amount of wood and do other small excavating jobs on the side. All my side stuff is cash only. If I filed the side stuff id be basicly working for my health.:cheers:
 
LLC fees for CT is $250, might be worth it, keeps a separation between business and personal. Are you talking about paying quarterly estimates for taxes? or quarterly for taxes collected? Mileage deduction right now is $.50/mile. Keep a log book of miles driven to go get the wood, bar oil, chains, gas, deliveries.

My main line of income has been labor based so I have had no tax on finished good collected. I pay my LLC fee yearly and claim 0 sales.

Depending on when the money is made it might be worth paying estimates quarterly.

Any specific questions pm, I can get her reply
 
Heck no, dont file. The less the state and feds know about you the better. Deal in cash only and dont report a penny. I dont know about you but I work hard for my money, and want to keep as much as I can, I can spend it better than B Hussien Obama can.
 
Congrats on wanting to do this correctly. For sure, the new guys are the ones who are checked on.

In PA, if you are self employed and do not file and pay a quarterly INCOME estimate you are penalized when you file on 04/15 of the following year provided you made money.

If you have employees, you must file and pay PAYROLL taxes quarterly and apply for a Federal ID number. This also applies if you are incorporated.

If you collect SALES tax, you file based on how much tax you collect which can be monthly, quarterly and so on. The reason for this is lets say you own a convenience store, you would file and pay monthly on that exposure because you sell alot of soda pop. Lets say you also own this firewood business, but only file and pay semi annual for it because it is a seasonal exposure. You might end up owning several businesses before its all said and done and its important to start off right.

Get yourself a 'day date' book. When you begin your business write down the starting mileage on each of your vehicles. Start collecting receipts for all business related expenses and put them away by month. If you use a card to buy gas, save the statements. You can either write off mileage or actual costs. If you buy a truck or equipment, you write off depreciation. In a new business, you can carry a loss for start up equipment for the first couple of years depending on what your income is.

Find a good CPA to handle the filing of the forms. Its cheaper in the long run and should you be audited they can handle the questions over the phone rather than you having to go. The cpa will tell you how they want you to keep the records as in paper or computer and so on.

Best wishes,
Bob
 
I respect your desires to stay legit,but after doing this for most of my life, I have come to the conclusion that as a hobby income, I have no desire to report a dime to either the feds or the state.
For one, you mentioned your delivery driver and that you lack a truck.If you pay him as a sub contractor and declare it as an expense, then your delivery driver can expect a letter in the mail asking why he isnt declaring his income from you if he isnt also licensed.Might curb his desire to deliver any wood.If you pay him under the table, then that is just that many more dollars you are going to pay taxes on that could have been in your pocket.Something to think about.
Second, around here it really doesnt pay to bust wood if I have to give a share to to the tax man.Last year I delivered 87 cords at the whopping price of $180 per cord.If I had to pay the sales tax,that would have been twelve percent out of my pocket.If I had charged my customer for it, I woulda been competing with the guys with a Wild Thing selling green wood out of a pickup truck.Sale killer no doubt.And after paying thirty percent to the feds for income tax,well, lets just say it woulda taken most of the incentive out of the deal for me.

Although I am a licensed tree service business, I draw the line on firewood.There is just far to much work to cutting firewood to merit handing out any of the income to the tax man.I enjoy cutting wood,but I want to see more of a result of my labor than some fat cat fed handing out cash to folks who dont work for a living.Either it had better be heating my house or padding my wallet.The way I look at it, the government takes enough out of my regular job's paycheck that they have no business taking anything more.Especially when they are going to hand it out to anyone and everyone that just doesnt have enough gumption to get out and earn a living.

Taking everything as a tax deduction is great,but you will come out further ahead by staying on the low side of things, selling just a few cords here and there,and enjoying the fruits of your labor without having to hand out some bucks to the tax man.Unless you are planning on going real big time, I wouldnt bother.Paper work has always given me a headache.
 
OH MY GOD! THIS POST IS SO GREAT I WANNA PRINT IT, FRAME IT, AND STARE AT IT EVERYDAY..
DECISION HAS BEEN MADE.... THANKS GUYS...

All my life I been working for cash...I guess no social security or pension coming to me. Lol

avalancher said:
I respect your desires to stay legit,but after doing this for most of my life, I have come to the conclusion that as a hobby income, I have no desire to report a dime to either the feds or the state.
For one, you mentioned your delivery driver and that you lack a truck.If you pay him as a sub contractor and declare it as an expense, then your delivery driver can expect a letter in the mail asking why he isnt declaring his income from you if he isnt also licensed.Might curb his desire to deliver any wood.If you pay him under the table, then that is just that many more dollars you are going to pay taxes on that could have been in your pocket.Something to think about.
Second, around here it really doesnt pay to bust wood if I have to give a share to to the tax man.Last year I delivered 87 cords at the whopping price of $180 per cord.If I had to pay the sales tax,that would have been twelve percent out of my pocket.If I had charged my customer for it, I woulda been competing with the guys with a Wild Thing selling green wood out of a pickup truck.Sale killer no doubt.And after paying thirty percent to the feds for income tax,well, lets just say it woulda taken most of the incentive out of the deal for me.

Although I am a licensed tree service business, I draw the line on firewood.There is just far to much work to cutting firewood to merit handing out any of the income to the tax man.I enjoy cutting wood,but I want to see more of a result of my labor than some fat cat fed handing out cash to folks who dont work for a living.Either it had better be heating my house or padding my wallet.The way I look at it, the government takes enough out of my regular job's paycheck that they have no business taking anything more.Especially when they are going to hand it out to anyone and everyone that just doesnt have enough gumption to get out and earn a living.

Taking everything as a tax deduction is great,but you will come out further ahead by staying on the low side of things, selling just a few cords here and there,and enjoying the fruits of your labor without having to hand out some bucks to the tax man.Unless you are planning on going real big time, I wouldnt bother.Paper work has always given me a headache.
Click to expand...
 
Last edited:
avalancher said:
I respect your desires to stay legit,but after doing this for most of my life, I have come to the conclusion that as a hobby income, I have no desire to report a dime to either the feds or the state.
For one, you mentioned your delivery driver and that you lack a truck.If you pay him as a sub contractor and declare it as an expense, then your delivery driver can expect a letter in the mail asking why he isnt declaring his income from you if he isnt also licensed.Might curb his desire to deliver any wood.If you pay him under the table, then that is just that many more dollars you are going to pay taxes on that could have been in your pocket.Something to think about.
Second, around here it really doesnt pay to bust wood if I have to give a share to to the tax man.Last year I delivered 87 cords at the whopping price of $180 per cord.If I had to pay the sales tax,that would have been twelve percent out of my pocket.If I had charged my customer for it, I woulda been competing with the guys with a Wild Thing selling green wood out of a pickup truck.Sale killer no doubt.And after paying thirty percent to the feds for income tax,well, lets just say it woulda taken most of the incentive out of the deal for me.

Although I am a licensed tree service business, I draw the line on firewood.There is just far to much work to cutting firewood to merit handing out any of the income to the tax man.I enjoy cutting wood,but I want to see more of a result of my labor than some fat cat fed handing out cash to folks who dont work for a living.Either it had better be heating my house or padding my wallet.The way I look at it, the government takes enough out of my regular job's paycheck that they have no business taking anything more.Especially when they are going to hand it out to anyone and everyone that just doesnt have enough gumption to get out and earn a living.

Taking everything as a tax deduction is great,but you will come out further ahead by staying on the low side of things, selling just a few cords here and there,and enjoying the fruits of your labor without having to hand out some bucks to the tax man.Unless you are planning on going real big time, I wouldnt bother.Paper work has always given me a headache.
Click to expand...

GREAT POST. I agree 110%.
 

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