XJWoody
ArboristSite Guru
Hi guys, I need simple answers to a few business questions:
Background in a nutshell is I started a very part-time home biz in 2007. Basically I prepare new & renewing membership packets and maintain a database for a not-for-profit corp. I invoice monthly, based on the number of members I process that month, and am paid monthly. My profit structure (presently) is that I gross $4.25 per process, and I net $2.25. I know that margin will change a little as postage & supplies increase or decrease, but it's enough to make investing a few hours per week productive.
In tax year 2007 I spent $966 and was paid $465. No 1099 was issued for that $465, however I filed a schedule C with the $501 loss - and carried nothing over into 2008. I had maybe $50 or less in "inventory" (inventory being some supplies and postage) left over going into the new year. The work I did in 12-07 wasn't invoiced or paid until 1-08
2008 1st quarter looks like I'll be in the green... (both 'privately' as in that -$501 from 2007 will be recouped, and have a positive cash flow...)
I know that I have generated enough income in 2008 for the NFP to require a 1099 at the end of the year... The questions I have are these:
FICA withholdings: That $466 "income" from '07... am I still on the hook for that? I assume not, since that year was a 'loss'. But starting in 1st quarter 08, I need to hold back & remit how much? 15% of my net? Who do I remit it to, and how frequently? The federal IRS & quarterly, I assume.
Inventory and business property: As I noted above there isn't a lot of overhead involved, nor is there a lot of 'inventory.' I buy only the supplies I need in the short term (roughly quarterly.) The business property at this point is a cheap printer and monitor (-+$250 that was part of the -$501 2007 loss above) and the only thing I can foresee 'needing' in '08 is maybe another PC. I'm waiting to see what the accelerated depreciation rules look like first... So even if the local (county) has some property tax due, it won't be much.
So thats about it. I can't predict how far into 2008 this group will want to retain my services (we are operating under a month-by-month contract for now) so I don't want to go too far buying lots of supplies or really expensive stuff. If we come to an agreement on something longer term, that will change things some.
But while it's kicking, I'd like to be doing the right things: ie being square with reporting earnings/paying FICA and income tax, keeping up with local taxes due, business license, etc... The old saying that it's "easier to ask forgiveness than permission..." I've played that card enough in the past with so-so results to not want to rely on it going forth. Especially with 'the government' since I work for a government...and know how pissy they can be.
Thanks for any good advice y'all can share.
Don
Background in a nutshell is I started a very part-time home biz in 2007. Basically I prepare new & renewing membership packets and maintain a database for a not-for-profit corp. I invoice monthly, based on the number of members I process that month, and am paid monthly. My profit structure (presently) is that I gross $4.25 per process, and I net $2.25. I know that margin will change a little as postage & supplies increase or decrease, but it's enough to make investing a few hours per week productive.
In tax year 2007 I spent $966 and was paid $465. No 1099 was issued for that $465, however I filed a schedule C with the $501 loss - and carried nothing over into 2008. I had maybe $50 or less in "inventory" (inventory being some supplies and postage) left over going into the new year. The work I did in 12-07 wasn't invoiced or paid until 1-08
2008 1st quarter looks like I'll be in the green... (both 'privately' as in that -$501 from 2007 will be recouped, and have a positive cash flow...)
I know that I have generated enough income in 2008 for the NFP to require a 1099 at the end of the year... The questions I have are these:
FICA withholdings: That $466 "income" from '07... am I still on the hook for that? I assume not, since that year was a 'loss'. But starting in 1st quarter 08, I need to hold back & remit how much? 15% of my net? Who do I remit it to, and how frequently? The federal IRS & quarterly, I assume.
Inventory and business property: As I noted above there isn't a lot of overhead involved, nor is there a lot of 'inventory.' I buy only the supplies I need in the short term (roughly quarterly.) The business property at this point is a cheap printer and monitor (-+$250 that was part of the -$501 2007 loss above) and the only thing I can foresee 'needing' in '08 is maybe another PC. I'm waiting to see what the accelerated depreciation rules look like first... So even if the local (county) has some property tax due, it won't be much.
So thats about it. I can't predict how far into 2008 this group will want to retain my services (we are operating under a month-by-month contract for now) so I don't want to go too far buying lots of supplies or really expensive stuff. If we come to an agreement on something longer term, that will change things some.
But while it's kicking, I'd like to be doing the right things: ie being square with reporting earnings/paying FICA and income tax, keeping up with local taxes due, business license, etc... The old saying that it's "easier to ask forgiveness than permission..." I've played that card enough in the past with so-so results to not want to rely on it going forth. Especially with 'the government' since I work for a government...and know how pissy they can be.
Thanks for any good advice y'all can share.
Don
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