Business taxes :(

[gregdrummeraz]

OK. quick question. my mind is blank but I am sure some of you have the RIGHT answer.

I am going to be running a small online resell business. I fiddled with numbers and it is showing I will be spending A LOT on inventory during the year. about 3.2 mil worth.


is business tax percent as high as income tax? I sell on ebay if that has anything to do with it. consumer electronics. Like iPod's, Navigation sys., and game consoles.


So if I DID even do 3.2 in inventory, would I truly pay one third? if not then how much do you think?


I can sell 75 units a day and each one hasa cost of sale of about 12 dollar's, which is a deductible business expense. which totals 327600 a year.


Just please help with anything you can and please keep answers on a yes and no basis. I feel dumb already.


help a brutha!


Thanks,
Greg

By the way I am in Arizona, do they have inventory tax?

 

[smokeyrabbit]

You need to talk to your accountant, especially before you get into trouble. From your post, it sounds as if you don't understand some very basic business entity differences. Talk to your accountant first, business taxes are not simple, and a good tax accountant can save you $$$$$$$$.

 

[shecky]

asking questions here is your first mistake. you feel dumb because you are not an accountant. which is why they make accountants.

have the mods lock the thread and go find an accountant. now.

 

[wordmunger]

Business tax depends on whether or not your business is incorporated, what accounting model you use, and a gazillion other factors. This sounds like a big enough business that you definitely need an accountant.

If you can't afford an accountant, you probably have unrealistic expectations about your business income.

 

[gregdrummeraz]

How much is an accountant? my cousins husband does taxes for Bush(senior). He must be good, but VERY expensive. 27 with 2 houses. yeah.


so, how much is an accountant though?

 

[Surely]

How much is an accountant? my cousins husband does taxes for Bush(senior). He must be good, but VERY expensive. 27 with 2 houses. yeah.


so, how much is an accountant though?

They usually cost around $3.2 million.



Seriously, if you're going to be spending that much on inventory, why is the cost of an accountant even a concern?

Either hire someone who actually knows about business to handle this stuff, or don't go ahead with this- you're setting yourself up for trouble.

 

[gregdrummeraz]

They usually cost around $3.2 million.



Seriously, if you're going to be spending that much on inventory, why is the cost of an accountant even a concern?

Either hire someone who actually knows about business to handle this stuff, or don't go ahead with this- you're setting yourself up for trouble.

Gee thanks for encouraging the kid(me). I was just wandering how much I would owe in taxes. I have seen arizona does not have inventory tax, so do I not have to pay on the 3.2 mil?

is it true that inventory is considered income?


Thanks to some,
Greg

 

[Counterfit]

I was just wandering

Well, step 1 is to find a place to settle down in!







Seriously though, unless an accountant familiar with AZ tax code comes and posts in this thread, NO ONE will be able to answer that for you. Go pick up a phone book and find an accountant. Or call your husband's cousin, I'm sure he'd be willing to do a family freebie on a question like this.

 

[itcheroni]

Gee thanks for encouraging the kid(me). I was just wandering how much I would owe in taxes. I have seen arizona does not have inventory tax, so do I not have to pay on the 3.2 mil?

is it true that inventory is considered income?


Thanks to some,
Greg

Admittedly, I don't know anything about business tax, but why would you have to pay a tax on inventory? And why would it be considered income?

 

[Hummer]

http://www.irs.gov/businesses/small/article/0,,id=109805,00.html

Also you can take an accounting class.

 

[Sun Baked]

File the LLC paperwork for Arizona, run the articles or organization in the local business rag, get a LLC tax ID, and open a business account.

Buy an accounting program and learn to use it.

Use the business account for nothing but business payments, don't take any personal expenses out of it (ever) ... get an accountant to help you with the taxes.

In business, sometimes writing 2 checks is better than 1 -- especially if checks include any payments to you. 1 for repayment of expenses, and 1 for paycheck.

And yes, keeping track of your hours and paying yourself might help.

---

As far as the money you take out of the LLC, it is income -- you will pay your fed/state tax on it in addition to social security.

If you draw a paycheck based on your hours, the company will pay half the SS and you might get to deduct it from profits. (maybe, i think, can't remember)

Any profits the LLC has, you will pay personally -- SS and your current tax rate on.

You have to be careful with the profit and use an accountant if you can't run your own books -- if you have a huge profit and spend the money in the company. You still personally owe the tax on the profit, even though the money is gone, or lost the next year.

---

You can for a good old fashioned C-corp.

But if you have a lot of profit, the company pays tax on the profit (at lower rate).

And any withdraw of profit means you pay tax on the profit AGAIN (though no SS tax).

The double taxation.

And as a corporation, you have to pay yourself market rate. Can't get out of that without raising a IRS red flag.

---

If you don't pay any personal expenses out of the corporate books, like a car payment, medical bill, insurance, movie tickets, etc. AZ should give you a decent shield for lawsuits with the LLC.

If you do get in the habit of paying personal expenses, it all gets tossed and You = LLC.

---

As far as inventory taxes, sales taxes, credit card machines, etc. Get an accountant.