This question from a reader is really on point! Just when are you considered In Business To Make a Profit?
I get jobs once in a wee while, and do them if I choose to or have the time.
I have never done anything for a large Company. The reason I have never registered as a sole proprietor is, I work so randomly… and wouldn't know how to set up a payment schedule.
I haven't worked a REAL job since before my children were born 21 years ago. Not being the business - tax savvy person I have shyed away from this, for not knowing what I'm doing. And I also feel a resistance from my husband because he's afraid I can potentially put him in another tax bracket.
I very much want to do this as a real business, and would like to go the correct route!
If I register a company name as a business, can't I file separately as a couple… and my husband will still be able to claim me as his wife as he has been doing all along.
I avoid bringing up this topic with him, because he seems to squirm and I don't think he truly understands either.All he is concerned about is whether or not it is going to change what he has been doing all along…
I totally feel this resistance, that is why I have dragged my feet!
If you could address this question for me, and maybe give me some guidance on where to find some good advice on this matter, I would be so relieved!!!
I have a deposit check from this company, and I'm afraid to do anything with it.
What general percentage of income would I expect to pay tax on a $2,000 job?
MOST IMPORTANTLY: Could I go along by just having this income once in a while, without being registered as a business, and file it as extra income earned by me on our joint return. Or is it illegal to earn money as a person that does a service without being registered as a company?
Meaning does it matter one way or another as long as I claim the small income on our joint return…………Your a Life saver. I so appreciate your help! Sincerely Joleen
Hi Joleen, I am not a lawyer or an account… nor do I play one on TV. 
That said… I don't think your husband has thought of all the benifits
that come with a small home based business.
If you are in business - legally - You can deduct:
- part of your house expenses… including phone, water, utilities,
- mortgage and any improvements you do to house your business.
- If you have a separate room in your home that you can use just for an office… then
you can deduct expenses related to that as well.
- You can deduct printer, computer, paper, ink, stamps, and on and on…
- You can depreciate your car.
I, for one have always had a home business… even when I worked full
time. My husband loved it because we could deduct so many things.
Including travel if I included a seminar of some sort in the trip.
So… in reality… your business could possible lower your tax bracket.
HA!
And when you don't have any little tax deductions running around the
house… you should always be on the lookout for a new one. Home
business is the winner every time.
You will always be married filing jointly… no reason not to.
A business income for a sole proprietor is just listed on a separate
sheet. It is a schedule C.
Really… it's not a lot more paperwork for taxes as long as you keep
the correct records through out the year.
Here is what you do right now. You go and get a separate checking
account and use that deposit check to open it with. You can open the
account as: Joleen….. DBA (your business name).
Then keep all expenses and income related to your business going though
that checking account. Don't use it to pay for anything personal.
Then get your business cards printed up as well.
Even if you only did one job a year… with just those two things… and
good records… you can file a Schedule C.
Every state is different… and the requirements for being "legal" are
different in each state… so I can't advise you on the legalities.
Have you checked out my other website: www.twopaintersinpod.com
Lots of really good material on this subject and a ton of audio
interviews you should listen to.
Let me know if you have any other questions about being in business to make a profit!
Debra
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