I have a home business- need tax advise what do i do???
I have an at home based business. that actually provides a beauty service. I sell no product. But I have a designated room in my home for this. i dont...
I have an at home based business. that actually provides a beauty service. I sell no product. But I have a designated room in my home for this. i dont have a corp or llc or s corp. i just work from home doing my service., to be more specific i do eyebrow threading. its an alyernative to facial waxing. I want to know whats the best way to take advantage of deduction with this type of business. I also get alot of payment thru cash. si what should i do before tax time to get the greatest return and avoid red flags and audits.
I dont own my home i rent, i have a designated room for this purpose, & I am not in india i am in the US. usually my husband and i do joint filling with him as the sole bread winner, Iam stay at home mom. But I started this, side work and it has turned out very well for me. so hearing about all the benifits of home based business, i wanted to see what i could do. would selling product be a way to legitmize my earnnings
You should always consult an account on specifics of your situation, especially if yours is a predominantly cash business where you don’t have clients sending you 1099 forms showing your income. In your case, you should have sat up some form of accounting system and be tracking your income and expenses carefully. There are different methods of accounting, such as accrual-based accounting, cash-based accounting and they each have ramifications and advantages.
As far as your more general questions, renting a home doesn’t knock you out of the home-office deduction. The IRS just says the room/space deducted has to be used exclusively for business. Again, an accountant can over this with you.
Bottom line: once you have a business, you should outsource your tax preparation and make sure you file quarterly taxes on your income to avoid an end-of-year penalty. There’s nothing really wrong with being a sole proprietor; the main advantage to converting to an LLC or s-corp is it limits your personal liability. But again, an accountant can go over with you what your best option is.