Newbie tax questions

DiggityDiggity subscriber Posts: 1
edited October 2006 in Business Planning
Hi!  My wife and I are considering starting a business on the internet - without going into details, it will be fairly standard - we`ll buy "stuff" bulk from suppliers and resell it in an online store front.  The problem is that neither of us know diddly about this process.  I know we have a lot of reading to do, but I`m wondering if someone can answer a few basic questions we have about taxes?1) I think we`d probably register the business as a sole-proprietorship.  The question is, in whose name should it be registered?  We will both be working on the business - I will be working on the website at night and she will be packing boxes and managing orders during the day.  Right now she is a stay at home mom - I`m concerned that if we list her as the sole proprietor, then I won`t be able to claim her as a dependent on taxes anymore.  Is this true?  We don`t really expect to sell much volume anyway - this will be supplemental income - so her "income" from the business could very well be under the $4,000 personal exemption anyway, if that matters.2) Some of our potential suppliers are requesting a tax ID number before they will send us bulk shipments.  Is this the same thing as an EIN and if so, what do they need this for?  Is this so that they don`t charge us sales tax for anything we`re buying for inventory?Sorry if these are dumb questions, but we`re very new to this and, well, `ya gotta start somewhere.Thanks!-Diggity

Comments

  • truegeniustruegenius subscriber Posts: 3
    Hi Diggity,
    Choosing a business entity can be a difficult task.  There are a ton of tax reasons to go one way or the other.  Here is a link to the IRS site that gives explanation to all forms: tml.
    Also, look into your local SCORE chapter and go and talk to a business counselor.  The service is absolutely free to you: http://www.score.org/</A>.  They can give you some good advice on what direction to go; at least be able to translate the tax mumbo jumbo for you.
    Rather than going as a sole proprieter, I`d look into doing an LLC.  Even if you just put one of you as the member, you can do this form of business entity.  There are tax benefits and protections going this way.  
    I don`t understand where you got information that if your wife works, that you cannot file a joint tax return.  I guess I`m confused about this comment.
    Check out the two resources I gave you.  Hopefully, it will help you out.
    Cheers,
    Tammy
  • DiggityDiggity subscriber Posts: 1
    Thanks for the info everyone.  Tammy, I think I was confused about the joint tax return issue.  I got an email from a Score volunteer who set me straight.  SCORE seems like an incredible resource - I found out there is an office only about 15 minutes from our house, so I definitely plan on contacting them.Thanks!-Diggity
Sign In or Register to comment.