Legal and Taxes

Yes. This is a common practice of small family owned businesses. As long as the child or relative is performing some needed service for the business and is paid approximately what a non-relative would be paid for the same work, it is allowed.

Probably yes. Many small business owners are unnecessarily intimidated by a tax return. If you take the form one line at a time and follow the IRS directions, it is easier than you may think. Simple logic will tell you that if a commercial tax preparer will do it for you for only a few dollars, it can’t be too difficult.

No. You can do it yourself with the help of a guide book from most large book stores or with the assistance of an accountant, SBDC, or other business specialist. The state agency that issues charters of incorporation can also help you with the forms and procedures. Nevertheless, many use lawyers because the cost is usually small and the help they offer can be beneficial.

To find out if your business needs a license or permit to operate in your area, call your local authorities. 

Business profits are taxed in one of two basic ways: either to you directly or to a corporation you have formed to operate your business.

You can deduct all regular expenses associated with your business. This is no different from operating your business from a location outside your home.

In addition, under certain circumstances you can also deduct a portion of your home expenses – that portion that relates to business use. There are some strict rules for this and you should know what they are before attempting to take any deduction for home office or home business use expense. Consult IRS Publication 334, the IRS, a CPA, a tax lawyer, or some other source familiar with these rules.

As with any specialist, a lawyer is valuable if you need one and a waste of money if you don’t need one. As a business owner, you will undoubtedly need the services of a lawyer now and then. If you will need one frequently, it might be more cost efficient to hire one on a retainer. If, however, you will only need one infrequently, you might locate one and establish a relationship where you can get and pay for what you want when you need it.

Yes, if your taxes are complicated and you need that level of expertise. No, if your tax return is simple and straight forward. You can either do it yourself by following the IRS guide that comes with your tax form or by using a commercial tax preparer such as H & R Block. If in doubt, show your information to a commercial tax preparer and ask if they are competent to handle it.

Yes, if you do not feel confident of what your are agreeing to or if you want a legal review of the terms and conditions. The time for the lawyer is BEFORE you sign it, not after.

The most common are sole proprietorship, corporation, partnership, S-corporation, limited liability business, and limited partnership.

You can expense most any money that you spend in the operation of your business that is not spent for inventory or equipment that has a life longer than one year. You can also expense depreciation of equipment with useful lives of more than one year as well as losses from inventory spoilage or obsolescence.

For most businesses, this is easy. Simply decide of the form of business organization you want to use (such as sole proprietorship or corporation) and register your business accordingly.

Choose the type of business organization that best suits the needs of you and your business. There is no one best form for all businesses. The most common types of business forms are listed here. Investigate each before making your decision.

First, decide of the legal form of business organization you want to use. For most businesses, this will be a sole proprietorship, corporation, or partnership. There are also other less used forms such as S corporations, limited liability companies, and limited partnerships.