Thinking of starting Business.. Income Tax?

Roderigo · 01-20-03, 05:31

I am thinking of starting a neighborhood Mobile detailing company. Well.. its just me going to their houses and detailing. I am going to work out the prices when i get all my supplies. so i can make a profit after buying items. My neighborhood is all elderly people with BMWs and Mecedes and way too much money on their hands. So im sure i could get a good little operation going. And word of mouth is really good here.

My question is. Since i am a minor, do i have to worry about paying income tax? I mean, its not an official company. Just a little side work. If i have to pay income taxes, how will i go about claiming them?

Well. Any ideas on how to go about doing this business will be well appriciated. though i have a good idea of my plan. I plan to start in about a month, when this semester finishes up and Final Testing is over.

NY detailer · 01-20-03, 06:33

No matter what age you are you need to pay income tax.
What you said reminds me of a movie called "Kid-Co" where the sold horse crap and never claimed taxes.

You will need to go to your town business area and complete a bunch of forms, You will need a tax id # for sales tax as well.

I dont want to steer you in the wrong direction but is this an all cash business or will you be taking checks.

You are always better off not playing around when it comes to the IRS. They will find out one day and then hit you with back taxes.

Roderigo · 01-20-03, 06:38

sigh... it could be considered detailing for friends though. I would have to accept cash and check. since alot of people dont cary around wads of cash. I dont know. It is the same as a kid mowing neighbors lawns. Its not like im going to roll in thousands of dollars. Im thinking small time. like. 5 cars a month. Just enough to use for school lunches and have some extra spending money.
How much Income tax would i pay for a 100$ a month deal. Most kids i know get more than that for their allowances. I dunno. I will have to check it out i guess. Im also curious if i will need a license.

NY detailer · 01-20-03, 06:40

It is up to you, but since you said what you will be making and stuff I know what i would do. Just wont say as i dont want to get anyone in trouble

Taxlady · 01-20-03, 06:59

Isn't the personal deduction more than $1,200 (your approximate annual income)? If it is, you shouldn't have to pay tax, so it would be best to file and have a $0 balance owing.

There may be factors in U.S. taxes that I haven't considered. I don't know if it affects your parents' deduction for you, if you have income. I don't know if someone as young as you has to pay social security.

There might even be some benefits. In Canada the earned income would increase your RRSP (registered retirement savings plan) limit. I'm not up on what possible benefits there would be in the U.S.

But here is a fact I'm sure of: minors are not exempt from paying income tax.

Roderigo · 01-20-03, 09:09

Thanks. I will talk to my parents and see what they think. They have been really supportive in this. They are the ones who brought up the tax thing. So they told me to check it out so we can settle that. I will let them know my situation and see what happens. Thanks all.

samiam513 · 01-20-03, 09:16

Alwyas remember, "What momma don't know don't hurt her"

I detail cars for close firneds and frriends of family, ,and for now I am not gonig to claim it. If they want their 8.25% or what ever of what I make, they can come, and i'll be happy to give it to them. For now I am not 100% sable and don't need to be concearned with it.

If they do send somone to collect from me, it'll cost them more than tehy are getting from me.

Roderigo · 01-20-03, 09:30

yea. that is my state of mind right now. if they want my 12.45$ they can send a guy. and get it.

PathfinderGuy · 01-20-03, 11:28

Alright buddy.. never thought i would have a say in something like this, but it's time to put in my $.02

Forget about the taxes...
Unless you're an incorporated company with an established name, and the company registered under the government, just forget it..

My friend and I detail cars mostly as a hobby.. just something to do while we come home for vacation from college and make some cash to spend on the ladies and when we go back.

We only take cash, and checks made out to: Cash.. Since this is no large scale operation but something you're basically doing for fun and to make a few bucks on the side, there is absolutely no need get the IRS involved.

as someone already stated: "what momma dont know won't hurt her" and making $100 a month is nothing which the government would care about..

Over the 3 week period of winter break, we billed around $1300 in total... if the IRS wants their piece of that, then they can gladly come down and get it.. but i doubt it..

Just don't worry about it. you're still in high school, and it's a part time job.. just dont take credi cards, or anything that is NOT cash.. makes life much simpler.

anyways.. hope your business goes well, and if ya need any help just holla.. i'll be glad to give you a few pointers

THESANTINI · 01-21-03, 05:10

Chances are you won't have to pay any taxes, its important that you just claim them. And if for no other reason then the fact that you'll learn how to do taxes and get a feel for things of that nature.

HellrotCi · 01-21-03, 06:13

If all those "Cash Only" businesses and there's a lot of them, not only here, would pay their taxes like responsible citizens maybe the rest of us wouldn't have to pay so much.

The last year I worked as a contract programmer my wife an I paid $60k in taxes.

Do you think those black topped highways you drive on everyday were constructed for free? Have you given any thought to how much it is costing the people of the U.S. to support our role in the war against terrorism? Even the air you breathe and the water you drink isn't free. The government spends millions of dollars to help ensure those items are safe for us to consume. You may say that the government, that includes local, state and federal, wastes a lot of our tax money, but so does private industry.

You say, "It's only $10 here or $50 there that I'm not paying. What can that hurt?" This example is just for the sake of the argument, but let’s say that 25 million tax payers under paid only $500 a year in taxes or earned around $2000, that's less than $200 a month, of unreported yearly income. That's $12.5 billion dollars of lost tax revenue. My numbers aren't accurate or anything, I just used them to show how a little fudging on your owed taxes multiplied by the number of people who do under report taxable income can make a difference.

What PathfinderGuy said is a pretty fair example of the attitude of tax cheats. How would you feel if you filled your car up with gas and the pump showed you got 10 gallons but in reality you only got 9.5 gallons? What if that 12 ounce can of soda really only had 11.5 ounces in it? What does that hurt; it's only a half gallon of gas or a half ounce of soda, that's not much.

Mutilator · 01-21-03, 06:18

If you think you're going to make more than $2500 in the year I suggest you pay your taxes... especially if you're going to be accepting checks.
I worked as a consultant last year and now I owe $7500 in taxes since I wasn't able to pay all my quarterly estimated taxes.

2 Things are certain in life... death, and taxes. Pay your taxes or you'll wish you were dead.