Charlie Zapalac
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I'm doing this now. You can operate one of three ways. Do nothing, since you already have the legal ability to collect and report taxes. You can file a DBA, (Doing Business As) which will only add the ability to accept payments made out to your business name. If you don't do a DBA and someone writes a check to the business name, legally you cannot cash it or deposit it, and your bank will most likely say Whoa, first time you walk in with one and you don't have a business account in that name. A DBA will not protect your name. Someone else can start using the same name and there's nothing you can do about it. If you get a DBA, and start accepting payments in that name, your bank will force you to have a business account, which will mean more fees and charges. That's why you see alot of sellers with little signs saying make checks payable to {their name}. With no DBA, you list all of your earnings as just other income and claim it on your taxes that way. The next level is an LLC. It will protect your name, but there is also a belief that your not liable personally for anything that the LLC does. That's not true. There are alot of things you will still be liable for. Also, your LLC business will have to file it's own income tax separately and your tax rates are higher, and you are an employee of that business so you will have to pay social security and medicare on all of your earnings. Then there's the big business corporate stuff that you wouldn't want to do on this scale.
I did get my tax id, my own domain for online stuff, and an Etsy online shop. I got a seperate pesonal checking account for my business. I got a persoanl accout with PayPal. I can accept payments online with that, on my phone with an app, and they are sending me a free card swipe that will work with my phone. All of them will deposit funds directly into my checking account. If anything gets hacked by that account tied to PayPal, then it won't be connected to our regular accounts and shut us down financially. Also, the more public "noise" you make the more chances the IRS or other agencies will take note and say hey, what's all the hoopla. Maybe we should audit this guy. I'm keeping a simple spreadsheet of all expenses, sales, and income. I'm using only the one account so that spreadsheet will be backed up by those bank records. I don't know if I'll be rich or sell only one thing a year. However, I do know that I'll have some tax deductions, and if I make a little here and there to cover shop supplies and materials, I'll be happy. i would like to get a new lathe this year and have it pay for itself in small sales, and I'd also like it to become my retirement business, which I'm actually eligible for retirement in 3 1/2 years but I probably will stay longer to get more things paid off first.
Hope that helps and that I'm correct in what I have learned about this.
So that's what I've learned so far in the last few months.
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