INDEX
Please note that index links point to page beginnings from the print edition. Locations are approximate in e-readers, and you may need to page down one or more times after clicking a link to get to the indexed material.
AAA. See American Automobile Association
ABA. See American Bar Association
Above the line, 90
Accelerated cost recovery system (ACRS), 135
Acclivity’s AccountEdge, 98
Accounting. See also specific topics
features of, 81
firms for, 99
office supplies for, 26–27
styles of, 83–86
system or software for, 14
Accounts payable (A/P), 90
Accounts receivable (A/R), 90
Accrual, 90
accounting method, 83–85
basis, 105
Accumulated earnings tax, 50, 61
ACRS. See Accelerated cost recovery system
Adams, Roger B., 44
Adjusted basis, 91
Adjusted gross income (AGI), 91
Adoption credits, 209
Advances, 91
Advocacy groups
small business, 10
Taxpayers Advocate Service, 282
Agencies, researching regulatory, 14–16
Agency nexus, 241
AGI. See Adjusted gross income
Agri-BizPlan, 207–8
AICPA (American Institute of Certified Public Accountants), 9, 96
“Allowed or allowable” IRS depreciation rule, 158
Alternative minimum tax (AMT), 31
Aluria Software LLC, 227
American Automobile Association (AAA), 17
American Bar Association (ABA), 9
American Express, 143
American Institute of Certified Public Accountants. See AICPA
Amortization, 91
AMT. See Alternative minimum tax
A/N Group, Inc., 208
Annual gift tax exclusion, 215
Annualized payments method, 231
Answering service, 20
A/P. See Accounts payable
Appeals, IRS audits, 268–71
A/R. See Accounts receivable
Ashley, Adryenn, 78
Asimov, Isaac, 281–82
Assets
defined, 91
Urgent Notice, We Intend to Levy on Certain Assets, CP 504, 253
AT&T U-verse, 21
Audit determination letter (30-day letter), 270
Audit trail, 91
Audits. See IRS audits
Auto insurance, researching, 16–17
Automobile expenses. See Vehicles
Average life expectancy, 212
Avery labels, 26
Babener, Jeffrey A., 129
Bad debts, researching, 20
Balance sheet (BS), 91
Barbershops and beauty salons, 127–28
Barter, 108–9
Basis, 92
Below the line, 92
Benefit plans, 219. See also Fringe benefits
Benefits of (five Cs), 32
Benjamin, Carolin, 34–35
The Best Home Businesses for the 21st Century: The Inside Information You Need to Know to Select a Home-Based Business That’s Right for You (Edwards, S. and Edwards, P.), 5–6
Bills, paid, 87
Blasingame, Jim, 44
Blenk, Christiana, 161
Bookkeeping. See also Record keeping
accounting styles, 83–86
for fiscal year, 83
by hand, 81
for IRS, 83
records, 77–78
resources, 96–99
services, 37
terms, 90–96
To-Do List and Questionnaire, 76
Bottom Line/Personal, 75
Boyd v. Commissioner, 190
Brand awareness, developing, 21, 126
BS. See Balance sheet
Bureau of National Affairs, U.S., 99
Business. See also Small business checklist; specific topics
deductions (See Deductions)
entities (See Entities)
focus, 10–11
name, 12–13
success, 32–38
Business plan, 28–45
benefits of (five Cs), 32
business success and, 32–38
hobby losses, avoiding, 30–31
losses and IRS audits, 30–31
need for, 29–30
outlining and considerations, 38–42
as predictor of success, 6–7
resources, 43–45
tax consequences of, 42
ten fundamental questions, 37
To-Do List and Questionnaire, 28
working to your strengths, 39–40
Buy vs. lease decisions, 19, 166–71
Byrd, Mary Jane, 43
Cable TV, as home office expense, 156–57
Calculators, 99
California
employer-provided childcare facilities credit, 210
“jock tax,” 238–39
sales tax case law, 241
Cancelled checks, 87
Capital, 32, 92, 102–3. See also Owner’s capital account
Car
expenses (See Vehicles)
loan interest deductibility, 123
Cash
accounting method, 83
Audit Guide, 109
basis (method of accounting), 92
as expense, 264
-intensive businesses, 130–31
C-corporations
fringe benefits, 199
nontax considerations summary, 66–67
tax considerations summary, 64–65
Center for Business Planning, 44
Certified Financial Planner Board of Standards (CFP), 10
Certified financial planners, on advisory team, 10
Certified public accountants (CPAs), 9, 96
CFP. See Certified Financial Planner Board of Standards
CFS Tax Software, 99
Chambers, Stan, 261
Check register, 92
Checking account, separate for business, 14
Checklists. See To-Do List and Questionnaire
Childcare, 161, 205, 209–10, 220
Children, adoption credits, 209
Clarity, as business plan benefit, 32
Clarke, Lori Singleton, 125, 211
Clicking Through: A Survival Guide for Bringing Your Company Online (Ezor), 20, 25, 245
Closing the books, 92
CNNMoney.com retirement calculator, 221
Cohan, George M., 265
.com domain name extension, 12, 26
Commerce Clearing House, 99
Commission Junction Internet tax map, 247
Commissioner v. Soliman, 146
Common deductions. See Deductions
Communications, selecting, 21
The Company Corporation, 25
Compensation, 53, 73–74, 103, 185
Computerized accounting system, 80
Confidence, as business plan benefit, 32
Construction industry, 128–29
Constructive receipt, 83, 92–93, 111–12
Consultants. See Independent contractors
Contract law, researching, 20
Contractors. See Independent contractors
Copiousness, as business plan benefit, 32
Copyright issues, 245
Corporations
Delaware, Nevada or Wyoming, 63, 68–70
described, 60–62
IRS forms for, 72
payroll, 186–88
reporting requirements, 70
setting up, 13–14
tax rates, 49–50
Cosmetology Fairness and Compliance Act of 2001, 127
Cost control, as business plan benefit, 32
Cost of goods sold, 121
Costco, 26
Costs, researching, 16–18
CPAs, 96. See also Certified public accountants
Credit, 93
Credit cards
expenses, 264
interest deductibility, 123
to pay taxes owed, 271–72
for tax payments, 272–73
Daily, Frederick W., 43
DDB. See Double-declining balance
DDB (double-declining balance) depreciation, 135
Death benefits, 199
Debit, 93
Deductions, 118–43
business expenses, 265
car loan interest, 123
cost of goods sold, 121
industry-based, 127–31
insurance, 123–24
interest expenses, 122–23, 149
licenses, 124
marketing, 122
office expenses, 120–21
office in home, 145
publicity, 122
rents, 127
To-Do List and Questionnaire, 118
travel and transportation, 125
uniforms, 126
universal, 120–27
vehicle expenses, 164–65
Definitions
assets, 91
benefit plans, 219
depreciation, 132–33
entities, 49, 51, 55–63, 70–72
estimated payments, 223–26
independent contractors, 177–80
payroll, 94–95
Delaware corporations, 63, 68–70
Delegation, 40
Dell, 241
Demas, Cheryl, 161
Department of Labor, U.S., 192, 202
Deposits vs. income, 101–2
Depreciation, 93
defined, 132–33
double-declining balance (DDB), 133, 135
of home, 158–60
IRS, 132–41
office in home, 148–50, 154–55, 158
of vehicles, 171–72
DiPietro, John, 167
Disability insurance, researching, 17–18
Disaster and continuity planning, IRS, 44
Dodge Reports, 129
Domain names, Internet, 11–13, 23, 26
Dome, 97
Double-declining balance (DDB) depreciation, 133, 135
Double-entry accounting system, 80
Double-entry bookkeeping, 80–81, 93
Draws, 93
Driver’s Daily Log, 130
Drugs, Drunks and Debits (Thorburn), 14, 26
EAs. See Enrolled Agents
EasyStick, 19
Education, 124–25, 199, 211–12, 215
Edwards, Paul, 5–6
Edwards, Sarah, 5–6
EFTPS. See Electronic Federal Tax Payment System
eHealthInsurance.com, 17, 206, 220
EIN. See Employer identification number
Electronic Federal Tax Payment System (EFTPS), 195, 202, 230, 279
Electronically filed returns, 89
Employee stock ownership options (ESOPs), 200
Employees, 176–203
achievement awards, 193
benefits, 198–200
family members, 188–91
fringe benefits, 198–200
independent contractor claims, 180–83
leasing and trusts, 210
ownership and stock options, 200
resources, 201–3
Safe harbor rules, 182–83
1099-MISCs, 183–86
To-Do List and Questionnaire, 176
Employee’s Withholding Allowance Certificate, 191, 201
Employer identification number (EIN), 15, 43, 197, 252
Employer-provided child care facilities credit, 220
Entertainment, deductibility, 126
Entities, 46–75
choosing, 47–49
Delaware, Nevada or Wyoming, 63, 68–69
issues, 51–55
non-profits, 69–70
nontax considerations summary, 66–67
payroll, 51
resources, 72–75
self-employment, 51
tax considerations summary, 64–65
tax rates, 50
taxation, 49
To-Do List and Questionnaire, 46
Entrepreneur, 44
ePage, 33
Epilogue, 281–82
Equipment, lease vs. buy decisions, 19
Errors, on tax returns, 252
ESOPs (employee stock ownership options), 200
Estimated payments, 222–33
benefits of, 224
defined, 223–26
installment payments, 228–29
methods for, 226–28
resources, 232–33
To-Do List and Questionnaire, 222
withholding, 230–31
Estimated tax payments, 95, 185, 225, 252
Etymology dictionary, 47
Evoy, Ken, 26
Exempt organizations, 209
Expense report, 93
Expenses. See Deductions; specific expenses
Ezor, Jonathan I., 20, 25, 245
Facilities, selecting, 18–19
Factoring, 22
Fair market value (FMV), 94
Family
hiring members, 188–91
IRS Section 105 on medical reimbursement plans, 207–8
trusts, 64–67
Family Business Magazine, 202
Federation of Tax Administrators, 15
Fees, deductible, 130
Fictitious name announcements, 13
Fire insurance, researching, 23
Fiscal year, 95. See also Tax year
bookkeeping for, 83
Five Cs, business plan benefits, 32
Flexible spending accounts (FSAs), medical, 198
FMV. See Fair market value
Forms. See IRS forms
Freelancers. See Independent contractors
Fringe benefits, 204–21. See also specific benefits
employees, 198–200
IRS for, 219–20
owner’s, 205–21
reimbursements and, 205–12
resources, 220–21
retirement plans, 212–16
tax-deferred opportunities, 216–19
To-Do List and Questionnaire, 204
FSAs. See Flexible spending accounts
FYTIN acronym, on checks, 252, 278
Garrison, Jamie and Matt, 227
GEICO, 17
General journal, 94
General Journal, 94
General partnerships (GPs), 58–63, 68–69
described, 56–57
income tax handling, 49–50
IRS forms for reporting, 71
nontax considerations summary, 66–67
tax considerations summary, 64–65
General Services Administration, U.S., 125
Gifts as compensation, 125, 193
Gifts, business, 125
Glink, Ilyce, 279
GoDaddy.com, 12, 26
Google AdSense/AdWords, 247
Google.com search engine, 127
government resources, U.S., 24
GPs. See General partnerships (GPs)
Greatland, 27
Guaranteed payments, 51
Guerrilla Marketing to Heal the World: Combining Principles and Profit to Create the World We Want (Conrad and Horowitz), 22, 25
Health Care Reform Act, U.S. (2010), 221
Health insurance, 17, 53, 62, 123–24, 206–9, 220
Health savings accounts (HSAs), 17, 206–7, 220
HELOC. See Home equity line of credit
Help a Reporter.com, 25
Hobby losses, avoiding, 30–31
Hoffman, David, 239
The Home Daycare Complete Recordkeeping System (Thompson), 161
Home equity, 216
Home equity line of credit (HELOC), 216
Home office. See Office in home
Home repairs/maintenance, 157
Hopfenmuller, Steve, 165
Hourly compensation, 192
Household supplies, as home office expense, 157
H&R Block Tax Liability Estimator, 233
HSAs. See Health savings accounts
Hybrid accounting method, 83, 85
I-HelpDesk, 293
IIAA. See Independent Insurance Agents and Brokers of America
Illegal income, 106–7
Image and visibility, 21–22, 24
Inc., 44
Income, 100–117
accrual basis, 105
capital transactions, 102–3
deposits vs., 101–2
IRS Cash Audit Guide, 109
rarely reported, 106–9
resources, 116–17
sales taxes received, 105–6
1099s, 109–16
timing, 104–5
To-Do List and Questionnaire, 100
Income taxes. See Internal Revenue Service
Incorp Services Inc., 13, 25, 74
in Nevada, 25
Independent contractors, 176–203
behavior, 179–80
defined, 177–80
employee benefits, 198–201
family members, 188–91
hiring checklist, 180–82
resources, 201–3
safe harbor rules, 182–83
1099s, 183–86
To-Do List and Questionnaire, 176
Independent Insurance Agents and Brokers of America (IIAA), 10
Individual Retirement Account (IRAs), 191, 213–18
Industry
deductions based on, 127–31
safe harbor rules, 182–83
Installment tax payments, 228–29, 272–73
Insurance
agent/broker, on advisory team, 10
deductibility, 123–24
health and medical, 206–9
as home office expense, 157
life insurance, 210
researching costs, 16–18
Insurance agents and brokers, 10
Interest expenses, deductible, 122–23, 149
Internal Revenue Code sections
529, on college education plans, 215
530, on safe harbor information, 182–83
105, on medical reimbursement plans, 207–8
162, on deductions of business expenses, 265
179, on depreciation, 140–41
Internal Revenue Manual, 278
Internal Revenue Service, U.S. (IRS)
Abusive Tax Schemes warning, 107
audits (See IRS audits)
on barter, 108–9
beauty salon guide, 128
bookkeeping for, 83
cash audit guide, 109
childcare providers, 128
construction industry, 128–29
credit for green vehicles, 172–83
depreciation, 132–41
disaster and continuity planning, 44
Employment Taxes for Small Business, 195
forms (See IRS forms)
for fringe benefits, 219–20
industry-specific, 127–29
main phone number, 282
notices (See IRS notices)
office in home, 145–61
payroll service providers/bureaus, 194–95
phone numbers, 282
publications (See IRS publications)
schedules (See IRS schedules)
sections (See Internal Revenue Code sections)
tax professionals, 10, 25, 247, 268
trucking industry, 130
website, 24
Internet
access to, as home office expense, 156
business plan resources, 44–45
businesses (See Online businesses)
computerized accounting system, 80
home-based business support, 161
Legal issues on, 245–46
resources, 26–27
for resources to start business, 7–8
sales tax, 240–42
selecting communications, 21
taxes, 236–37
Internet Tax Freedom Act, U.S., 236
Investor’s money, 103
IRAs. See Individual retirement account
IRS. See Internal Revenue Service, U.S.
IRS audits, 255–79
anticipating, 256
appeals, 267–71
audit guides, 142
business plans, 30–31
determination (30-day) letter, 270
focus of, 256
frequency of, 255
independent contractors, 180–81
losses and business plan, 30–31
negotiations during, 265–67
office in home, 152–53
“ordinary and necessary” expenses, 265
process described, 259–60
professional help and, 256, 260, 264, 267–68, 274–76
proof of cash, 260–63
reconsideration, 267
resources, 278–79
tax bankruptcy, 277
Tax Court, 270–71
taxes owed, 271–76
taxpayer information sources, 257–59
To-Do List and Questionnaire, 248
IRS Cash Audit Guide, 109
IRS CP codes. See IRS notices
IRS forms
for corporations, 72
8109, Federal Tax Deposit Coupon, 197
8801, Credit for Prior Year Alternative Minimum Tax-Individuals, 229, 232
8809, Request for Extension of Time to File Information Returns, 184, 201
8822, Change of Address, 256, 278
8825, Rental Real Estate Income of a Partnership or S Corporation, 71–73
8829, Expenses for Business Use of Home, 71, 128, 145–46, 153, 157, 160
8834, Qualified Plug-In Electric and Electric Vehicle Credit, 172–74
8882, Credit for Employer-Provided Childcare Facilities and Services, 209, 220
1120, U.S. Corporation Income Tax Return, 65, 73
1120S, U.S. Income Tax Return for an S Corporation, 71–73
entities, 71–72
433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, 278
433-B, Collection Information Statement for Business, 278
4549, Income Tax Examination Changes, 267
4562, Depreciation and Amortization, 71–72, 142, 165, 174
4835, Farm Income and Expenses, 71, 73
for GPs, 71
I-9, Employment Eligibility Verification, 191, 201
for LLCs, 71
for LLPs, 71
for LPs, 71
940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, 201
940-V, Payment Voucher for unemployment taxes, 201
941, Employer’s Quarterly Federal Tax Return, 201
941-V, Payment Voucher for payroll taxes, 197, 201
9465, Installment Agreement (IA) Request, 252 entities, 272–73
for partnerships, 71
for s-corporations, 71–72
656, Offer in Compromise Application and Instruction Packet, 278
6251, Alternative Minimum Tax - Individuals, Estates, and Trusts, 229, 232
for sole proprietorships, 71
SS-8, Determination of Worker Status, 201
1040, Individual Income Tax Return, 90, 174
1040-ES, Estimated Tax for Individuals, 232, 252
1065, Return of Partnership Income, 64–66, 71, 121, 229
1099, income to sole proprietors and partnerships, 109–16, 114, 183–86, 243
1099-MISC, Miscellaneous Income, 109, 112–14, 122, 183–86, 201, 243–44
2210, Underpayment of Estimated Taxes by Individuals, Estates, and Trusts, 232, 278
2290, Heavy Highway Vehicle Use Tax Return, 130
W-2, Wage and Tax Statement, 197, 239
W-3, transmittal form for W-2 information, 197
W-4, Employee’s Withholding Allowance Certificate, 191, 201
W-9, Request for Taxpayer Identification Number and Certification, 185, 201, 244
website, 24
IRS notices, 248–54
Additional Child Tax Credit, CP 8, 250
Balance Due, No Math Error, CP 14, 251
Changes to Tax Return, and Earned Income Credit, Balance Due, CP 11A, 251
Changes to Tax Return, Balance Due, CP 11, 250
Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing, CP 90, 253
Final Notice before Levy on Social Security Benefits, CP 91/CP298, 253
Math Error, Overpayment of $1 or More, CP 12, 251
No Math Error, Balance Due, CP 161, 253
Notice of Default on Installment Agreement, CP 523, 253–54
Notice of Proposed Adjustment for Underpayment/Overpayment, CP 2000, 254
Overpaid Tax Applied to Other Taxes You Owe, CP 49, 252–53
refund check by mail, CP53, 253
Reminder, We Have Not Received Your Tax Return, LT18, 254
Reminder Notice, Balance Due, CP 501, 253
To-Do List and Questionnaire, 248
Unable to Apply Your Overpayment to Your Estimated Taxes, CP 45, 252
Urgent Notice, We Intend to Levy on Certain Assets, CP 504, 253
We Changed Your Estimated Tax Total, You Are Due a Refund, CP 24, 251–52
We Changed Your Estimated Tax Total, You Have an Amount Due, CP 23, 251
IRS publications
505, Withholding and Estimated Payments, 232
541, Partnerships, 73
542, Corporations, 73
583, Starting a Business and Keeping Records, 83, 96
587, Business Use of Your Home, 160
463, Travel, Entertainment, Gift, and Car Expenses, 174
946, How to Depreciate Property, 135, 174
970, Tax Benefits for Education, 220
334, Tax Guide for Small Businesses, 72
1281, A Guide to Backup Withholding on Missing and Incorrect Names/TINs, 183
Web site, 24
IRS schedules
C, Profit or Loss from Business, 55, 60, 71, 121, 129, 155, 174, 185
E, Supplemental Income and Loss, 71, 102
F, Profit or Loss From Farming, 71, 95
K-1 of Form 1065, 52, 56, 58, 71–72, 229
SE, Self-Employment Taxes, 229
Jest for Pun, 247
”Jock tax”, 238–39
Jordan, Fred, 69–70
Jordan, Michael, 238–39
Journal entry, 94
KGB Rules of Negotiations, 266–67
King, Rodney, 261
Lease vs. buy decisions, 19, 131
Legal issues, 25–26
compliance as predictor of success, 6
online businesses, 236–37, 240–41
research, 20–21
Lexis Nexis Matthew Bender, 99
Liabilities, 94
issues, 245
protection myth, 54
Library of Congress legislation database, U.S., 232
Licenses
city or county, 15
compliance with, as predictor of success, 6
deductibility, 124
independent contractors, 179–80
nontax considerations summary, 66–67
payroll, 187
researching required, 14–16
resources, 24–25
setting up, 13–14
tax considerations summary, 64–65
Life insurance, 18, 123–24, 199, 210
Limited liability corporations (LLCs)
Aluria Software LLC, 227
described, 59–60
fringe benefits, 198
income tax handling, 52–53
IRS forms for reporting, 71
nontax considerations summary, 66–67
payroll, 187
setting up, 13–14
tax considerations summary, 64–65
1099s, 114
Limited liability partnerships (LLPs)
described, 58–59
IRS forms for reporting, 71
nontax considerations summary, 66–67
payroll, 187
tax considerations summary, 64–65
Limited partnerships (LPs)
described, 57–58
income tax handling, 52–53
IRS forms for reporting, 71
nontax considerations summary, 66–67
payroll, 187
tax considerations summary, 64–65
Lincoln, Abraham, 47
Listed property rules, 132
LLCs. See Limited liability corporations
LLPs. See Limited liability partnerships
Loan calculators and information, 88
Local issues. See State and local issues
LPs. See Limited partnerships
Luxury vehicles, 171–72
MacPhee, Robert, 41
MACRS (modified accelerated cost recovery system), 136–38, 171–72
Magical Miles, 97
Malpractice insurance, researching, 16
Mandossian, Alex, 160–61
Manifesting, 41
Manifesting for Non-Gurus (MacPhee), 41
Marketing, deductible, 122
Martha Stewart Living, Omnimedia, Inc., 38
Martin, Rose, 70
McDonald’s, 11
McKeever, Mike, 44
Meals and lodging, deductibility, 199
Mediation, IRS audits, 269, 278
Medicare, 84, 159, 181–82, 190, 196, 206
Megginson, Leon, 43
Megginson, William L., 43
Merchandise, cost of goods sold, 121
Mieszerski, Ed, 242
Mike the Realtor, 35–36
MileIQ, 97
Mills, Donna Schwartz, 161
Mixed-use assets, deductible, 120, 131–32
MLM. See Multi-level marketing industry
MLM (multi-level marketing industry), 129
Modified accelerated cost recovery system, 136–38, 171–72
Money. See also Income; specific topics
investor’s, 103
issues, 22
raising, 54–55
Multilevel marketing industry (MLM), 129
Municipal bonds, 214
The Myth of Being Solo in Business (Silver), 44–45, 270
NAEA. See National Association of Enrolled Agents
Name(s)
business, 11–13
National Association of Enrolled Agents (NAEA), 9, 212
National Association of Tax Professionals (NATP), 10, 212, 247
National Center for Employee Ownership (NCEO), 200, 203
National Taxpayer Advocate, 229, 232
NATP. See National Association of Tax Professionals
NCEO. See National Center for Employee Ownership
Negotiating for office space, 18
Negotiations during IRS audits, 265–66
Net operating losses (NOLs), 159
Nevada corporations, 63, 68, 243
New York, Internet sales taxes, 239
Newspapers, fictitious name announcements in, 13
Nolo books and CDs, on business plans, 44
NOLs. See Net operating losses
Nonprofit organizations, 7
Nontax considerations summary, 66–67
Notices. See IRS notices
Notices, IRS, 248–54
Numbers, transposition of, 95–96
Offer in Compromise (OIC), 274–76, 278
Office in home, 144–61
deductibility, 145
depreciation, 154–55
expenses, 156–57
IRS, 145–61
IRS audits, 152–53
proof for IRS, drawings and photographs, 152–53
pros and cons, 145–48
resources, 160–61
sale of home, 150
square footage, 150–52
To-Do List and Questionnaire, 144
worksheets, 154–55
Office space, selecting, 18
OfficialPayments.com, 271, 279
Offshore income, 70, 94, 106–7
OIC. See Offer in Compromise
Olsen, Nina, 229
One-Write, 97
Online businesses, 234–47. See also Internet
Internet sales tax, 240–42
Internet taxes, 236–37
IRS payment system, 15
legal issues, 245–46
online accounting, 81
rents and services, domestic and international, 242–45
resources, 246–47
time-saving tools, 235–36
To-Do List and Questionnaire, 234
Open, by American Express, 143
Outright.com, 37, 98
Owner’s capital account, 94
Owner’s equity (capital), 32, 92, 102–3
Owner’s fringe benefits. See Fringe benefits
Partnerships. See also specific types, such as General partnerships
family members as employees, 188–91
IRS forms for reporting, 71
nontax considerations summary, 66–67
payroll, 187
setting up, 13–14
tax considerations summary, 64–65
1099s, 109–14
types of, 47–52
Pass-through entitiea, 94
Pass-through entities, 53, 83, 93–94, 141
Patent and Trademark Office, U.S., 11
Payroll
defined, 94–95
independent contractors, 186–88, 191–97
Intuit Complete, 98
licenses, 187
paying, 191–94
preparing, and record keeping, 194–96
quarterly due dates, 196
record keeping, 89
reporting, 196–97
resources, 202–3
Section 530 Safe Harbor, 182
services, 195
Per Diem rates, 125–26
Percentage of completion, 95
Performance Marketing Association, 246–47
Personal holding company, 50
Phone, selecting service, 24
Phone numbers, important, 282
Physician’s office, 146–47
P&L. See Profit and loss statement
PO. See Purchase order
Pomarantz v. Commissioner, 146
POPs. See Premium-only plans
Post-It Notes, 7
PR. See Public relations
Premium-only plans (POPs), medical insurance, 198
Privacy issues, online businesses, 245
Professional help
and IRS audit, 256, 260, 264, 267–68, 274–76
tax professionals, 10, 25, 247, 268
Profit and loss statement (P&L), 95
Proof of cash, 260–63
Property tax, as home office expense, 154, 157
Public relations (PR), developing, 21–22
Publications. See IRS publications
Publicity, deductible, 122
Purchase contracts, 88
Purchase order (PO), 95
Purdie, Ian, 35
Quarter, 95
Quarter (time), 95
QuickBooks, 14, 78–81, 97–98, 195
Quill Corporation, 26
Racketeer Influenced and Corrupt Organizations Act, U.S. (RICO), 110
Rebalance business plan for taxes, 42
Rebalance for tax consequences, 42
Recapture, 140
Reconsiderations, IRS audits, 267–71
Record keeping, 77–99
accounting styles, 83–86
accounting systems, 79–81
bookkeeping terms, 90–96
challenges of, 77–79
fiscal year, 83
by hand, 81–82
IRS on, 83
payroll, 89
records to keep, 86–89
resources, 96–99
To-Do List and Questionnaire, 76
Recovery period, MACRS, 136–38
Reed, Philip, 167
Regulatory agencies, researching, 14–16
Reimbursement. See Fringe benefits
Rent
deductibility, 127
8825, Rental Real Estate Income of a Partnership or S Corporation, 71–73
online businesses, 242–43
Resources, 282
bookkeeping, 96–99
business plan, 43–45
employees, 201–3
entities, 72–75
estimated payment, 232–33
fringe benefits, 220–21
income, 116–17
independent contractors, 201–3
Internet, 26–27
IRS audits, 278–79
licenses, 24–25
office in home, 160–61
online businesses, 246–47
payroll, 202–3
record keeping, 96–99
small business checklist, 24–25
state and local issues, 24–25, 73–74
Retained earnings, 95
Retirement plans, 199–200, 212–16. See also Individual Retirement Account
The Revenge of Brand X (Frankel), 21, 25
RICO. See Racketeer Influenced and Corrupt Organizations Act, U.S.
Rules of thumb, 119–20, 168–70
Safe harbor rules
employees, 182–83
independent contractors, 182–83
industry, 182–83
Internal Revenue Code sections, 182–83
Section 530, 182
Sage 300c, 98
Salaries, 94–95, 187. See also Payroll
Sales tax, 105–6, 239, 240–42, 246
Savings Incentive Match Plan for Employees (SIMPLE-IRAs), 213, 216–18
SBA. See Small Business Administration, U.S.
SBI. See SiteBuildIt
Scanning records, 86
Scholastic Corporation, 241
SCORE. See Service Corps of Retired Executives
S-corporations
fringe benefits, 205–6
income tax handling, 49
IRS audit red flag, 255–56
IRS forms for reporting, 71–72
nontax considerations summary, 66–67
self-employment taxes, 51
tax considerations summary, 64–65
1099s, 184
Section 179 depreciation, 140–41, 179
Section 530, Safe Harbor, 182
Self-employment tax, 51, 53, 159, 185–86. See also Estimated tax payments
Senate Finance Committee, U.S., 246
SEP-IRA. See Simplified Employee Pension
Service Corps of Retired Executives (SCORE), 10, 23, 202
Services and help, need for, 20, 37–39
Shankman, Peter, 21
Shipping company representative, on advisory team, 10
Shoeboxed, 98
Sick pay, as employee benefit, 198
SIMPLE-IRAs. See Savings Incentive Match Plan for Employees
Simplified Employee Pension (SEP-IRA), 218
Single-entry accounting system, 79–80, 97
SiteBuildIt (SBI), 26
Size of business, as predictor of success, 6
Small Business Administration, U.S. (SBA), 10, 24, 258
Small Business Advocate, 44
Small business checklist, 2–27
Carry-with-You, 23–24
predictors of success, 6–7
prior to getting started, 7–8
resources, 24–25
To-Do List and Questionnaire, 2
Small Business Management: An Entrepreneur’s Guidebook with CD (Megginson, L., Megginson, W., and Byrd), 43
Small Business Taxes & Management Web site, 233
Small Case Tax Petition Kit, 270
SoCal Mom, 161
Social Security
Administration phone number, 282
employee payments, 159, 185, 193–94
retirement, 219–20
Sole proprietorships
described, 49–51, 55–56, 186–87
employer identification number (EIN), 15, 24
family members as employees, 188–91
income tax handling, 49
IRS forms for reporting, 71
1099s, 184–86
Solo 401(k) plans, 216–17
Spam issues, online businesses, 245
Staples, 26
State and local issues
licensing, 15–16
newspapers, fictitious name announcements in, 13
tax agency information, 202
workers’ compensation insurance, 17, 190
Stewart, Martha, 37–38
Stock options, 200
Straight line depreciation, 133, 139
Streamlined Sales Tax Project, 240, 246
Success of business
and business plan, 32–34
predictors of, 6–7
Supplies. See Office supplies
SUV vehicles, 172
Tax code. See Internal Revenue Code sections
Tax Court website, 279
Tax notices. See IRS notices
Tax professionals, 10, 25, 247, 268
Tax returns, saving, 89. See also Deductions; Internal Revenue Service; Record keeping
Tax year (fiscal year), 95
taxadmin.org, 24–25, 73, 190
The TaxBook, 99
Taxes. See also Internal Revenue Service
compliance with, as predictor of success, 6
deferred retirement and savings plans, 216–17
entity considerations summary, 64–67
estimated payments, 124, 224–25
office supplies for, 26–27
rebalancing business plan for, 42
resources, 99
state and local, 15–16, 240–42
tax rates, 49–50
Tax-free retirement and savings plans, 214
TaxMama’s Quick Look-Ups, 27, 45, 75, 99, 117, 143, 161, 175, 203, 221, 233, 247, 279
Taxpal, 97
Taxpayers Advocate Service, 282
Team building, 40
Teicher, Stacy A., 282
1099-MISC. See IRS forms
1099s. See IRS forms
Ten fundamental questions, 37
Terms, 95
Terms (time period), 84
Theft insurance, researching, 16
30-day audit determination letter, 270
Thompson, Brigitte A., 161
Thompson-RIA, 99
Thomson-Reuters Quickfinders Handbooks, 99
Time spent on business, and success, 33
Timing of income, 104–5
Tirone, Philip, 34
TMI Quickfinders Handbook, 99
To-Do List and Questionnaire
bookkeeping, 76
business plan, 28
deductions, 118
employees, 176
entities, 46
estimated payments, 222
fringe benefits, 204
income, 100
independent contractors, 176
IRS audits, 248
IRS notices, 248
office in home, 144
online businesses, 234
record keeping, 76
small business checklist, 2
vehicle expenses, 162
Toll-free phone lines, researching, 21
Trades (barter transactions), 95, 108, 117
Transient taxes, 239
Transposition of numbers (transpo), 95–96
Travel and transportation, deductibility, 125
Treasury Resources, U.S., 220
Treaties governing online businesses, 244
Trial balance, 96
Truck expenses. See Vehicles
Truckers, 129–30
Trusts
employee leasing and, 210
family, 64–67
Uniforms, deductibility of, 126
UPS, 126
Vacation, as employee benefit, 198
VCs. See Venture capitalists
Vehicles, 162–75
car loan interest deductibility, 123
deducting, 164–65
depreciation rules, 171–72
lease vs. buy decisions, 19, 131, 164, 166–71
mileage rate method, 165–66
resources, 173–75
rule of thumb, 168–70
tax issues, 168
To-Do List and Questionnaire, 162
Venture capitalists (VCs), 48
Verizon, 21
Vertex Inc., 246
Visibility and image, developing, 21–22, 24
W8-BEN, 244
Wages. See Payroll
Waller, Brad, 33
WC. See Workers’ compensation
Web server rent, 243
Websites. See Internet; Online businesses
Weston, Liz, 279
Workers’ compensation (WC) insurance, 17
Wyoming corporations, 63, 68–70
Xero, 98
YourBusinessBible.com, 18, 27, 117, 143, 161, 175, 203, 221, 233, 247, 279
Zapata, Carmen, 70