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Topic: Taxes, etc.
Message: Posted by: Tyler_Magician (Apr 24, 2005 08:09AM)
I perform stage and close-up shows. I haven't done too many yet, but I am working on advertisement now. I do not pay taxes or have not signed anything to make me a real business. Before I get too many bookings, I want to make sure I am doing everything right. How and what do I have to do to make my business...well, a business?
Thanks,
Tyler
Message: Posted by: muzicman (Apr 24, 2005 09:21AM)
I finally started a business to keep my financials in order. You need a business license to begin with. Keep all your receipts, and follow the tax laws regarding businesses.

For the record, you don't have to sign anything to get in trouble with the IRS. If you are collecting WAGES, TIPS, OR OTHER COMPENSATION, you need to protect yourself. The IRS is not nice when it comes to those they find that omitted income. I am fortunate that my wife is an accountant and ran her own accounting business. This free's up my time to just practice/perform while she is in the backroom with the calculator and maintaining the books. I found having a business license and writing off many expenses due to the business was beneficial for me. It also justified many expenses. Like my lectures I attend, the gas to get there, a portion of my mortgage, my business PC, ect. We took a trip to the coast to see if I could get a gig with any of the resorts there. Our entire trip was a writeoff since it was business. Gas, food, lodging was all deducted as a business expense. Before I had my business license, the same trip would have been taxed, every penny!
Message: Posted by: Tyler_Magician (Apr 24, 2005 10:37AM)
Where do I get a business licence at?
Message: Posted by: Patrick Differ (Apr 24, 2005 11:42AM)
Mighty fine questions here...

You should be able to apply for a license at your local city hall.

My best thoughts are that you consult a CPA for all legal advice regarding this matter, and decide if you will do business as a sole proprietership, corporation, etc...again, ask your CPA to keep it all straight.

Do you have any background in business management...i.e. a college degree or something like that?
Message: Posted by: Tyler_Magician (Apr 24, 2005 11:50AM)
No, Patrick. I will call this week and see what I have to do.
-Tyler
Message: Posted by: muzicman (Apr 24, 2005 01:11PM)
In Washington state, my wife was able to get the license online. It only cost $25 and they mailed the license but I had a business license number immediately once the online form was submitted and paid for by credit card. You should be able to research online what it would take in your state vs making a trip to the state office. It was VERY SIMPLE for me. As far as the business records, I have no clue, I make the money appear and disappear and my wife records it in our books.
Message: Posted by: Bill Palmer (Apr 24, 2005 11:39PM)
You do not necessarily need a business license to be in business. If you have income exceeding a certain amount, then you are in business. And the feds will want their cut of the take. For years, in Houston, there was no such thing as a "business license." There were store licenses, there were restaurant licenses, but no general "business license." If you are operating out of your home, you may not need one, especially if you never have clients visit you.

Find a good CPA -- not one of these fellows who sets up a booth at Wal-Mart or one of the other things like that -- and ask him what the legal requirements for YOUR AREA are. They vary from city to city and state to state.

The fewer licenses you are coerced into obtaining, the fewer people will be taking a bite out of your pay.

What I am saying is not that you should evade any taxes. Just don't pay them anything you don't have to.
Message: Posted by: Patrick Differ (Apr 25, 2005 09:10PM)
What Bill said. Find a GOOD CPA to check the legal requirements in your area.

And pay the least amount of taxes legally possible. It's the American Way!
Message: Posted by: Whiterabbit (Apr 25, 2005 10:48PM)
I absolutely agree with Bill, chat to a good CPA. Often below a certain amount there's no point in a business license as the paperwork and expenses can be a nightmare.

An example would be that in my country with up to a certain amount of income, things can be run as a hobby. The good news is that there is no tax and very little paperwork, the bad news is that there are no tax deductions and some people may be reluctant to hire you without a business license (even if you are well insured).

Whatever you do check it out with a CPA and keep an accurate record of your expenses. It's easy to the think that things are superprofitable and you should go into business when if you deduct your expenses, you might be barely breaking even.

I'm running things as a hobby at the moment and may go to a business at some stage, but, personally, I wouldn't go into business unless it was necessary or there were enormous financial incentives...

Hope this helps.
Message: Posted by: Lyndel (Apr 26, 2005 06:37AM)
I agree! Find a good CPA that understands our business and that you can trust.

I have what many might consider a VERY special relationship with my CPA/financial adviser. Ocassionally, I will cook dinner for her and do other little odd jobs that she requests. But then again, that's what you're supposed to do for your wife, even if she doesn't have a degree in finance...



Lyndel
Message: Posted by: Paddy (Apr 26, 2005 07:22AM)
Here in OH you have to get a "vendor's Licence" which entitles you to buy wholesale and other things. It also registers you with the state sales tax division. Then I had to explain to them that I was an ENTERTAINER not a RETAILER. That was a pain whereever your pain is located. Like they all say see a CPA it will save you a lot of trouble.

I also bought Quickbooks Pro accounting software, expensive but worth it. I can run an accounta's copy on disk and give to my CPA for audits and taxes, it keeps track of money from shows, restauraants, parties, and corporate work, so I can tell at a glance where my marketing should be directed, and also if my marketing is working.

Good Luck and much success to you.

Peter
Message: Posted by: Jim Snack (Apr 26, 2005 08:16AM)
Good advice Peter.

Here in New York State I do not need a business license, however, I do need a State Sales Tax Certificate that authorizes me to collect state sales tax on tangible goods I sell. I do not have to collect and pay sales tax on shows, but I do on the products I sell after shows and from my http://www.success-in-magic.com website.

I also use Quickbooks to handle my business accounting and have a great CPA on my business team. That's very important for anyone building their professional magic business.

Jim
Message: Posted by: Eric Leclerc (Apr 26, 2005 11:00AM)
In Canada, if you do not make over 30 000 with your "side project" you don't have to register. I ignored this quote and just registered myself to feel it more like a business. Its difficult at my age to treat it as a business, and I thought if I registered, it would keep me focused. I finally did 2 months ago and I can tell you it helped a lot.

I found someone willing to sit down with me for 20 minutes and explain all the tax stuff to me like I was a 4 year old. that's all I needed (and all the marketing magic and program books) to get me started and feeling like a real business.

I would recommend it... I would reccomend this book by 2 of my good friends here in Ottawa, it is VERY helpful... enjoy!!!

http://www.happymediumbooks.com/
Message: Posted by: muzicman (Apr 26, 2005 08:48PM)
For me, having a business license allowed me to write off business expenses. Everything I purchase for my magic shows is a business expense. That includes EVERYTHING related including lectures, books, DVD's, props, conferences, ect. Prior to the license, I had to pay taxes on everything I made, regardless how it was spent. I still do, except those expenses for the business are deducted as business expenses. Besides, now it's easy when I find something I'd like, I just explain to my wife it's a "business expense"!

I don't understand how a person that is not registered as a business could write off their purchases and expenses related to their magic. Definitely check with your local and state laws, the last thing you want is IRS troubles.
Message: Posted by: Jim Snack (Apr 26, 2005 09:56PM)
If by "registering" your business, you mean registering a DBA in the county clerk's office where you do business, that's a little different from obtaining a business license. A DBA , or "Doing Business As," is for someone who wants to do business under a different name than their own, and is needed to open a bank account in a business name (unless you are incorporated).

You can write off business expenses for any business, whether licensed or not.
The laws governing small businesses licensing requirements, vary from state to state, or even county to county. It would be best to check with a CPA in your area. Then get a second opinion if you have any doubts.

Jim
Message: Posted by: Wolfgang (Apr 26, 2005 11:37PM)
A very reputable New York tax attorney told me something that might interest you non-professionals.

He said that, since 100% of my shows are non-paying charity performances for hospitals and nursing homes, the money I spend on those shows (magic books, props, costumes, etc.) can be treated as deductible charity donations.
Message: Posted by: muzicman (Apr 27, 2005 09:31AM)
I checked with my boss (wife) and the real reason we got the business license was to get wholesale rates for some giveaways. As far as taxes go, she was filing schedule c or something like that. Just wanted to clarify. That's what makes us a great team. She takes care of the "Business" end of things, and I get to work 100% on the "Show". Put us together and we are "Show Business" We make a great team!
Message: Posted by: Paddy (Apr 27, 2005 12:08PM)
Muzicman, in my case it is the opposite. Yes I am the magi and the wife is a face painter, but she is the one that really puts my show together is a harmonius flow while I do the accounting and bookings and just perform the magic.

Her judgement is far better than mine.
Message: Posted by: muzicman (Apr 27, 2005 03:15PM)
I could never balance the checkbook. I am terrible with books. I envy you. I was always good with math and an honor student all through HS, I just can't seem to record my purchases. I guess I'm too excited to get the purchase home so I can play with it. My wife has setup my own checking account...complete with overdraft protection. I have a debit card to make all my purchases. It's amazing how I can go weeks without any money in my wallet. Just use my card for everything. I think the cashiers know I have no cash..they always ask me "Cash back today"? NO THANKS, I'll just spend it!
Message: Posted by: Bill Palmer (Apr 30, 2005 03:22AM)
In Houston, you need a DBA to open a business bank account, but you don't need one to obtain a sales tax permit. The DBA is necessary ONLY if your business has a different name than you do. For example, if I do business as Adesso Verlag (my publishing company) I need a business account. If I do business as Bill Palmer, I don't. But I still don't need a business license, because my actual business doesn't take place in a permanent location.

My CPA is quite unusual. He worked his way through UT as a piano player, juggler and magician. He is an attorney as well as a CPA. He understands every aspect of the entertainment business quite well.
Message: Posted by: Bob Sanders (May 1, 2005 09:16PM)
Bill,

My attorney is also a magician.

My CPA came from the broadcast industry. He is also an attorney.

My doctor was a musician.

My wife was a ballerina / model before becoming a physician and then a magician.

Now we need to find a showbiz dentist!

Bob
Magic By Sander
Message: Posted by: Sebashtion H. (Oct 16, 2007 08:15PM)
I know this thread is a little old but for online sales you still need a sales tax certificate correct. you have to charge sales tax weither you are a buisness or not, from what I remember.

Sebashtion H.
Message: Posted by: Paddy (Oct 17, 2007 10:35AM)
[quote]
On 2007-10-16 21:15, Sebashtion H. wrote:
I know this thread is a little old but for online sales you still need a sales tax certificate correct. you have to charge sales tax weither you are a buisness or not, from what I remember.

Sebashtion H.
[/quote]
Sebashtion, I am not a lawyer (thank God for that) nor a CPA, I also live in Ohio wher the law may be totally different from where you are. Having given my cop out disclaimer, Ohio law, as I understand it says that everything I sell that is shipped to an Ohio address must be sales taxed because it is considered an in state transaction. Anything that is shipped out of state is not liable for Ohio taxes but "may be liable for sales tax in the receiver's jusrisdiction." Which I take to mean that the state of Ohio could care less if I collect out of state taxes.

Hope this gives some insight, but to be sure that you don't but yourself in the ringer, check with your local and state tax agencies.

Peter
Message: Posted by: honus (Oct 17, 2007 11:31AM)
The IRS page on "business versus hobby":

http://www.irs.gov/newsroom/article/0,,id=172833,00.html

[quote]An activity is usually considered a business if it makes a profit during at least three of the last five tax years, including the current year.[/quote]
Message: Posted by: Sebashtion H. (Oct 17, 2007 03:52PM)
[quote]
On 2007-10-17 11:35, Paddy wrote:
[quote]
On 2007-10-16 21:15, Sebashtion H. wrote:
I know this thread is a little old but for online sales you still need a sales tax certificate correct. you have to charge sales tax weither you are a buisness or not, from what I remember.

Sebashtion H.
[/quote]
thanks that helps

Sebashtion H.
Sebashtion, I am not a lawyer (thank God for that) nor a CPA, I also live in Ohio wher the law may be totally different from where you are. Having given my cop out disclaimer, Ohio law, as I understand it says that everything I sell that is shipped to an Ohio address must be sales taxed because it is considered an in state transaction. Anything that is shipped out of state is not liable for Ohio taxes but "may be liable for sales tax in the receiver's jusrisdiction." Which I take to mean that the state of Ohio could care less if I collect out of state taxes.

Hope this gives some insight, but to be sure that you don't but yourself in the ringer, check with your local and state tax agencies.

Peter
[/quote]