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JamesinLA Inner circle Los Angeles 3400 Posts |
I just got a letter from the mayor of Los Angeles saying that I may be a taxable business and I should be paying business tax to the city! I have 10 days to respond or they will go forward and assess me an amount to pay. Has anyone had this happen? What should I say to them? Is there some key phrase I should say? I am not incorporated, however, they contacted me under my stage name, as if that was my company's name. Again, I do not have a company. It's just little old me. Do I owe the city a business tax? Thanks.
Jim
Oh, my friend we're older but no wiser, for in our hearts the dreams are still the same...
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bubbleburst2004 Veteran user 370 Posts |
Quote:
On 2007-12-25 18:19, JamesinLA wrote: Do you make use of or rely on anything the city provides? Police, Fire, Library, Traffic Lights, Public areas, sanitation? If yes, then you do owe the city something. Whether you "must" pay it in the form they ask is of course the point |
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et New user San Fran, CA 18 Posts |
It is one thing to owe a tax, another to owe a business tax. I would try to do some research online/try to find someone you know who is an accountant or specializes in taxes.
We all rely on the Police and fire departments, we all use the traffic lights and we always go in public areas. Individuals do this as well as businesses, and using those services does not automatically make it a business tax. I would strongly recommending trying to contact someone you know (family friend, friend of a friend, whatever), or do some research online. Each city may have different tax laws and most of the members of this forum hopefully specialize in magic and not in tax laws. You would need to find someone with a very similar situation as yourself, who also lives in the LA region. |
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Jerskin Inner circle 2497 Posts |
This happened to me (I live in L.A.)but I can't recall how I got out of it (sorry)
GrEg oTtO
MUNDUS VULT DECIPI |
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ricker Special user Tampa, FL 914 Posts |
If you take your income as a schedule C on your 1040, you are a sole propritorship which is a business, all magicians are this unless you inc yourself.
For the most part, working out of your house, you don't need a business licence, but you will have to pay sales tax on anything you sell at the back of the room. Anyone who takes money for their shows is in BUSINESS. You have to take out your estimated taxes every quarter, but you can also deduct your expenses from your income. |
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Jim Snack Inner circle 1338 Posts |
I suggest that you take a look at the following:
http://www.lacity.org/finance/finA6a.htm You will see that you may qualify for an exemption, but you will need to file. See also: http://www.lacity.org/finance/finA5a.htm Jim |
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TheDean Inner circle Reno, Nevada 2164 Posts |
The way it was explained to me is:
If you 'MAKE money' directly, regardless of what you "call" yourself, you are a "business" and you owe tax. Do yourself and your family a favor, seek the advice of a TAX professional... this is NOT something you want to mess around with. Merry Christmas. Dean <><
Dean Hankey, *M.D. - The Dean of Success Solutions!
Serving & Supporting YOU and Your Success! "Book More Shows... Make More Money... SERVE MORE PEOPLE! - Not Necessarily In That Order…" (*Marketing Doctor) |
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ricker Special user Tampa, FL 914 Posts |
This is why I 'inc'ed myself 20 years ago. everything I buy through the company is an expense, including the salary I pay myself and Syd (and our employees).
Being a Sub S Corp is the way to go, the profit or loss falls through to the personal return and is taken at the personal tax rate. So if you do $500,000 in business and your expenses are $510,000, you have a $10,000 loss that carries to your personal return that is taken off your taxable income you took from the company through payroll. |
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TheDean Inner circle Reno, Nevada 2164 Posts |
Yep, we "inc.'d" as well. Good for some, not as good for others.
Dean Hankey, *M.D. - The Dean of Success Solutions!
Serving & Supporting YOU and Your Success! "Book More Shows... Make More Money... SERVE MORE PEOPLE! - Not Necessarily In That Order…" (*Marketing Doctor) |
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kenscott Inner circle 1869 Posts |
If you are filing taxes and writing things off for your business such as , computers, props, etc, then you do owe taxes.
I strongly suggest using a CPA it is well worth the money you pay them to take care of things like this. Ken |
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JamesinLA Inner circle Los Angeles 3400 Posts |
I certainly believe that I owe state and federal taxes for the magic profits, however, I didn't think I would owe city taxes. Does anyone have to pay city taxes? Thanks and thanks for all the advice.
Jim
Oh, my friend we're older but no wiser, for in our hearts the dreams are still the same...
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TheDean Inner circle Reno, Nevada 2164 Posts |
Doesn’t matter what we "think". What matters is “what is”. If it is true that you owe in the CITY, then you owe in the city regardless of what any of us “THINK”. Again, all WE can do is THINK unless someone here really KNOWS, and to that all I can say is:
All together now... (Chanting) CPA, CPA, CPA, CPA or LA area Tax Professional. Hehehehehehehehehehe… Merry Christmas! Dean <><
Dean Hankey, *M.D. - The Dean of Success Solutions!
Serving & Supporting YOU and Your Success! "Book More Shows... Make More Money... SERVE MORE PEOPLE! - Not Necessarily In That Order…" (*Marketing Doctor) |
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joshlondon17 Special user San Diego, CA 685 Posts |
Jim,
Take everyone's advice and stop asking us. We're not CERTIFIED tax people. You need to contact a tax professional or you'll find yourself in a world of hurt if (and WHEN) the city comes after you. Josh London P.S. If this matter isn't taken care of by the 10 days, you could find your license suspended and any tax returns given to the city for not taking immediate care of this. |
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Jim Snack Inner circle 1338 Posts |
You can find answers to your questions at:
http://www.lacity.org/finance/finA6a.htm Also, depending upon your income level and category of filing, you may qualify for an exemption, but you will need to file. See: http://www.lacity.org/finance/finA5a.htm Everything is explained on these web pages. Jim |
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Blair Marshall Inner circle Montreal, Canada 3660 Posts |
Hi Jim S.,
Read the links you posted and I believe they answer Jim's questions. I also looked into this situation here (Montreal) and it is a lump sum business license fee that we have. It came up when I wanted to produce a magic show at a local school (in my city). The school wanted to ensure that I was a "business", but I asked the question "would I need a license for each city that I performed in?". No real answer to that one, because that is where the magic part of my business is conducted. So based on some advice, I have a p.o. box which is my official busness address. But I do not perform any activities there. I work from home, as any sales person might. I have no cusotmers to my home (so this does not imapact the neighbours, or the city), as it is not used as a "place of business". It is expensed as any home office would be in any situation on my personal provincial (state) and federal taxes. Taxes and deductions are made as a professional, as I am not incorporated. One should look at all their options. As has been said you should always get local professional advice to ensure you are playing within the rules. Because you will not win! (in most cases!) Blair Marshall "ShaZzam!"
Visit My Facebook Fan Page At
www.Facebook.com/BlairMarshallMontrealMagician www.BlairMarshall.ca www.ShaZzamShow.com www.MontrealMagicien.com |
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TheDean Inner circle Reno, Nevada 2164 Posts |
Sage... thank you!
Dean Hankey, *M.D. - The Dean of Success Solutions!
Serving & Supporting YOU and Your Success! "Book More Shows... Make More Money... SERVE MORE PEOPLE! - Not Necessarily In That Order…" (*Marketing Doctor) |
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kenscott Inner circle 1869 Posts |
By the way you mention city taxes. I live in the city . I pay city and County taxes. So if you are the city limits then chances are you owe them. Again find a CPA. I would not ask other performers or links. Find a CPA in your area that knows the tax laws, by the way they change ever year.
Ken |
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TheDean Inner circle Reno, Nevada 2164 Posts |
STILL the best suggestion Ken...
WE are just guessing! If Jim ends up in trouble or in jail it's HIM that will have to pay the price... NOT US. Find a local, knowledgeable pro with your best interest at heart. Do we need to start chanting again? (Hehehehehehe!)
Dean Hankey, *M.D. - The Dean of Success Solutions!
Serving & Supporting YOU and Your Success! "Book More Shows... Make More Money... SERVE MORE PEOPLE! - Not Necessarily In That Order…" (*Marketing Doctor) |
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JamesinLA Inner circle Los Angeles 3400 Posts |
Thank you everyone! I talked to the woman today and I do have to get a business license for the city of LA. The "license" is really a tax since its price adjusts based on your yearly earnings. You are taxed on your gross income not on your net earnings! You have to keep track of what jobs were performed inside city limits and which were outside city limits. You are only charged 40% of what your earned outside city limits. What a pain in the a**. More paper work. I like the idea of a PO box to get around this.
Jim
Oh, my friend we're older but no wiser, for in our hearts the dreams are still the same...
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ricker Special user Tampa, FL 914 Posts |
James, get quickbooks. It does this all for you.
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