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The Magic Cafe Forum Index » » Tricky business » » Beginning your business (0 Likes) Printer Friendly Version

rickyhmltn
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How do most of you established fellows go about with your business? I'm interested in starting a self proprietorship. How do the taxes work on that? My local bank has a free small business checking account for up to 150 transactions a month.
Do you pay quarterly estimates? Do you pay yourself in distribution checks? How about holding out taxes for medicare and the regular taxes?
gadfly3d
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If you are a sole proprietor you will eventually need to do quarterly estimates. Your income is then personal, in other words you can take out whatever you want for yourself (remembering that you still must pay the bills). Initially, your quarterly estimates are for your convenience to be sure you can pay your taxes by April 15th. When you are in your second year you can base your estimates on the previous year just remember if your second year is lot better you will probably have greater tax liability.

Two really great tips: Quickbooks and TurboTax.

Gil Scott
Benji Bruce
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Hey Ricky your first step in any business is to sell. Do not worry about taxes, etc. If you waste your money on hiring accountants, web designers, etc then you will not get any business because those actions do not lead to money in your pocket...they take money out.

It is best to start selling your show (stage or walkaround) and then worry about taxes, great business cards, flash websites, and more. If you can't get people to pay you money for your show then it doesn't matter how "legit" your sole proprietor business is.

SELL SELL SELL Smile
sethb
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While I'm all for making more and spending less, my own feeling is that spending $100-$150 to sit down with an accountant would be money well spent.

I did that and saved myself many hours of aggravation in trying to figure out how to keep track of bills, inventory, fees, etc., because the accountant showed me what to do and how to do it. So filing my tax returns was a breeze instead of a nightmare. An accountant can also advise you on the necessary licenses, permits and other requirements for your business. While you're at it, don't forget liability insurance, and fire/theft insurance for your props, either. SETH
"Watch the Professor!!" -- Al Flosso (1895-1976)
"The better you are, the closer they watch" -- Darwin Ortiz, STRONG MAGIC
Scott Burton
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Here in Canada, you can simply start by claiming your self-employment income (and business expenses) on your personal income tax return. No need to set up business accounts etc until you are more established. Not sure if this is how it works everywhere.
TheDean
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= For you "tax & banking" question:
Get Real & Professional Advice and Councle.

= To the basic Business Building Question that has come-out of this discussion somehow:

Boy this is a tricky question for too many reasons to address. That said THERE is No One, Two Or Three “Magic Bullet Answers”. I’m guessing (or at-least hoping) you already know that, so then what is the best way to get started?

Again, understanding “the rules” (That there is no magic bullet answer…) the answer is “It Depends”.

= It DEPENDS on goals, desired destination, skills, talents, abilities, resources (and more…) and your ability to leverage those things to deliver specific bottom-line RESULTS moving in the right direction for you and ‘those things’. (goals, desired destination, skills, talents, abilities, resources…. etc)

OK… enough of the what we don’t have,; how about what we DO have and what can we DO with those things?

SO… Question:
Tell us a bit about yourself and your desired plan...
= Your Goals and Desired Destination & Result Based Outcomes…
= Your Skills, Talent, Abilities…
= Your Resources…

So then we can better support and serve you with answers you can actually USE and APPLY & Leverage them with your “Next Step” (or First-Step) in your business building process… fair?

Off the top, I would also agree that getting a good foundation in place IS essential, (Like Talking with a Coach or CPA, or. or, or… cuz “Success leaves Clues”!) but DO NOT allow that to stop you from actually taking massive action and getting real results NOW! – Most “plan” and then fail to launch! - - Make SURE you take ACTION!

It’s ok to TAKE ACTION NOW and create some small success and even possibly a small mess to have to refine, define and redeploy later if needed AS YOU Eventually Uncover More and Better Ways To Build and Get RESULTS!

Go! Go! Go! - - Break-a-leg brother!

I am at your service and in HIS Service,
Deano in Reno
<><
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) Smile
Fitz
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Phoenix, AZ
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This may be a helpful link for the original question.

http://www.thetaxmagician.com/
I have a daily web show all about magic at http://FitzMagic.info
TheDean
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Reno, Nevada
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Steve is a good man and one who KNOWS our business intimately... so check him out!
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) Smile
TomBoleware
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Before someone jumps in and says don't listen to Anyone on here. Hire, a lawyer.(and just trying to throw everything's been said out the window. I hate it when people do that.) Let me say this:

I've been self employed for years. I've been in the magic business. I've owned more than a dozen other businesses, some being very large, and I currently own one that has many employees. I've been dealing with self employment taxes, business permits, licenses, etc, for more than forty years. I still have a team of legal professionals I can call on, my wife is also a long time business owner, and my son is an accountant with a huge corporation. So I can probably answer just about any question you have with starting a business.

But honestly, the best advice I can give you on taxes is, do talk to a local accountant. Why wouldn't you? Shouldn't cost you anything to just ask a few questions, and get a good answer from the local expert. As Dean said above, much will "depend."

What Scott said above does apply here in the States too. "You can simply start by claiming your self-employment income (and business expenses) on your personal income tax return. No need to set up business accounts etc until you are more established." You can learn as you go.

Actually, that's not a bad idea for most. Because (and this is a fact) most small business fail the first year, (about eighty percent) so these little things aren't going to matter anyway.

I highly recommend the link Fitz posted above. Steve can definitely help. That would be my first move.


Now to answer your questions:

Do you pay quarterly estimates? Yes.

Do you pay yourself in distribution checks? You can write yourself a check, but the owners check is considered a draw. Taxes are not withheld like it is from an employee check. You being the owner, you are responsible for ALL taxes. Those will be paid separately, not just witheld from a check.

Depending on the amount of income, if it's small you can worry later. If it's expected to be a really large amount, start your worrying now. Smile

Tom
Each Day Is a Blessing or a Lesson - Most Are Both

www.tomboleware.com
Dannydoyle
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Quote:
On 2010-09-10 20:53, TomBoleware wrote:
Before someone jumps in and says don't listen to Anyone on here. Hire, a lawyer.(and just trying to throw everything's been said out the window. I hate it when people do that.) Let me say this:

I am perhaps the most guilty of this phrase (with the exception of saying don't listen to anyone on here that is.) and let me explain why.

SO many things can go wrong with business and if you do not set them up right, or get the RIGHT advice straight up front, well then you are just going to keep making the same stupid mistakes. Generally magicians are very poor at the way they set up businesses.

That being said so are lots of people. For an example let me just say this. Most small business owners think that after your expenses are paid, what is left is your salary. If this is how you have a business set up (magic or otherwise) you have made a very serious mistake. It is COSTING YOU MONEY.

I am not going to get into the solutions or the right way to do it, but see a corporate accountant to find out why. Most magicians just don't want to go through the trouble it takes to get things done right, and it costs them in the long run. What I am saying is that asking people who may or may not have things set up quite the right way is not really a great way to start a successful business. If you want to be successful, then plan for it. The way to plan for it is to set up businesses the right way. Maybe large scale illusion shows would have those in a holding company that leases them to the performance company. Much like a construction company. What I am saying is that to spend the time and money to find people who are professional at what they do is worth the time and the money in the long run.
Danny Doyle
<BR>Semper Occultus
<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
Bill Hegbli
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Eternal Order
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Quote:
On 2010-09-10 09:16, rickyhmltn wrote:
How do most of you established fellows go about with your business? I'm interested in starting a self proprietorship. How do the taxes work on that? My local bank has a free small business checking account for up to 150 transactions a month.
Do you pay quarterly estimates? Do you pay yourself in distribution checks? How about holding out taxes for medicare and the regular taxes?


Is the business a physical store or a service?

There are different rules for each. If a service like doing magic shows, then you can use the 'hobby' tax reporting to begin with. No sense in jumping into setting up as a business if you do not have any business.
TomBoleware
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Danny, you said it well, and I completely agree with you. A plan is needed.

I see now I didn't put the little smiley on my last post. Sorry about that. Wasn't trying to be smart, just wanted to point out that we, (and I include myself) often do hit those asking about taxes, etc with the short answer, go ask an accountant. That is excellent advice, but those asking may think we just don't know the answer. It does sound like an easy out.

No we shouldn't try and give out legal advice on here, but I personally see no harm in talking about the subject of taxes, business permits, etc. An accountant, or any other adviser, can't really do you any good unless you know what to ask of them. It is YOUR business and you need to be prepared to ask the right questions.

Like I said, most never make it in business. Looks like the person asking the original question got out of business before he ever got started anyway. He hasn't replied. LOL

Tom
Each Day Is a Blessing or a Lesson - Most Are Both

www.tomboleware.com
Decomposed
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Quote:
On 2010-09-10 11:08, Benji Bruce wrote:
Hey Ricky your first step in any business is to sell. Do not worry about taxes, etc. If you waste your money on hiring accountants, web designers, etc then you will not get any business because those actions do not lead to money in your pocket...they take money out.

It is best to start selling your show (stage or walkaround) and then worry about taxes, great business cards, flash websites, and more. If you can't get people to pay you money for your show then it doesn't matter how "legit" your sole proprietor business is.

SELL SELL SELL Smile


Well said......
Close.Up.Dave
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It depends on where you are, but the Small Business Association in Illinois sets up offices so you can consult with experts for free. Its worth checking out http://www.sba.gov
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