Determining When You Should Incorporate Your New Business

Atlanta CPA: Determining When You Should Incorporate Your New Business

Incorporating Issues are not easy. Knowing what to do involves consultation with a CPA. The below is a sample inquiry we might receive off our website.

Hi John, I am putting together all the stuff to send you for doing our personal taxes and the business taxes.

I have a question about a side business. I started keeping beef cows this year. At first I thought it would just be a hobby but I think it could eventually be a little business where I could sell calves, cows maybe meat at some point in the future. I imagine it would be summer of 2012 before I get to the point where I could start selling anything at a farmers market. I have heard it is not easy to make a profit with livestock. Break-even might be the best I could hope for. But it's something I could still do years from now.

I bought woodenware, tools, clothes, books, and in 2010 and probably spent around $1,000. Is there anything specific I should do about these expenses related to my taxes this year or do I wait until I can actually sell products? Thanks.

Below is my response:

As you will be selling food items, I would suggest you set it up ASAP as an S Corporation to protect any liability from affecting your main business as well as your personal assets.

If you feel you will have income in 2011 and that it is truly a business and not a hobby then get to me a recap of the expenses so that I can record accordingly. Please be advised that the IRS will not allow deductions for any hobbies but only valid business that are set up to produce profit. ASAP after I get your information I will complete the returns. Stay warm and safe today.

Choosing an Entity Type for Your New Business
Your initial choice of entity is perhaps the most important tax, financial and legal decision you might ever reach. Being well versed in these areas is essential to a wise and prudent decision. See http://www.hiscpa.com/article2.html

Determining How Your New Business Will Be Taxed: Effects of Entity Choice
Carefully considering the tax effects of your entity choice is essential to getting your business off on the right foot. Being careful to avoid, if at all possible, the double taxation of C Corporations and then selecting the right entity for your business from both a tax and legal perspective is critical. Visit http://www.hiscpa.com/article2.html

A Christian CPA Firm: Never Underestimate the Long Term Benefits for Atlanta Bookeeping & Financial Statements

John Dillard is an Christian Speaker/Author and an Atlanta CPA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/  or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!