Structure and Tax Consideration for Small Business

ASMI – Instructors

Presented by: Jennifer Knourek

Director of Business Development

James Hamlin & Co., P.C.

Biker’s Betterment Conference

J. Knourek – James Hamlin & Co., P.C.

James Hamlin & Co., P.C.Helping Clients Build Value Since 1964Tax support and planning, Financial Services,

PayrollSmall Business FocusThree Offices in Northern Illinois

Antioch, IL., Gurnee, IL., Lake Zurich, IL.300 Monthly Clients300 Annual Clients

www.jhamlin.comwww.yourpayrolldept.com

J. Knourek – James Hamlin & Co., P.C.

Business or Hobby?Does the time and effort indicate an intention to make a

profit? Does the taxpayer depend on income from the activity? If there are losses, are they due to circumstances beyond

the taxpayer’s control or did they occur in the start-up phase of the business?

Has the taxpayer changed methods of operation to improve profitability?

Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?

Has the taxpayer made a profit in similar activities in the past?

Does the activity make a profit in some years? Can the taxpayer expect to make a profit in the future from

the appreciation of assets used in the activity?

Further information is available in IRS Publication 535, Business Expenses

J. Knourek – James Hamlin & Co., P.C.

Types of BusinessesSole Proprietor PartnershipLLC

Limited Liability Company Single memberPartnershipMulti memberCorporation (S

Corporation)

S CorporationCorporation

J. Knourek – James Hamlin & Co., P.C.

Considerations for Your Business

Business Expenses What Can I Deduct?

Expenses used to figure the cost of goods sold

Capital ExpensesPersonal Expenses

Cost of Goods SoldCost of products or raw materials,

including freightStorageDirect labor costs (including

contributions to pensions or annuity plans) for workers who produce the products

Factory overhead

J. Knourek – James Hamlin & Co., P.C.

Personal versus Business Expenses

Business Use of Your HomeBusiness Use of Your VehicleOther Types of Business

ExpensesEmployee’ PayRetirement PlansRent ExpenseInterestTaxesInsurance

Considerations for Your BusinessBusiness Expenses (continued)

J. Knourek – James Hamlin & Co., P.C.

Considerations for Your BusinessTravel

Meals50% of actual costsStandard meal Allowance

Incidental expenses Additional Considerations

EntertainmentGiftsTransportationRecordkeepingHow to Report

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Self-Employed If you are in business for yourself, or carry on a

trade or business as a sole proprietor or an independent contractor you generally would consider yourself self-employed and you would file Schedule C or Schedule C-EZ with your Form 1040 as a sole-proprietor.

You must pay Self-Employment TaxYour must pay Estimated Taxes

Filing and Paying your Taxes ElectronicallyProvide for Insurance for self and/or family

Consider hiring a Tax Professional

J. Knourek – James Hamlin & Co., P.C.

Helping Clients Build Value…Small Business Tax Workshop

http://www.tax.gov/virtualworkshop

Video & Audio Presentations http://www.irs.gov/SmallBusinessTaxpayer Business ExpensesBusiness IncomeChanging Your BusinessEmployersFormsScam & FraudSmall Business WorkshopStarting a Business

J. Knourek – James Hamlin & Co., P.C.

Valuable Links and Resources

Tax Publications for Individual Taxpayers http://www.irs.gov/publications/p463/newind01.html

Small Business Tax Workshop http://www.tax.gov/virtualworkshop

Video & Audio Presentations http://www.irs.gov/SmallBusinessTaxpayer

James Hamlin & Co., P.C. http://www.jhamlin.com

The Professional Association of Small Business Accountants http://www.pasba.org/users/accountants.asp

J. Knourek – James Hamlin & Co., P.C.

James Hamlin & Co., P.C.

Helping Clients Build Value Since 1964Tax support and planning, Financial

Services, PayrollSmall Business FocusThree Offices in Northern Illinois

Antioch, IL., Gurnee, IL., Lake Zurich, IL.300 Monthly Clients300 Annual Clients

www.jhamlin.comwww.yourpayrolldept.com