If I haven't generated any revenue OR the revenue I have generated was used for business expenses will i still owe for taxes?? And since i just incorporated in January how soon do I have to file?
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If I haven't generated any revenue OR the revenue I have generated was used for business expenses will i still owe for taxes?? And since i just incorporated in January how soon do I have to file?
C corp or S corp ?
It's a C corp
I think you have to file quarterly, but there may be an exemption for personal services corporations.
If you are talking about your corporate income tax return, that is due once a year at the end of the year. Since you just incorporated then it will be due March 15, 2009.
If you are talking about payroll taxes then you have to file your 941's quarterly and your 940's annually. Your state unemployment returns will be quarterly. You need to make tax deposits at the same time unless they are over a certain amount, I'd have to look up the thresholds. Also, there could be some other things particular to your state, I'm not sure about that.
Corporate taxes are net income taxes, not gross. Gross income tax applies to individuals. Thus, a C corporation with deductible expenses exceeding revenues would owe no taxes. This can happen even if a corporation has a positive cash flow. For example, IRS regulations allow a business to expense up to $128,000 of certain qualifying capital assets. However, you must make the election in the year you acquire the asset. You cannot file an amended return later if you change your mind.
Thanks Zofia! This is the answer I was looking for. So what can be considered deductible expenses in our line of work? Once I start back doing parties I plan on traveling alot and maybe even doing club work, phone sex, etc. I have a business bank account for the corporation. Should I just deposit all earnings whether it be for phone sex or private parties in that one account?
Also, when keeping records do you need to include the source of all income. For example, if you sell something on ebanned, would you need to include that in your records?
YVW.
All expenses that are "ordinary and necessary" to the production of income are deductible. Ordinary and necessary gets fuzzy at times, and there is really no good rule to define just what it is exactly. For example, copy paper and stationary is usually ordinary and necessary. Costumes, are different. The IRS applies what is usually called "the housewife" test to costumes and uniforms. If a ordinary housewife would wear it, it's not an ordinary and necessary expense. However, the REV Rules specifically set out some uniforms that are always deductible, painters clothes for instance. I did deduct my sparkle bras and panties, and my more outrageous costumes. I always kept a copy of the picture of the costume in my records along with the receipt. Also, even regular Victoria's Secret panties are a deductible expense if you are selling them. (Inventory is always a deductible expense.) Auto expenses are always tricky. The IRS has a good publication on the issue. I would read it and keep good auto expense records, including insurance and taxes.
As far as revenue, the IRS is not all that picky about the source, so long as you report it all. I always kept my revenues accounted for by category. For example if I sold some panties, that went in as panty sales. As I said, the panties, even plain old VS thongs are a deductible expense if that is inventory. Same with EBay. Also, listing fees on EBay are a deductible expense, as is postage and the cost of the box or envelop you use to send product to a winner. Even a reproduction of your glam shot has some expense that is a deduction. For nightly take from dancing, I always accounted for that separate from my panty sales and other stuff. I didn't do many out of the club shows, but when I did, I kept a separate category of income for that. That was more for my personal information than the IRS's.
My dancing business always had two bank accounts, one was the business checking account. That one had an ATM card and I made deposits every night into it using the ATM card. The other account was a business savings account. About every second or third day, I'd move all the money out of the business checking into business savings. Then, I'd figure out what business checks needed to be written, write those and transfer enough back to checking to cover the checks I had written. My last year and a half of dancing I had so much money flowing in, that I decided to set up a SEP retirement plan. That required a separate account for me, though, not the business. I did write a company check to the SEP once a year for the contribution.
HTH
Z