Micro-Entrepreneurship For Dummies

Chapter 21

Uncle Sam Comes Calling: Tax Issues for the Micro-Entrepreneur

In This Chapter

Grasping the difference between profit and loss from a tax standpoint

Knowing your tax obligations

Getting tax benefits in your business

Seeing how to set up your business

You just finished working hard to make your client happy, and getting paid sure feels great. Your family is proud of you, and one family member in particular is interested in your success — Uncle Sam.

Benjamin Franklin said that the only guarantees in life are “death and taxes”— and I choose to address the more complicated (and painful) one — taxes — in this chapter. In the event that you have a net loss (you don’t have a profit) in your business, you generally don’t have to deal with paying any taxes, at least on the federal level. If you have a net business loss, you generally don’t pay state income taxes either, although some states exact a minimum tax regardless of any business net income or net loss. Therefore, check with your tax pro.

This chapter gives you a basic overview of taxes, including the different obligations ...