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Member Workshop: Keeping Your Business Safe - Nov 15
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Last Post Nov 15, 2006 1:01 PM by: deirdre@ebay.com
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deirdre@ebay.com
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Member Workshop: Keeping Your Business Safe - Nov 15

Oct 31, 2006 8:28 PM
Topic: Member Workshop: Keeping Your Business Safe: Smart Use of Business Structures

Host: dkennedycpa
Date: Wednesday 11/15
Time: 10:00 am to 11:00 am PT
Location: Workshop Board

Description: The right business structure will protect your business assets, your personal assets and reduce your taxes. The wrong business structure puts everything at risk, and, at the worst case, might even land you in jail. Please join best selling-author and CPA Diane Kennedy to learn what it takes to set up the right business structure for your business and run it so you get all the benefits you deserve.

Cheers,

Deirdre
eBay Community Development
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:00 AM
Hello. My name is Diane Kennedy. I’ve been a CPA and Tax Strategist for over 25 years. My specialty is working with small business owners and real estate investors. My tax education company, Tax Loopholes, teaches people through books like Tax Loopholes for eBay Sellers, tapes and seminars on how to take advantage of the legal tax loopholes available to everyone. Please remember that laws and practices vary from state to state and if tax, accounting, legal and other specific expert advice is required, the services of a professional should be obtained.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:00 AM
What is a tax loophole? It’s a government incentive to promote public policy. Loopholes, in the way we’re going to talk about them, are legal and safe. There are two things that the government wants you to do: (1) Start a business and (2) Invest in real estate.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:01 AM
eBay has generously set aside time for these business-related sessions designed to help you make more and keep more money. We have a new workshop every month. Mark your calendars!

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:02 AM
Today we're talking about Keeping Your Business Safe: Smart Use of Business Structures. This is always a hot-button topic, and one of the most misunderstood areas in business.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:02 AM
But first, let me ask you this: would you ever consider allowing your homeowner's insurance policy to lapse to save on the premiums? How about those of you who also work for someone else - how many of you have turned down employer-provided healthcare because you didn't want to pay the premiums? Do any of you drive without car insurance?

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:02 AM
In most cases (I'm hoping!) the answer is going to be no - you wouldn't consider taking on such a great risk. And yet when it comes to business, you'd be amazed at the stories I've heard over the years from people who didn't want to bother using a business structure. They either didn't think they had time to keep the business records up to date, didn't want to pay the additional filing and maintenance fees to the state, or just didn't think they were getting value for the money spent operating through a business structure.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:04 AM
As a businessperson for more than 20 years, I have to shake my head. I know what the risks are, and how devastating a mistake or an accident can be to someone running a business unprotected. I've seen people lose their houses, cars, savings - even their families, when a lawsuit strikes home.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:04 AM
Here's how it works: when you start a business without using a business structure, you and your business are one and the same in the eyes of the law. That means anything happening to you personally affects your business, and anything happening to your business affects you personally. If your business bounces a check, you have to make up those funds from your own pocket. If your business gets sued by an angry customer, you will be named personally in the lawsuit. And if you're out driving around town and cause an accident, you could lose your business, and your house, and your car and your son’s college fund. EVERYTHING you own is at risk if you operate a business without a business structure

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:05 AM
This type of business is typically called a sole proprietorship. It has its upsides: for one thing, it's cheap! You don't have any filing fees to pay - in fact the only thing you'll probably need to do is register with your local municipality and get a business license. You don't need to keep a separate bank account or worry about keeping your income and the business's income separate. You don't even need to keep particularly detailed records, or file a separate tax return.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:05 AM
But as I said above, that kind of easiness comes with a price. Actually that's not quite true. Operating as a sole proprietorship comes with several prices. Besides having full legal liability for everything the business does (or doesn't do), you also have a far higher chance of being selected for an IRS audit (the odds are about 10 times higher than business operating in business structures). Why? Because the IRS *knows* there's an excellent chance your business records aren't being kept to the same standard that a proper business would use, and that makes you an easy target. You get to pay more in taxes in many cases, and it's harder to value and sell your business, too. Plus, you’ll have to pay self-employment tax of 15.3% on all profits from the business.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:05 AM
Just to recap this, there are two benefits to the Sole Proprietorship:

(1) It’s cheap.
(2) It’s easy.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:06 AM
There are three drawbacks to the Sole Proprietorship:

(1) It’s risky – everything you own is at risk if something goes wrong in the business. That includes product liability and simply having an accident on the way to the Post Office.
(2) You’re 10 times more likely to have an audit. (See October’s Workshop for the 25 Mistakes that Can Cause an IRS Audit)
(3) It costs you an extra tax – the self-employment tax.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:06 AM
Of course if you REALLY like to live dangerously, you could always double your risk and halve your profits! That's what happens when you and a friend get together and start a business without using a proper business structure. This type of business is called a general partnership and it often happens by accident. You see, you form a General Partnership whenever you form an alliance or joint venture for a project, business venture or investment and don’t have a formal agreement for the business structure. You will automatically default to a General Partnership. Now you're responsible for all of your own acts AND those of your partner, too.

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: Keeping Your Business Safe - Nov 15

Nov 14, 2006 9:06 AM
A friend of mine told me a sad story about her mother-in-law, who went into business with a friend. They made and sold fancy dolls, doll furniture and doll clothing, along with patterns, materials and other doll-related supplies. In the beginning everything was fine, but when business began to slow down, the friend disappeared - after cleaning out the business's bank account. My friend's mother-in-law was left holding the bag, so to speak, and wound up paying out thousands to wind up the business and pay off its debts. We still don't know what happened to the "friend."

Diane Kennedy, CPA
www.taxloopholes.com
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