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  1. #1
    SitePoint Enthusiast MK3design's Avatar
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    Fileing Taxes, do you need to for webdesign?

    Ok, so ive been really busy the past few months as a web/graphic designer. Ive picked up many local and internet based clients so far. Everything is going great, Im about to quit my other job to do this full time, all allready doubleing my income at my other job, and im only doing this part time.

    But... before I quit my other job... My fiance is concerned that this is illigal since I dont file taxes, and I am not an official bussiness and doesnt want the IRS coming after us in 15 years. So If it is illigal, can somone tell me, or refer me to a place to go to make this a legal thing. If it is perfectly legal tell me so i can shuve it in her face

    Thanks
    MK3DESIGN!
    MK3DESIGN.COM

  2. #2
    Web Design Addict
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    I am no CPA or anything, but I think you must report ANY income to the IRS when you file for taxes. Like I said, I honestly don't know for sure because really I'm in the same boat, unfortunatly not as much money coming in for me as it seems for you, but I was wondering the same thing because I also design part time and have brought in some money doing so. But I think it is illegal. Someone help me on this...
    Deron Sizemore
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  3. #3
    Non-Member Egor's Avatar
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    It is NOT legal.

    You need to report taxes and be registered as a business. However most can be written off on your business expenses... At least here in AUS.

  4. #4
    SitePoint Wizard silver trophy
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    If you make money you pay taxes on it, period (how people don't understand this I don't get, must be some sort of urban myth).

    The only time you don't have to file is if your final income (after deductions, credits, etc...) is negative or is very small. If you are doubling your salary then this is probably not going to be the case. Solving this problem is simple, instead of just submitting your w-2 and hoping for a refund like normal, go to H&R block (or a local CPA for even better service) and bring a copy of all your invoices, business expenses, business deposits and other financials. Since you are doing this as a sole proprietor without a separate company you will likely switch from a w-2 to a 1040 long with a schedule C for your self-employment business. It's not the hardest thing to do but figuring out what to deduct and how to calculate it all can be tricky the first few times. Also, if you made a good deal of money and don't have a lot of deductions prepare to pay some money on your earnings and you do want to declare them because odds are at least a client or two reported the payments they made to you (you can ask each client for a 1099 but they may not give you one if they aren't use to working with contractors).
    - Ted S

  5. #5
    SitePoint Wizard dethfire's Avatar
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    You must file estimated quarterly taxes, 1st quarter is due april 15th. Research the 1040ES form. Include everything, you don't want to screw with the IRS, and save everything for atleast 3 years. Speak with a CPA for official advice.
    Free Science Homework Help
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  6. #6
    SitePoint Wizard bronze trophy JRMillion's Avatar
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    you dont need to file estimated taxes if you expect to owe less than $1,000 in taxes. I was a student for the good part of the year and have a lot of deductions, so I think I fit that category.

    I am in the process of figuring out all the tax stuff. I got a good book called "working for yourself" published by nolo and I also got TurboTax Premier to help me along.

    I have been very busy so far in 2005, and it looks to be a busy year... so I think taxes will be more complex for me next year.

    I just got an EIN from the IRS, and filed a DBA form with my local county clerk. I am going to bank of america tomorrow to get a business account going
    James Rice :: Ex-Mentor
    www.jamesrice.net

  7. #7
    busy Steelsun's Avatar
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    Get with a local business advisor/CPA. You might have to be charging sales tax to your in state clients (not sure if AZ taxes webdesign) and paying "self employmeny" (FICA, income tax, etc) on all your income.

    Uncle Sam and his little brother State Taxman are not pleasant to deal with if they find out you've been getting money in and not talking about it. And they will find out if your clients are businesses, since the business will most likely claim the expenses on their taxes.
    Brian Poirier
    SunStockPhoto: Stock Photos, Fine Art Photos, Event Photography

  8. #8
    SitePoint Wizard bronze trophy JRMillion's Avatar
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    from what i have read, sales tax does not apply to services like ours (in most places at least)....
    James Rice :: Ex-Mentor
    www.jamesrice.net

  9. #9
    SitePoint Addict Sgt. Baboon's Avatar
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    As far as I know, you do not need to file quarterly if you are a sole proprietor. You just use the Form 1040 when filing taxes.

    Of course, I am no accountant by any means.

  10. #10
    SitePoint Wizard bronze trophy JRMillion's Avatar
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    No, you do need to the File quarterly taxes... even if youre a sole proprietor... (Im pretty sure )
    the are a few exceptions... but is most cases its required.

    I thought i was going to have to pay a late fee on my quaterly taxes, but I think it turns out that I owe a small enough amount so I meet one of the exceptions this year.
    James Rice :: Ex-Mentor
    www.jamesrice.net

  11. #11
    SitePoint Enthusiast Dancer555's Avatar
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    Since you are in the US, you should go talk with a SCORE representative or SBDC counselor. They are both free services to people starting out on their own. They would have the answers you're looking for.

    SCORE website: http://www.score.org/

    SBDC website: http://www.sba.gov/sbdc/

    Good Luck with your new venture!
    Dancer555
    ************************
    PointVision Web Development
    Web Development for Association and Non-Profits

  12. #12
    SitePoint Wizard bronze trophy JRMillion's Avatar
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    hmm very interesting, ill check those out.
    James Rice :: Ex-Mentor
    www.jamesrice.net

  13. #13
    Texan at Heart Corey Bryant's Avatar
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    You might also contact Stephen over at http://www.scgfs.com/ - he has helped a few of our clients out as well.

  14. #14
    SitePoint Addict Sgt. Baboon's Avatar
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    Quote Originally Posted by JRMillion
    No, you do need to the File quarterly taxes... even if youre a sole proprietor... (Im pretty sure )
    the are a few exceptions... but is most cases its required.

    I thought i was going to have to pay a late fee on my quaterly taxes, but I think it turns out that I owe a small enough amount so I meet one of the exceptions this year.
    Hmmm. I will definately check into that. I was sure that Sole Prop, didn't, but anything above (LLC, S-corp, etc) had to.

    I'll let you know what I find out.

  15. #15
    busy Steelsun's Avatar
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    Alot of how often you have to file depends on how much you take in.

    Also on Sales tax, some states tax web design (like Texas, but it's a weird formula you follow), and some don't. Inquire with yor state's sales tax office.
    Brian Poirier
    SunStockPhoto: Stock Photos, Fine Art Photos, Event Photography

  16. #16
    With More ! for your $ maxor's Avatar
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    The Following Only Applies To Arizona, USA
    This is a great little program:
    http://www.azcommerce.com/webapps/SmallBusVR/intro.asp

    This website is just filled with great info about Arizona LLCs:
    http://keytlaw.com/azllc/azllc.htm



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