Sole Proprietor?

[CF2006]

I am starting an online business (by myself, alone) and want to know what I need to do to operate legally (taxes are my main concern).

My service is photo-altering (changing people's personal photos to make them look like they are hanging out with celebrities, or a head on mt. rushmore, or just if they want whiter teeth, I do what they want with them).

Basically we talk about what they want done, and then they send me a payment along with a digital photo. I change it for them, and send it back.

I will of course be keeping records of all transactions, but do I need any special documentation/business registration papers or anything to do this legally?

Can I just report all of this income when I file my taxes? Is it that easy?

Thanks for any help!

 

[David_Staub]

With respect to taxes, a sole proprietor simply reports the income and expenses of the business on a Schedule C of his own Form 1040. You don't mention what state you are in but state income tax reporting requirements are generally similar.

Your concerns should not end there, however. If you are operating under a "d/b/a" (not your own name), you may have to file an assumed name application and publish a notice in a local newspaper. If you have employees, even part-time, you will need an employer id number from the IRS. Your state may impose retailers occupation taxes (sales taxes) on your sales, which would require registration of you business and filing sales tax reports. State and local requirements vary, but there are often registration requirements for even small, home-based businesses.

David K. Staub