On Thu, 02 Apr 2009 21:48:53 -0700, Darren New wrote:

> Jim Henderson wrote:
>> I know.  My point is that the tax you collect and pay on "stuff" that
>> people buy from you in the quantities you are talking about is sales
>> tax.  10,000 customer *buying* $20 of stuff from you requires that you
>> pay sales tax, not income tax.
> 
> So, if you make a living selling stuff at $20 a pop, you don't have to
> pay income tax no matter how much you'd make?

That's not what I said.  The tax paid based on the sale of stuff at $20 
each you collect sales tax for.  If some portion of that translates into 
personal income, then you have to pay personal income tax on that, 
obviously.

>>>> Does *anyone* think the tax laws make sense?  I sure don't.
>>> I'm pretty sure the owner of the local gas station pays income tax,
>>> even tho he *never* gets a 1099, yes?
>> 
>> He would pay personal income tax, sure - because his business would
>> generate an 1099 for him.
> 
> Not if it's not a corporation. You don't issue a 1099 to yourself from
> yourself.

But a local gas station has to have a business license, and in order to 
have that, doesn't it have to be registered as some sort of corporation?

>> Yes, that makes sense. But that doesn't necessarily mean the feds get
>> involved when one is created.
> 
> Not necessarily, but they do. :-) It's a federal law that allows you to
> not pay income tax on your corporation or organization. I'm not sure why
> you wouldn't think the feds are involved in at least some sense.

You seemed to be suggesting that she would have had to meet with people 
from the IRS.  The feds are involved, sure, but that doesn't mean she met 
with them in order to get the nonprofit status sorted out.

>>>>>>> Did you take them as an individual, or a corporation, or what?
>>>>>> Individual.
>>>>> Well, a corporation has to report everything, even if they don't get
>>>>> a 1099.
>>>> Yes, but we were talking about individual income tax?
>>> Yes.
>> 
>> So I'm not clear as to how we're getting them conflated.
> 
> Because an individual can't be a non-profit organization?

Well, if I was going to be facetious about it, I'd point out that there 
are plenty of people who personally don't make a profit. ;-)  But I see 
what you're saying.

>> If that's your job, then you *should* be working for a "company"
>> entity, even if it's a sole proprietorship and you're the only
>> employee.
> 
> It doesn't work that way. If you're a sole proprietor, you don't have a
> separate EIN for the business.

K, I'll take your word for that.

>> That
>> way if the business tanks, it's the business' finances that are hosed
>> and not your personal when you file for bankruptcy.
> 
> That would be a corporation.

Yes.

>> So you - as the business - are responsible (as I understand it) for
>> reporting the business' income as an entity (quarterly as I understand
>> it) and then as an individual you are responsible for reporting your
>> salary from your business (and the business is responsible for
>> reporting that as well and dealing with withholdings and such).
> 
> That would be a corporation.

Yes.

>> I know a few folks who are independent consultants, and they all seem
>> to have incorporated a business for this purpose, as well as paying an
>> accountant to help them keep their books.
> 
> Yes. That would be a corporation. Not a sole proprietorship.

Well, I was thinking the latter was a subset of the former.

It's apparently a good thing I'm not a tax consultant. ;-)

Jim

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