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On Fri, 03 Apr 2009 10:28:50 -0700, Darren New wrote:
> Jim Henderson wrote:
>> That's not what I said. The tax paid based on the sale of stuff at $20
>> each you collect sales tax for.
>
> Yes. That has nothing to do with income tax, tho, so I'm not sure why
> you bring it up.
Because you were talking about tax on the proceeds from sale of
products. That's distinctly different from income.
>> If some portion of that translates into personal income, then you have
>> to pay personal income tax on that, obviously.
>
> Even tho it isn't reported, right? :-)
If I sell 10,000 items for $20 each, then I'm working for a company
that's reporting it. As an individual, it would make more sense to
incorporate and have the profits go to the business for reasons I already
discussed earlier.
>> 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?
>
> No. A corporation is a separate entity. That's orthogonal to whether
> you need a license to do business.
It was my understanding that you had to have a business entity in order
to get a business license. But I've never had to, so I'll take your word
for that.
>> You seemed to be suggesting that she would have had to meet with people
>> from the IRS.
>
> Uh, no. I said you have to get permission from the feds. That doesn't
> imply meeting with them. It just implies that you follow the rules for
> them to approve it.
K, fair enough. When you say "involvement", I picture direct involvement.
>> 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.
>
> There are plenty of for-profit corporations that don't make a profit
> either. I'm talking about the rules. :-)
That's why I said "if I was going to be facetious about it". ;-)
> All I'm saying is, a 503(c) is (usually) in the form of a corporation,
> and certainly is a distinct entity (perhaps a partnership or a
> non-revocable trust) and not an individual. I'm also claiming that
> there are moneys that are never reported to the IRS that you
> nevertheless have to pay tax on, whether you're a corporation or an
> individual sole proprietor.
OK.
>>> 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.
>
> If you do, it's either a partnership or a corporation. That's why it's
> called a "corporation", see, because it has a "body" separate from you.
>
>>>> 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.
>
> It's a good idea. It's just not required. :-)
>
>> Well, I was thinking the latter was a subset of the former.
>
> No. :-)
>
>> It's apparently a good thing I'm not a tax consultant. ;-)
>
> Yes. ;-)
We've found common ground. I'll stick to what I know. ;-)
Jim
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