On Fri, 03 Apr 2009 12:12:18 -0700, Darren New wrote:

> Jim Henderson wrote:
>> Because you were talking about tax on the proceeds from sale of
>> products.  That's distinctly different from income.
> 
> Oh. Well, I was talking about income tax on the profits on sales of
> goods.

It sounded like you were talking retail sales, not income.  Hence the 
confusion.

>> If I sell 10,000 items for $20 each, then I'm working for a company
>> that's reporting it.
> 
> Why do you say that?

Assumption that if you're selling that kind of volume that there's a 
company involved - based on previous discussion, perhaps a false 
assumption on my part.

>> As an individual, it would make more sense to incorporate and have the
>> profits go to the business for reasons I already discussed earlier.
> 
> Yes, but it's not required by law.

Yeah, I see that now.

>>> 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.
> 
> You do. The business entity can be a sole proprietorship.

See, it was my understanding that a sole proprietorship had to file the 
same type of paperwork on its finances to the IRS, including salary stuff 
and so on.

>> K, fair enough.  When you say "involvement", I picture direct
>> involvement.
> 
> If you set up your bylaws properly, you can just say "I followed the
> rules for setting up the bylaws."   You can do everything by mail. But
> the IRS has to at least get involved to the point where they issue the
> appropriate certification that your entity is tax exempt. I.e., they're
> at least as much involved as they are when you pay your income tax.

See, that's not what my understanding was.  My understanding was (is) 
that the state certifies the organization as tax-exempt and passes the 
information along to the IRS.

Jim

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