Future Texas decorators: help on setting up

Business By smbegg Updated 11 Sep 2011 , 9:42pm by djbookkeeper

smbegg Posted 10 Jul 2011 , 8:03pm
post #31 of 86

Then that would mean that those items are never taxed except through my income tax. is that correct? So I do not have to pay taxes on anything I buy to go into a cake (mixes, dye, ingredients, ect) and then I do not tax the sale of the cake either?

It is just confusing because I would think that the state would want their money and would not get taxes on those items.


Thanks for all the help......just when you think that you get it figured out, something else comes up! Glad I have 1 1/2 months to figure it all out!


Stephanie

RussellsCakes Posted 11 Jul 2011 , 1:51pm
post #32 of 86

Stephanie,

You are correct. However, most grocery/food type items are not taxed to begin with.

ConnieJ Posted 13 Jul 2011 , 10:20pm
post #33 of 86

Thanks to everyone for this great info!

alvarezmom Posted 14 Jul 2011 , 6:33pm
post #34 of 86

Great information.

So here is what I get from all 3 pages/

Sole Proprietorship = I assume all responsibility and there is no gray area between my "business assets" and my own personal assets. All are wrapped up into one!

LLC = suited for a company with one owner, and I could report earnings on my own tax return.

I would like to set up as an LLC. I have no way of knowing if one day my cake might make some one sick and they come back to sue me. I'd like to be protected in some way with some kind of insurance, and would like to try to keep my personal assets separate from my companies.

I'm guessing it would be best to talk with an accountant who could help me decide how I want to file my taxes at the end of the year. I'm looking to keeping this as simple as I possibly can.

DALIG Posted 14 Jul 2011 , 8:34pm
post #35 of 86

ok now i understand the sole-propertioship and LLC and that i can file my personal taxes and the business taxes together, but what if i get a tax id, than i would have to file quaterly and never with my personal taxes and just pay taxes on my profits than? so what is bettet sole or LLC. Aldough i think i remember reading that by getting a tax id# you would also be protecting your personal assets i think. icon_confused.gif

smbegg Posted 15 Jul 2011 , 12:51am
post #36 of 86
Quote:
Originally Posted by DALIG

ok now i understand the sole-propertioship and LLC and that i can file my personal taxes and the business taxes together, but what if i get a tax id, than i would have to file quaterly and never with my personal taxes and just pay taxes on my profits than? so what is bettet sole or LLC. Aldough i think i remember reading that by getting a tax id# you would also be protecting your personal assets i think. icon_confused.gif




You won't have quarterly taxes because you will not be collecting taxes. You will still file with your personal taxes, you just have to file quarterly stating that you did not collect sales taxes. Tax ID doesn't protect your assets, it just gives you the ability to set up wholesale accounts. And the nature of the law is such that it should cover any personal liability since it is "buyer beware"

If you are going to do sole prop, and you are worried, you can get liability insurance.

DALIG Posted 19 Jul 2011 , 1:10am
post #37 of 86

well i am reviewing the posts since today i got an applicationa at my county clerck office to file for my dba and one of the options says Limited Partnership and i am wondering if is this tha same as LLC. i google it and i think it is but i just would like somebody's reasurement

smbegg Posted 19 Jul 2011 , 1:24am
post #38 of 86

Are you partnering with someone? If you are not, then you are a sole proprietor. You can do a LLC, but then you need to file for an EIN number and I believe that the set up for it is in the hundreds of dollars (I think that I read $500 somewhere).

If you do Sole Proprietor, you are only out the money to get your DBA which was 9.50 for me. You can purchase Liability insurance as well.

Stephanie

DALIG Posted 19 Jul 2011 , 1:38am
post #39 of 86

ok than if i file as a sole-pro and i get liability insurance i should be ok, at a certain poit right?

smbegg Posted 19 Jul 2011 , 3:02am
post #40 of 86

I am not a professional at setting up new businesses, but that is what I am doing.


Stephanie

alvarezmom Posted 19 Jul 2011 , 1:30pm
post #41 of 86

Filing for an EIN# is free. I'm not sure what the fee is to file for an LLC. I'll be meeting with an Accountant to see what the best way for me is. I would suggest anyone going into this for the first time do the same. You dont want to mess around with taxes because Uncle Sam will come knocking.

smbegg Posted 19 Jul 2011 , 4:56pm
post #42 of 86

It must be the LLC then. If you are doing Sole Prop. then you just file under your ss# and file as a small business and pay your taxes through that.

Stephanie

alvarezmom Posted 19 Jul 2011 , 5:05pm
post #43 of 86

Stephanie, I thought about going for Sole Prop., but I'd rather have my business assets separate from my personal. This would be the one way for me to protect my family.

Texas_Rose Posted 19 Jul 2011 , 5:21pm
post #44 of 86

I believe the fee for a LLC is $300 in TX.

alvarezmom Posted 20 Jul 2011 , 7:43pm
post #45 of 86
Quote:
Originally Posted by Texas_Rose

I believe the fee for a LLC is $300 in TX.


Thanks for the info. I wonder if I went that route if I could deduct the start up fee! :-0

Doughnut Posted 3 Aug 2011 , 6:35pm
post #46 of 86
Quote:
Originally Posted by smbegg

I have had a few ask me, so I am going to post what I have done and found out so far here!
You need to get a tax id to charge sales tax and you need one if you want to get any wholesale accounts (to be able to order from). Also, if you are going to call your business anything other than your name, you need to file a DBA-doing business as.

To get a Tax ID you go here: http://www.window.state.tx.us/taxpermit/
This is free, but you may want to set up your DBA before because it asks for the business name. The NAICS code that you need is 445291-which is baked goods store.

To get a DBA, you need to go to your county clerks. They will have an "assume name" either in office or online. Fill out the forms and they will do a record check to see if the name is available. There will be charges for this, but it should be under 20. Make sure to get yourself a copy. Your DBA will last for 10 years.

If you are doing a "sole Proprietorship" which is what most of you will be doing, you do not need a EIN number for your federal tax ID. That will be your SS# as you will just file on your regular taxes. If you set up a LLC or partnership, then you will need to file for a EIN.

When you file, you will need to pay small business tax (which are the taxes that you would normally have pulled from your check if working for a business.) And you will have to pay your state sales taxes quarterly.

Remember that you can claim some of your start-up costs and also your mileage, so make sure to keep track of those receipts and keep a mileage log. Also, if you qualify, you may be able to write off some of your household costs if your home is your sole place of business.

Hope that helps!
Stephanie




Are you sure its not NAICS code 311811? That one seems closer to what we do.

From reading the descriptions of the codes, 445291 seems more for retailers who DO NOT make their product on the premises where as we make ours and sell it from the same place.

Can anyone help with that? icon_smile.gif

Doughnut Posted 3 Aug 2011 , 6:49pm
post #47 of 86

further researching leads me to believe that 445291 may be correct. Sorry for the doubt..

Paul

thecakeprincess Posted 3 Aug 2011 , 7:06pm
post #48 of 86

Thanks for all the great info!!

aggiechef Posted 4 Aug 2011 , 6:29pm
post #49 of 86

For those that live in Harris County, the fee to get your DBA is $15. I just had mine notarized and am about to put it in the mail to the clerk's office. YAY!!!

I plan on starting out as a sole proprietorship in September, but may decide to go the LLC route sometime next year. If I change that in the middle of the year, how will it affect me filing my taxes? I want to go the LLC route, but don't have the $300-$500 it takes to get that right now.

what_a_cake Posted 5 Aug 2011 , 10:26am
post #50 of 86
Quote:
Originally Posted by smbegg


This is free, but you may want to set up your DBA before because it asks for the business name. The NAICS code that you need is 445291-which is baked goods store.




Fellow cakers, I think many of us are confused. My little contribution:

code 445291 as read in

http://www.census.gov/econ/census02/naics/sector44/445291.htm

clearly states "not made on the premises". Unless you're buying cakes already baked and ONLY decorating and putting together the elements, then I believe this is not our business code.

I've been searching all over and more inclined towards 311811:

http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=311811&search=2007 NAICS Search

Mainly because most of us "make from flour" in our own kitchens what we sell: cakes & cupcakes. OMG if only legal terms were clear... LOL!

meezykat2011 Posted 6 Aug 2011 , 8:45am
post #51 of 86

Thank you so much for the info! Now I can get started with arrangements for my little biz. icon_biggrin.gif

djbookkeeper Posted 8 Aug 2011 , 5:33pm
post #52 of 86

Hi, TX Bakers! I've been lurking reading as much as I can since my daughter is about to start her cake business. I have a bookkeeping service and I'm a bit more numbers oriented than she is.

There's a little bit of confusion with the different taxes. There's sales tax that everyone is agreed you won't be charging but you will still need to file a quarterly zero sales tax form to avoid penalties. After the 1st year of filing quarterly, you can move to an annual filing.

There's income tax which for most of you will be filed on a Schedule C as a sole propreitor with your regular 1040 that you file.

If you go the LLC route, you get to add one more report to file - franchise tax. Again, nothing will be due until you have over $600,000 in sales but you need to file the report.

I would recommend that everyone get a FEIN (Federal Employment Identification NUmber). It's free and VERY easy to get. It will always be associated with your social and sole propreitor's can use it. With a FEIN, you can avoid using your social when filling out any forms for your business. As a sole propreitor, you'll file a Schedule C with your 1040 for your personal income tax and can use a FEIN. To get a FEIN, go to www.irs.gov.

And, of course, I would strongly urge all of you to have some kind of software to track your expenses and income. Use something, whether it's Excel or QuickBooks. QuickBooks is easy to use but it's also extremely easy to screw up. Just get with someone and make sure your QuickBooks is set up correctly to avoid the QuickBooks clean-ups that I get to do frequently.

Hope this helps a little. You're welcome to email me anytime with questions. Good luck!

Molly2 Posted 8 Aug 2011 , 5:44pm
post #53 of 86
Quote:
Originally Posted by djbookkeeper

Hi, TX Bakers! I've been lurking reading as much as I can since my daughter is about to start her cake business. I have a bookkeeping service and I'm a bit more numbers oriented than she is.

There's a little bit of confusion with the different taxes. There's sales tax that everyone is agreed you won't be charging but you will still need to file a quarterly zero sales tax form to avoid penalties. After the 1st year of filing quarterly, you can move to an annual filing.

There's income tax which for most of you will be filed on a Schedule C as a sole propreitor with your regular 1040 that you file.

If you go the LLC route, you get to add one more report to file - franchise tax. Again, nothing will be due until you have over $600,000 in sales but you need to file the report.

I would recommend that everyone get a FEIN (Federal Employment Identification NUmber). It's free and VERY easy to get. It will always be associated with your social and sole propreitor's can use it. With a FEIN, you can avoid using your social when filling out any forms for your business. As a sole propreitor, you'll file a Schedule C with your 1040 for your personal income tax and can use a FEIN. To get a FEIN, go to www.irs.gov.

And, of course, I would strongly urge all of you to have some kind of software to track your expenses and income. Use something, whether it's Excel or QuickBooks. QuickBooks is easy to use but it's also extremely easy to screw up. Just get with someone and make sure your QuickBooks is set up correctly to avoid the QuickBooks clean-ups that I get to do frequently.

Hope this helps a little. You're welcome to email me anytime with questions. Good luck!




Thank you so much !

Molly

oabakes4u Posted 9 Aug 2011 , 7:39pm
post #54 of 86

FYI to anyone who needs more info on the whole tax id issue...call and ck but this is the email sent to me from the office itself:

I have withdrawn your Texas Sales and Use Tax Permit Application. As long as you only make baked goods, jellies, jams, herbs or herb mixes, you will not need to have a sales tax permit.

If you decide to sell any of the goods in individual r...eady-to-eat servings or baking utensils, you will need to get a sales tax permit.

Sincerely,

Melanie Thompson
Texas Comptroller of Public Accounts
Tax Policy Division

kisamarie Posted 9 Aug 2011 , 9:28pm
post #55 of 86

Im still unclear, if the comptrollers office will not give you a sales tax id, then you will be paying tax on things that you purchase for the business when you shouldnt have to.....? That doesnt seem right.

djbookkeeper Posted 9 Aug 2011 , 10:18pm
post #56 of 86

The purpose of a tax exempt form, or a re-sale certificate, is to prevent the purchaser from paying tax on say, bricks, and then he has to turn around and charge his customer sales tax on those same bricks so that's double taxation. A re-sale certificate states that the purchaser is not being charged tax because he will charge tax when he re-sales the taxable item.
You don't really need a re-sale certificate since #1) you don't pay tax on food items that you will use to prepare your baked goods and #2) you won't be charging tax.
The re-sale certificate/tax exempt comes with the sales tax ID when you get it so it's all the same package.

kisamarie Posted 9 Aug 2011 , 10:48pm
post #57 of 86
Quote:
Originally Posted by djbookkeeper

The purpose of a tax exempt form, or a re-sale certificate, is to prevent the purchaser from paying tax on say, bricks, and then he has to turn around and charge his customer sales tax on those same bricks so that's double taxation. A re-sale certificate states that the purchaser is not being charged tax because he will charge tax when he re-sales the taxable item.
You don't really need a re-sale certificate since #1) you don't pay tax on food items that you will use to prepare your baked goods and #2) you won't be charging tax.
The re-sale certificate/tax exempt comes with the sales tax ID when you get it so it's all the same package.




That makes sense in that example, but I am paying tax for colorant, piping bags, etc. If I have the tax ID I wont have to pay tax for my above mentioned items, and I will just file the quarterly return as zero. Im wondering why the comptrollers office withdrew someones request for a tax ID, unless there is some other way to get a tax exemption without it. I guess Im just confused, lol.

oabakes4u Posted 9 Aug 2011 , 11:07pm
post #58 of 86

Actually I asked her to, after explainging to her how I plan on doing all this she said it was up to me. I'm not paying taxes on anything as it is and not really wanting to do wholesale so there is no need for me to have an ID unless I do want those and will be selling item that have to be taxed.

Sorry I should have added...for those not wanting one and was told they had to based on the info given. I was reading some who just don't want to deal with filing taxes and such. sry.

kisamarie Posted 10 Aug 2011 , 12:12am
post #59 of 86

How are you not paying taxes, without a tax ID? Is there some other way to be tax exempt?

oabakes4u Posted 10 Aug 2011 , 1:38am
post #60 of 86

Not that I know of. Nothing I buy has taxes (food items) and as far as everything else, I shop for days/weeks online getting the best deals that are wholesale prices anyways and there's no taxes or shipping...well sometimes it's shipping but I like to think I saved so much the shipping is like paying taxes and shipping. I know I could do it the easy way and do the whole Tax ID thing but this seems to work for ME so as long as it's working for me then I'm just going to cont doing so. I'm doing a low to no profit home bakery. I'm not in it for the money and hate to charge ppl to make a profit. That's just me, have no problems with others who do so, some are making a living for their familes so I understand but again this is something thats works for me and I'm able to so. Now if I needed to then yes, I would be going the whole nine yards icon_smile.gif

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