Small Business

Tax Saving Advice
Small Business

What forms do I need to withhold taxes for my employees? Where do I send the taxes after I withhold them?
I would recommend that you get copies of IRS Publication 334, Tax Guide for Small Business, and Publication 15, Employer's tax guide. Both are available free by calling 1-800-TAX-FORM. They are also available for download with free printing software from the IRS web site at www.irs.ustreas.gov.

What IRS form(s) does the Limited Liability Corporations (LLC) use to report profit/loss for income tax purposes?
Generally, Form 1065. That would be the same form as used by Partnerships. You may want to see the IRS instructions for form 8832 as well. With that form, the Limited Liability Corporation could elect to be taxed like a regular corporation.

I am running a home business besides my regular job. I have claimed losses for the business for the previous two years. Can I claim another year of loss or does it have a limit on the number of years I can claim as loss for the business?
The IRS guidelines presume that if a business does not make money in three out of five years, that it is a hobby and not real business. However, that does not mean that you can't prove that you are still a business in spite of the losses, you just have to be prepared to be able to prove it should they question it.

The key issue is to prove that you have a "profit motive". Items that help to establish that are: considerable time spent in the activity, business like records are maintained, you expect assets to increase in value, even though recording losses. If you are considered to be a "hobby" and not a business, you will be limited to deducting expenses to the extent that you have income from the activity.

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