1st year in business-Withold some income or disclose it all?

[Green&Clean]

This is my first year in business. I'm about to get started. Friends of mine who own other businesses suggest I should not disclose all of my income when it comes to tax time. They suggest since it's a cash business I can easily not report some of the cash. Of course this would mean that I would have to throw out some invoices. What are some of the advantages and disadvantages of doing this?

 

[Lee Stockwell]

Re: 1st year in business-Withold some income or disclose it

There is no long term benefit in not reporting all of your income.

There are legal ways to minimize taxes.

 

[roro]

Re: 1st year in business-Withold some income or disclose it

Can the tax department not read bulletin boards???
:x

roro

 

[FredC]

Re: 1st year in business-Withold some income or disclose it

Let me know what you decide
http://money.cnn.com/2010/03/02/pf/taxes/rat_out_tax_cheat/

 

[Green&Clean]

Re: 1st year in business-Withold some income or disclose it

Yeah Lee I agree with you. I'm not concerned with the legal implications. There many ways to avoid that. But I'm thinking of other issues like 1) what if i one day want to take out a loan 2) I'd hate to be missing past customer/job information over this and 3) I just always want to have a real pic of where my business is at.

what's funny is that one of the people who suggested this is an accountant's assistant.

 

[ACE]

Re: 1st year in business-Withold some income or disclose it

I would suggest buying equipment then quickly depreciating it. That will mean paying less tax, having assets, and lenders generally look at depreciation deductions as income if you want a big loan like a mortgage.

 

[Desk Jockey]

Re: 1st year in business-Withold some income or disclose it

My sister is a Region 4, IRS Inforcement agent. I asked what she thought, she strongly suggested that you follow the letter of the law. She also asked for phone number, it isn't in your profile. Nothing official, off the record conversation and she says you have broke no laws as of yet since you have not yet filed.

You can PM me your number.













P.S. just kidding, my sister works in the cleaning business with us.

P.S.S. Its my younger brother that works for the IRS, and doesn't care to speak to you. No he just turned your name in for file review.



Ok j/k he works here too. :mrgreen:

 

[Lee Stockwell]

Re: 1st year in business-Withold some income or disclose it

Evil lurks in Kansas...

 

[floorguy]

Re: 1st year in business-Withold some income or disclose it

as the saying goes....

if you have to ask....it might not be a good idea

 

[Steve Toburen]

Re: 1st year in business-Withold some income or disclose it

Yeah Lee I agree with you. I'm not concerned with the legal implications.

The federal government moves slow. (Duh!) But they do eventually catch you.

My carpet installer bragged that he had not filed a tax return in 12 years. Then one day we received a certified letter from the IRS with a court order directing us to send 50% of everything we paid him to the IRS. That was 25 years ago and with penalties, fines and interest he may STILL be working for .50 on the dollar!

Steve Toburen
www.SFS.JonDon.com

PS Another disadvantage of hiding income is that when it comes time to sell your business the selling price will be based on your REPORTED AND VERIFIED net profit.

 

[Green&Clean]

Re: 1st year in business-Withold some income or disclose it

LOL @ Jimi.

thanks guys. I will be going about this the legal way. Full disclosure. All income reported.

 

[Green&Clean]

Re: 1st year in business-Withold some income or disclose it

PS Another disadvantage of hiding income is that when it comes time to sell your business the selling price will be based on your REPORTED AND VERIFIED net profit.

So true Steve.

 

[Desk Jockey]

Re: 1st year in business-Withold some income or disclose it

:mrgreen:

Good I'll tell my brother. !gotcha!