STARTING YOUR BUSINESS (T/G 203) covers the pros, cons, and tax forms of proprietorships, partnerships, and corporations when deciding on one's initial business venture: lays out the surprising role of "bank account discipline," the tradeoffs of employees versus nonemployees; and of being a "deputized" collector of taxes. Also covered:

• Gross receipts to gross profits
• Payroll matters & FTC "coupons"
• MACRS depreciation methods
• Myth of "free" company auto
• Are owners "naturally" tax suspect?
• Combating IRS's computer tyranny

Starting Your Business
Book: 203

Table of Content

1.  PREBUSINESS MATTERS                         1-1

    “Trade or Business” Defined                 1-2
    Material Participation Required             1-3
    The Not-for-Profit Presumption              1-4
    Nine Objective Factors                      1-6
    More Than One Business                      1-8
    Methods & Phases of “Starting”              1-9
    Startup Costs Defined                       1-12
    Simplified Cost Accumulation                1-13
    Timing When To Be “In Business”             1-14

2.  SELECTING INITIAL FORM                      2-1

    The Basic Forms of Business                 2-2
    Variants and Hybrids Thereof                2-3
    Proprietorship Pros and Cons                2-6
    Partnership Pros and Cons                   2-7
    Corporation Pros and Cons                   2-9
    Tax Differences Inconsequential             2-11
    Name, Logo, & Letterhead                    2-14
    Fictitious Name Publication                 2-15
    Federal I.D. Number                         2-16
    
3.  BANK ACCOUNT DISCIPLINE                     3-1

    Those Records at Your Bank                  3-2
    A Nightmarish Example                       3-4
    How It All Worked Out                       3-5
    How to Start Right                          3-7
    “Big Stub” Business Checks                  3-9
    Cash and Barter?                            3-11
    The “De Minimis” Rule                       3-13
    Borrowed Money                              3-14
    Employee Withholdings & Sales Tax           3-15

4.  EMPLOYER TAX MATTERS                        4-1

    IRS Circular E                              4-2
    What If Nonemployees?                       4-3
    When Hiring Any Employee                    4-4
    Separate Record on Each Employee            4-7
    Payroll Ledgers:  Setup & Selection         4-9
    Employer Quarterly Returns                  4-10
    FTD “Coupons” Explained                     4-13
    Still Another Form: 940                     4-14
    Taxability of Fringe Benefits               4-15
    Business Expense Reimbursements             4-17
    Getting Out Those W-2s                      4-18

5.  COLLECTING SALES TAX                        5-1

    Applies to Retailers Only                   5-2
    Collection at “Point of Sale”               5-3
    Seller’s Permit Required                    5-5
    Importance of Resale Certificates           5-7
    Other Exempt Transactions                   5-9
    Periodic Returns Required                   5-10
    Good Supporting Records Needed              5-11
    Good Invoicing Design                       5-13

6.  COST OF GOODS SOLD                          6-1
    
    The Sequences of Income                     6-2
    The “Direct Cost” Subschedule               6-3 
    Beginning/Ending Inventories                6-5
    Purchases for Resale                        6-5
    Raw Materials & Supplies                    6-7
    Meaning of “Fabrication Labor”              6-7
    Nonemployee Labor: 1099s                    6-8
    More on “Other Costs”                       6-11
    Importance of Ending Inventory              6-13
    Ending Valuation Methods                    6-14
    Putting It All Together                     6-16

7.  DEFERRED DEDUCTIONS                         7-1

    What is Amortization                        7-2
    Items Statutorily Amortized                 7-3
    What is Capitalization?                     7-6
    Depreciation: Most Understood               7-8
    The “Essence” of Sec. 168                   7-9
    MACRS Depreciation Methods                  7-12
    Special Depreciation Election: Sec. 179     7-14
    Introduction to Form 4562                   7-15
    Part V of Form 4562 (Listed Property)       7-18
    
8.  FORM 1040 PROPRIETORSHIPS                   8-1

    Overview of Forms Required                  8-2
    Other Related Forms                         8-5
    Format/Content of Schedule C                8-6
    Cash vs. Accrual Accounting                 8-10
    Office-at-Home Deduction                    8-11
    Car & Truck Expenses                        8-13
    Travel, Meals, & Entertainment              8-14
    Other Expenses (Specify)                    8-15
    Schedule SE: The “Second” Tax               8-18

9.  FORM 1065 PARTNERSHIPS                      9-1

    The Partnership Accounting Year             9-2
    Written Partnership Agreement               9-3
    Each Partner’s Capital Account              9-5
    Quick Overview of Form 1065                 9-7
    Multiple Sources of Income                  9-11
    Deductions Sequence Rearranged              9-11
    Importance of Balance Sheets                9-14
    Introduction to Schedule K-1                9-15
    Many Key Questions Asked                    9-19
    Figuring Each “Distributive Share”          9-20

10. FORM 1120 CORPORATIONS                      10-1

    Immediate Tax Suspicion                     10-2
    A Creation Under State Law                  10-3
    Fiscal Year: Indefinite Life                10-5
    Introduction to Form 1120                   10-6
    Schedule C (1120):  Uniquely Special        10-11
    Balance Sheet Comprehensiveness             10-12
    Three Separate Taxes Apply                  10-14
    Applicable Credits                          10-15

11. COMPENSATION OF OWNERS                      11-1
    
    Owners Are “Naturally Suspect”              11-2
    Limit “Meals & Entertainment”               11-3
    Nondiscriminatory Insurance Plans           11-4
    “Safe Harbor” Benefits                      11-7
    A “Company-Provided” Auto                   11-8
    Livelihood Compensation Differences         11-9
    Employing Spouse & Children                 11-11
    Qualified Retirement Plans                  11-13
    Annual Contribution Limits                  11-14
    Form 5500-C/R for Each Plan                 11-17

12. COMPLIANCE MATTERS                          12-1

    Vow to “File on Time”                       12-2
    Establish a Tax Calendar                    12-3
    Have Access to a “Tax Reserve”              12-4
    Prepaying Income Tax                        12-5
    Filing of Information Returns               12-6
    Resolving “Computer Tyranny”                12-7
    Subjection to TCMP Audit                    12-9
    Beware of IRS Abuses                        12-11
    Adapting and Thriving                       12-12