3 Steps You Can Take to Avoid This Woman’s IRS Nightmare!
Has everyone seen this nightmare post that is circulating? $45,000 owed to the IRS for not paying taxes.
The IRS is no joke! If you’re running a business make sure it’s legal!
This anonymous email has been going around social media like CRAZY lately. Its being shared by thousands and I definitely want to put in The Legal Paige’s two-cents here; this situation is the REASON WHY I created this virtual law office, it is to help entrepreneurs just like this lady. As a lawyer and wedding photographer, I put together this post breaking down what this means and some steps you can take to make sure your business is legally legit!
Wow, what an incredibly difficult situation and what’s worse is the amount of legal fees and back taxes she will face in the coming years. I wish I could hug this lady right now and tell her everything is going to be okay. But, unfortunately, this situation is literally making photographers throughout this country go into a panic.
I don’t want you to panic. Let's get you LEGALLY LEGIT right now! No time but the present people. Its not worth it to wait, and wait, and wait to make your business legitimate and feel 100% protected. I’ve outlined three simple steps you can take TODAY or TOMORROW to get you started in the right direction.
REGISTER YOUR BUSINESS
Register your business name with your state; both sole proprietor and an LLC. You can do this ONLINE, and it takes only 15-30 minutes. First, go to your Secretary of State’s website and type into the search bar “Register a business.” Then, click on the links to get you to a page that you can register online. It only takes a little information from you (your name, business name, address, email, phone, etc). After that, you will get a response back from your Secretary of State with confirmation that your business is registered with a business registration number or a business license number.
Not sure if you should be a Sole Proprietor, LLC, or S-Corp?
Click here to download the free guide!
GET AN EIN NUMBER
Next, if you're an LLC, go get an EIN number from the IRS. Click on the blue link below, and click “Apply Online Now” then start the application process. Again, it will ask you very general information regarding your business. This shouldn’t take more than 10-15 minutes, and MAGIC, it will give you your EIN right then and there. No waiting at all. (I still recommend that even if you're a sole proprietor and you don't have to get an EIN, that you should still do so because it notifies the IRS that you are in business and bringing in income.)
GET A BUSINESS BANK ACCOUNT
Use your business registration number and EIN number to go get a business bank account. Any bank in your hometown should be able to help you with this, so just call them and ask what is needed to set up a business account. You will likely need around $50-$100 to open the account. Get checks and a debit card to this account. And, after it's official, use this account for EVERYTHING related to your business income and expenses! (Although some banks do not require you to have an EIN number to open a business bank account if you're a sole proprietor, like I said above you should TOTALLY still get one because it will notify the IRS that you are in business and put you a step ahead of the game for any tax related issues that come up.)
Do not commingle your personal and business finances.
That is the biggest way to get flagged by the IRS or get into trouble in the future. Finally, please PAY YOUR TAXES! Do not cut corners or take cash under the table. It’s not worth it in the long run... $45,000 is not worth it. We are all so lucky to live in the beautiful United States of America and have a lot of good things about being a citizen here (we are not debating the good, bad, and the ugly here, so please don’t).
We are all responsible for paying taxes. Its just ONE thing we HAVE to do. I’ve always heard this saying and love it, “You don’t HAVE to do anything besides pay taxes and die one day.” #truth
Now, a trick I use is the easy budget spreadsheet, this budget spreadsheet will help you keep track of your income and expenses to alleviate any issue. If a client pays you in cash, report that on your budget spreadsheet.
You're in luck! I’ve got a FREE budget spreadsheet for you to start using now at the bottom of this post!
Scared yet? Want to make sure your business is legally legit? Want to learn more?
I've got you! The Legal Paige offers our signature course “Ready, Set, Legal: A step-by-step virtual legal course to help small businesses become legally compliant.” In the course, I'll assist and lead you through each step - from registering your business, to creating legal contracts with all the necessary clauses, to getting your business income and expenses ready for tax season.
I’ve set this course is designed to easily guide you through all of the legal stuff that likely makes your head spin.
CLICK HERE to sign up now!
Links:
READY, SET, LEGAL COURSE SIGN UP
FREE BUDGET SPREADSHEET FOR SMALL BUSINESSES
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