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How many of you have made MS a business with license and all?

April 06, 2012 11:02PM
I was wondering how many of you have turned mystery shopping into a regular home based business to supplement your income? I run a concession trailer during the summer, and of course I've got all the licenses, insurance, bonds and permits for that, but wondered how many of you go through that entire process to set yourselves up as a MS business. Care to share?
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April 07, 2012 12:33AM
I have a business license and am silver certified...this is my little business,
and I went the whole nine yards. There is actually no reason to do it, not
required, but in my mind, it feels good and there are deductions paying taxes.

Live consciously....
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April 07, 2012 12:46PM
In many states you do not need a business license at all, and not having one does not change the way the IRS looks at you MS business.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.
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April 07, 2012 02:22PM
I have no desire to pay personal property taxes on my office furniture and equipment which would be the result of registering as a business. As walesmaven said, for IRS purposes I am still a small business without having to go through all the other hoops.

Equal rights for others does not mean fewer rights for you. It's not pie.
"I prefer someone who burns the flag and then wraps themselves up in the Constitution over someone who burns the Constitution and then wraps themselves up in the flag." -Molly Ivins
Never try to teach a pig to sing. It's a waste of your time and it really annoys the pig.
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April 07, 2012 02:46PM
They give writeoffs on computers, phones, home space and all that goes along
with being a business.

Live consciously....
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April 07, 2012 03:13PM
You can write off your expenses for computers, phones and home space, etc., without getting a business license.
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April 07, 2012 03:47PM
I suspect that for a concession trailer you cannot operate without a sales tax number, various state and local permits, and appropriate current inspections that are likely to include health and fire department. These are because you are selling to the public and for that you would need to be set up entirely differently than for mystery shopping.

Certainly the business licenses and such are not required for mystery shopping to be a business for tax purposes and eligible for deductions appropriate for a business. I would caution anyone to think long and hard about deducting home space for any business. The hoops to jump through are very specific, you greatly increase your chance of audit and if you own your home the annual depreciation for your office space must be taken and reduces your cost basis in your home when you eventually sell it. Whether you own or rent, the home space deduction may cause your business to show a loss on paper and you must show a profit 3 of the past 5 years to even be considered a business and eligible for business deductions.
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April 07, 2012 06:46PM
I was reading up on some of the home-based business requirements for a local municipalities and some limit the amount of space you can use and/or claim anyway. During the tax workshop at the conference the pitfalls of deducting home office space were discussed and it was not recommended anyone go that route for exactly the reasons Flash brought up.

Equal rights for others does not mean fewer rights for you. It's not pie.
"I prefer someone who burns the flag and then wraps themselves up in the Constitution over someone who burns the Constitution and then wraps themselves up in the flag." -Molly Ivins
Never try to teach a pig to sing. It's a waste of your time and it really annoys the pig.
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April 08, 2012 04:43AM
In my little town/city in Virginia, a business license is required. I had to get one for my tutoring business. I told them I was just doing my paper work at home, not actually bringing students in. I was told, if I am doing any work at all for my business in my home, I need a license. I am not sure what other states/towns/cities require so I suggest every one check the requirements where they are.
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April 08, 2012 02:06PM
To deduct home office space, it is my understanding that the space must be used solely for the business and not for anything else. How many of us do that?

*****************************************************************************
The more I learn about people...the more I like my dog..

Mark Twain
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April 08, 2012 05:11PM
MsJudi Wrote:
-------------------------------------------------------
> To deduct home office space, it is my
> understanding that the space must be used solely
> for the business and not for anything else. How
> many of us do that?


That's my understanding also, MsJudi. I have never deducted office space because I don't have a whole room in my house that I use for thing else besides mystery shopping. Even my computer is used for multiple things although I do have 2 laptops so one is dedicated to mystery shopping.
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April 08, 2012 05:25PM
If you are even considering the deduction you need to read [www.irs.gov] and Publication 587. Most generally the space used must be isolated from the rest of the dwelling. In practice this means doors can be shut to isolate it (so a spare bedroom is feasible). The room must be sole purpose for your business (so no hide-a-bed in the closet to use it as a guest room when you have company, no toy box, no out of season storage in the closet, no computer shared with the kids to do their homework, no personal files in the file cabinet, etc.).
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April 08, 2012 05:45PM
My spare bedroom is used for my office, totally aside from the house, and you get to claim a portion of it, having said that, I also have a laptop
and what prevents me from using it downstairs, my office is still upstairs
housing all paperwork and printer, etc. Had I not had a license I doubt I
would have tried to deduct msing as a business, that's my way of looking at it.
Check on your state laws, giving advice to someone in another state isn't always right, we just don't know.

Live consciously....


Edited 1 time(s). Last edit at 04/08/2012 08:04PM by Irene_L.A..
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April 08, 2012 05:51PM
But we all deal with the same federal laws regarding IRS tax deductions if we are in the US.
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April 08, 2012 07:34PM
That said, local zoning laws can effect how the IRS may view your deduction.

I have a live/work loft, so rather than having an office in my home, I am able to legally live at my office. There is precedent in my city to substantiate a 100% deduction, though I have opted for the more conservative 66.66% deduction in the past.

While it's an elegant solution to getting a large office write-off, it is not feasible for everyone to live this way. I use primarily to offset income from my main business, but it did come in handy this year when I received a large 1099 from one MSC that would have pushed me into a higher tax bracket.
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April 08, 2012 08:09PM
I have a business name, which I had to register with the local county clerk's office and the state, but did not need to get a license, per se.

I also do not take a home office deduction as I do not have a solely dedicated space in my home for my mystery shopping and other self-employment streams.

Shopping central/southern NJ and eastern PA
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April 08, 2012 09:49PM
My CPA's understanding is I can deduct a proportional amount of space, internet usage, electricity, gas, telephone, home repairs (even lawn care),etc but there are other factors to consider as well. I would suggest getting input from a professional. I simply follow her direction and don't worry about it. I would hate to give advise that turned out to be inaccurate. All I can share is what I have been told by a professional I trust.
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April 13, 2012 09:23AM
I have one room dedicated just for my MS, Merchandising, and self publishing business. It contains three large file cabinets, three large bookcases, and a computer center that wraps one entire wall and part of another.

Year before last I was doing my own taxes, but decided to let a lady from H&R Block go over them to see if anything jumped out at her. When she returned my taxes she came in my room and said, "You definitely have a home office. Nothing else could go in here." I did not mention that a couple of my merchandising jobs require me to receive large shipments and keep them until the date I install them in the stores.

I now have a LLC set up because I added something else in the mix, so I had to get an EIN. Some of our MS employers are starting to ask for them anyway.

The last two years I had a CPA doing my taxes because they were starting to get complicated. He advised instead of deducting for a home office that he just spread the same expensed under different headings. As long as he is satisfied, and he would have to go with me if I am audited, then I am satisfied.
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April 13, 2012 03:47PM
My state does not require a license, and if it's not required, I'm not voluntarily signing up for more red tape.

Until I would begin acquiring a significant level of business-exclusive assets (meaning real property or $10K+ in non-depreciated equipment) or I began engaging in activities that may result in potential losses (meaning hosting client meetings on my property, etc), I see no need to separate the business. If I reach that point, I would go the whole 9 and fully incorporate.
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April 13, 2012 06:53PM
I have an EIN with my business name and that is listed on my tax return. As long as I file a Schedule C, the IRS doesn't care if I have a business license or not. I deduct for all of my computer stuff (paper, ink, computer repair, new printers, new cameras and AA batteries) and have scanned receipts for all of them in case I am ever audited again.

Last year I filed returns for years 2008, 2009 and 2010 and I was surprised that I was not assessed a penalty. Of course each year was a refund. This year, probably will be too, though unfortunately not enough to qualify for the tax return mystery shop that one MSC was offering for $35.

**************************************************************
One buzzard to another while circling high overhead (paraphrased), "Patience hell! I want to shop somewhere."
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April 13, 2012 08:33PM
clarification. the IRS doesn't care, but the locality in which I live does. just clarifying. :-)
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