Locksmith & IRS info

[viking84]

I am looking into developing my own business in Oklahoma possibly by next March or April. I wanted to find out how has other locksmiths registered their business with the IRS? Do you have to be an LLC to get a IRS business code or number? I figured out that I would have to get my license through Oklahoma before I do anything. I'm planning on going through Foley-Belsaw to get my certification (Thanks whoever told me about that!). Any information will help! Thanks!


JC

[maintenanceguy]

I don't know what OK requires. I don't know if OK requires you set up a corporation to be a locksmith.

With the IRS, you can form a corporation (C,S,LLC) and the corporation is it's own entity. The corporation pays taxes and you as an employee of the corp pay taxes. The corporation, once legally incorporated, files with the IRS for an Employer Identification Number (EIN) that works like the corporation's social security number when it pays its taxes.

Or you can just be you with no corporation. Then you're a sole proprietor. You keep records on what you make on each job and what you spend on parts on each job. You pay taxes to the IRS based on your net income. Just keep in mind that as a sole proprietor, you pay both your own taxes and your employer's contribution too. (they call the employers part "self employment tax") That's probably about 30% of what you make.

But if you incorporate, you pay your taxes and the corporation pays your employer's portion so you can't win either way.

[viking84]

Maintenanceguy,

Do you think it would be better to run as a sole proprietor or form your own corp? Would you not need an EIN for the IRS if you are a sole proprietor? I am assuming there is a tax form for sole proprietorship companies! Thanks for all the information, I appreciate it!

JC

[maintenanceguy]

Taxes aren't all that complicated but you will get into trouble if you don't understand them. There are a lot of good books on taxes or accounting for the small business. Get one. You will get into trouble getting tax advice on the internet.

That said, Yes as a sole proprieter, YOU pay the taxes. The income and expenses are yours, not the busnesses because legally, there is no business, only you. If you hire employees, you need an EIN to pay your contributions to their taxes. If you don't you just pay taxes the way you always have.

You will use one of the IRS forms that allows you to attach a "schedule C". On schedule C you list all of your business expenses.

For example: You do a job and charge the customer $100. If OK has sales tax, you collect that from the customer too and you send the sales tax to your state (probably quarterly). If you had to purchase $50 in parts, you get to deduct the $50 from your income on schedule C. You really only made $50 so you pay taxes on that.(about $15) so you walk away with $35 on a $100 job.

That's why it's hard to make money in business.

Other things you might buy for the business get deducted differently. You can deduct 50 cents per mile for the use of your work truck as an expense. You can depreciate your truck at 23 cents per mile until you have depreciated the entire value then you can't any more.

There are lots of other things. You need a good book or you need to sit down with an accountant who can help you set up your record keeping system.

[wayne2182]

You dont have to be a LLC and would prolly be better to be a sole prop. makes everything easier and you do not need a EIN number if your doing it just by yourself, I will tell you in oklahoma you need alot more then a foley belsaw course to get a license PM on here and ill help ya out with more state info