Self-Employment & the K-1 K-2

[bruc 0]

Back in Nov 2005 I wrote about a friend loosing his job, could not find one near his home so he started his own business now self-employed. I've researched vj but could not find and answer he needs.

He started his new business this past Jan and has already met the aos requirements for the K-1.

He needs to know how this will effect him when is fiance goes for interview in Moscow being self-employed.

He can show the last three years tax returns from his past job with income about $30K a year with no tax problems and will have no tax problems this year.

We're wondering the best we can on what would be the cons of being self employed for about 12 months when his fiance gets her interview or anything he made need to do to get prepared .

Your answers would certainly be greatly appreciated.

Thanks,

bruc

[diadromous mermaid 36]

Back in Nov 2005 I wrote about a friend loosing his job, could not find one near his home so he started his own business now self-employed. I've researched vj but could not find and answer he needs.

He started his new business this past Jan and has already met the aos requirements for the K-1.

He needs to know how this will effect him when is fiance goes for interview in Moscow being self-employed.

He can show the last three years tax returns from his past job with income about $30K a year with no tax problems and will have no tax problems this year.

We're wondering the best we can on what would be the cons of being self employed for about 12 months when his fiance gets her interview or anything he made need to do to get prepared .

Your answers would certainly be greatly appreciated.

Thanks,

bruc

He will have to show income. Being self-employed that could be done through quarterly statements of profit and loss, if he hasn't filed a tax return for the business by that time. Does he pay himself a salary or is he simply living off profits from the biz?

[bruc 0]

Back in Nov 2005 I wrote about a friend loosing his job, could not find one near his home so he started his own business now self-employed. I've researched vj but could not find and answer he needs.

He started his new business this past Jan and has already met the aos requirements for the K-1.

He needs to know how this will effect him when is fiance goes for interview in Moscow being self-employed.

He can show the last three years tax returns from his past job with income about $30K a year with no tax problems and will have no tax problems this year.

We're wondering the best we can on what would be the cons of being self employed for about 12 months when his fiance gets her interview or anything he made need to do to get prepared .

Your answers would certainly be greatly appreciated.

Thanks,

bruc

He will have to show income. Being self-employed that could be done through quarterly statements of profit and loss, if he hasn't filed a tax return for the business by that time. Does he pay himself a salary or is he simply living off profits from the biz?

Thanks for your fast response.

I'll add to this...his business is legit and registered with the Secretary of State and he has an accountant .

I don't think he's per say paying himself a salary this first year.

He started a high end cabinet shop in my personal woodworking shop and a couple of us are helping him in our spare time when he needs help. I do not charge him for use of my shop and we charge him no labor when we help him, so he has no overhead. He has to pay only the utilities.

His profits are high and he's useing most of them to establish his new business. His home is piad for, he has no credit card debt nor a vehicle payment.

Th way things are going his fiance could get her interview close to the end of this year of sometime after the first of the year...who knows anymore

Once again...thanks for your help

bruc

[diadromous mermaid 36]

Back in Nov 2005 I wrote about a friend loosing his job, could not find one near his home so he started his own business now self-employed. I've researched vj but could not find and answer he needs.

He started his new business this past Jan and has already met the aos requirements for the K-1.

He needs to know how this will effect him when is fiance goes for interview in Moscow being self-employed.

He can show the last three years tax returns from his past job with income about $30K a year with no tax problems and will have no tax problems this year.

We're wondering the best we can on what would be the cons of being self employed for about 12 months when his fiance gets her interview or anything he made need to do to get prepared .

Your answers would certainly be greatly appreciated.

Thanks,

bruc

He will have to show income. Being self-employed that could be done through quarterly statements of profit and loss, if he hasn't filed a tax return for the business by that time. Does he pay himself a salary or is he simply living off profits from the biz?

Thanks for your fast response.

I'll add to this...his business is legit and registered with the Secretary of State and he has an accountant .

I don't think he's per say paying himself a salary this first year.

He started a high end cabinet shop in my personal woodworking shop and a couple of us are helping him in our spare time when he needs help. I do not charge him for use of my shop and we charge him no labor when we help him, so he has no overhead. He has to pay only the utilities.

His profits are high and he's useing most of them to establish his new business. His home is piad for, he has no credit card debt nor a vehicle payment.

Th way things are going his fiance could get her interview close to the end of this year of sometime after the first of the year...who knows anymore

Once again...thanks for your help

bruc

In that case, if it is a self-proprietorship, he'll likely declare the business profit as personal income on a Schedule C with his IRS 1040 at year's end. It might be a good idea for him to do quarterly estimated tax filings through his accountant so that he can better demonstrate what his annual income might be.

[MrsBruce5 0]

Does he draw a 1099 annually ?

If so, he can use them.

I am self employed and used 1099's for all 3 years of my taxes submitted with my 864. There were no problems at all using them.

Good Luck to your friend. He should be fine with all that you have stated.

-Rose

[bruc 0]

I would like to thank all of you that replied to my post., you offer an awsome wealth of info.

We're both self-employed but two different circumstances and after reading your answers several of us feel better about things now.

We both use the same accountant so I'll give him your info and I'm sure he can take it from there.

Our friends name is Justin and he's about as shy as shy can get....his fiance is "wide open" so we're placing bets as to who wins the battles when she gets here.

Thanks again for all your kind help,

bruc