I've gotten an EIN from the IRS and am working on getting a state tax ID. I've recently started a small business selling coin supplies. Now...I understand that if you buy something from your business, you can write it off. So if I buy a coin for "my business", can I write it off? Legally speaking, if I'm in the business of buying and selling coins, and buy a coin, I can write it off. But what specifics are there? Who's to say I bought the coin for my business, and not for myself?
Yes, but since I would be in the business of buying and selling coins, if I bought a coin, then technically I bought it as a business and not a person. Also, my state has USE TAX, which basically boils down to if I buy something from say Great Collections, I have to pay tax on it if they do not charge me sales tax.
Do what you want, but I wouldn't try and tiptoe around the IRS, they don't deal in technicalities. You better be prepared if they audit you, your past debts will seem like pennies compared to what they can do.
Think of it this way, you run a business out of your house (which is fine to do). You buy a paper shredder, which you also shred your junk mail with. Since that's a business expense, it can be written off. However coins are different. You don't really use coins. But...if you bought it and then decided to sell it, then you bought it as a business. Seems really tricky..
Tim: The rules can get very complicated and you do not want to make a mistake. My suggestion would be to talk to a tax accountant. TC
If I buy a restaurant, can I write off everything I eat for the entire year? Technically I'm doing research for my business.
http://www.irs.gov/pub/irs-pdf/p587.pdf http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses
And why would you need an EIN (Employer Identification Number)? Just more complicated forms to be filled out for the IRS. Even if you have no employees. A state sales/use tax stamp would have been enough. (notice I didn't write would of)
What they want and what the Feds require are two very different things. Still jumping in without checking if there's water in the pool, Tim?
Did you consult with anyone with any knowledge before going this route? You really do need a good CPA right now. Penny wise and pound foolish.
I disagree. Learning this stuff is good for almost everyone. You need to start somewhere. I've been doing my own taxes using TurboTax since I was 16. I do my wife's business bookkeeping and business taxes. Even if you farm the accounting work out once you are making enough money to do so, doing the day to day bookkeeping is a must. Having an understanding of double-entry bookkeeping, taxes laws, cash flow, income, expenses, etc is really important. I actually hang out here a few months around tax season, and read the questions and answers to stay fresh. (There are a lot of trash questions and trash answers, but plenty of free knowledge too) Stick to the answers from SuperUsers. OP, here is some helpful info: Might want to read up on COGS, http://www.irs.gov/publications/p334/ch06.html and http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses among other places.
I just looked at their site. They want "Federal Tax ID (EIN) or Resale Cert. Number". Resale cert number is your state sales/use tax stamp number. You do not need an EIN, Tim, nor do you want that can of worms opened. Cancel that EIN ASAP.
Getting and having an EIN is no big deal IMHO. The purpose is similar to that of SS# as far as taxes are concerned, great for LLC, s-corps, Sole proprietor, etc. My wife has an EIN for her childcare business, and we use it on the forms to the parents saying how much they paid in childcare expenses for the year. We report it on our taxes, and the parents report her EIN on their taxes for the deduction. Again, no big deal. She would otherwise be handing out here SS# to people, and on paper, and putting into the wild where she doesn't have control over it. EIN makes sense if Tim is going to actually make a go of his business.
