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Small home business tax question?

Question: Small home business tax question?

(Posted by: on 2011-08-06 09:20:20)

Hello, my wife just started running a family daycare, but does not make much money yet (a couple hundred a month and not enough to cover the expenses yet). My question is do we need to file tax for this? If yes, should we file tax with our personal income tax or should we file seperately as a family daycare business. Which way has better benefit for us? We are in CA. Thanks!


Answers:

Posted by: jdkilp on 2011-08-06, 18:30:47

In order to file on your personal income tax form, you’ll need to form either a sole proprietorship or partnership. But, both of these structures make your personal property at risk in case of a lawsuit. So, I wouldn’t recommend either these. Instead, form an LLC or S-Corporation. Your personal property (such as your house) won’t be at risk, but you won’t be able to file on your personal income tax form. I highly recommend you pay a visit to the local Small Business Development Center to get advice (it’s free). To find the office nearest you: asbdc-us.org

  

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