How To Start A Tee Shirt Business

And growing cash profits, expanding margins, the entrepreneur should focus on increasing traffic. That someone shouldn't find themselves bogged down with the accounting minutia, heck, and that's a shame: If someone's spotted a great new category and successfully built a web presence. New ecommerce entrepreneurs can find them confused and confounded by the tax and accounting requirements of their venture.

I offer up the following tax and accounting tips: with that in mind,

Tip #1: Don't Incorporate

You don't want to deal with this redtape--or at least not until you're profitable. A true corporation--whether a C corporation or an S corporation--saddles your business with more complicated tax accounting and a bunch of state filing requirements.

A one owner LLC is treated as a sole proprietorship for income tax purposes. Or LLC, note that you can setup a one-owner limited liability company, if you're concerned about legal liability protection. Operate your business as a sole proprietorship, instead.

Tip #2: Start Your Business Before Making Investments

Before you've got a business license and before you're selling or trying to sell your stuff--aren't very deductible, expenditures you make before you're actually in business-in other words.

000 must be amortized over the next fifteen years, but any amounts in excess of the $5. 000 of these expenses, you can probably deduct the first $5, specifically.

Accountants and lawyers and so on, web development, training, what this means is that you want to start your business before you start spending money on advertising.

Tip #3: Automate Your Bookkeeping and Accounting

This means you need to use a product like Quicken or QuickBooks, as a practical matter. By law--and some people don't know this--you're required to maintain an accounting system that lets you clearly measure your income.

You want to be able to move money from PayPal to your bank to QuickBooks simply by typing a few keys or clicking your mouse a few times, for example, as much as is possible. Make sure that you're taking advantage of online banking and bill payment features which integrate your accounting system with your banking. But you ought to go one better than simply using desktop accounting software.

Tip #4: Hire a Payroll Service Before Hiring Employees

Or QuickBooks, payroll, oursource the payroll to one of the large payroll service bureaus like ADP. Don't try to handle the payroll yourself, however, if and when you do need employees. Congratulations, hey, and if that's true for you. Many successful ecommerce business owners can run their operations without employees.

But the services let you avoid the bookkeeping nightmare called payroll and prevent you from getting into payroll tax trouble. Figure $1000 to $2000 per year. These services are expensive.

Tip #5: Consider S Corporation Status After You're Profitable

I've written and talked much about how S corporations save taxpayers money and how the right way to set up an S corporation is first create a limited liability company and then ask the IRS to treat the LLC as an S corporation for tax purposes.

000, 500 on the $90, or roughly $13, 000 and then another 15.3% self-employment tax, 000 in income taxes on the $90, if you just treat your business as a sole proprietorship--or an LLC treated as a sole proprietorship--you might pay $12. 000 a year off your web site, suppose that you're making $90. However, let me review the basics here again.

") Gets paid out as a dividend-like "distribution, by the way, 000 in remaining profits, (The other $40. 500 in self-employment taxes, you'll pay $7, 000 of the profits as wages, $50, say, if you categorize. But you'll only pay the 15.3% self-employment tax on that portion of the profit that you categorize as wages. 000 in income taxes, you'll still pay the same $12, if you set up an LLC and have the LLC treated as an S corporation.

Right, sweet? 000 every year, that the S corporation saves you roughly $6, then, note.