No. of Recommendations: 1
1) Where can I find out how much I will pay in taxes for a given state?
Will you be doing business in different states? Otherwise, the taxes you pay are generally income taxes and sales tax. For income tax, you have your regular Federal tax, your state tax [I am in MA, so it's 5% for earned income here], and the FICA of which you will pay both the employee and employer portion which is 15%. Actually, it's something like 15.3%, but I can't remember the actual thing. You will need to fill out Schedule C for all of this, and I recommend you hop over to the IRS website and find the publications on Schedule C to help you better understand this.

2) Where can I learn about leasing a home office to my business?

I'm confused again. If it's a home office, that means it is in your home, so I don't understand why you would be leasing it. If you mean taking deductions for using a home office, there are some very specific rules around that like the space must be solely for business use and cannot be used for personal use. Again, Schedule C and its associated publications will be very useful for understanding this.

3) What software is best for small business finances?
Depends what you want to do. I don't have to worry about things like inventory, so I find that Quicken is perfectly sufficient for my needs, and I already had that for our personal finances. So what I did was to get a separate checking account and credit card for the business, and anything those are used for are business expenses. Then I made one specific category in Quicken called 'DH's Business', and I have sub-categories underneath that match the lines on Schedule C. This way, all I have to do at the end of the year is run a categorized report, and move the numbers over accordingly. I also use TurboTax for doing my taxes, so everything is fairly automated.

The thing that I do not use Quicken for is producing invoices, but for that I just use a template in Word, and then I track invoices, payments, and tax information in an Excel spreadsheet. That way, I can see at a glance who has paid, when they paid, the check number, and our totals to date. I also have a sheet that mirrors the tax forms so that I can plug in my estimates that get refined as the year goes on, and I use that to determine how much money to send in every quarter for estimated taxes. I imagine you can do the same thing with real 'business' software, but I saw no point to having multiple products that do the same thing, especially when I am already used to the tools that I have.

4) What are the pros and cons of establishing an LLC or Incorporating? I'm not sure on this one as DH has remained a sole proprietor. He has no employees, so this was just easier for us and met our needs. Someone else, I am sure, will be able to give you more info on this.
5) What was the most challenging obstacle you faced when you started?

For my DH, it was actually starting. In his case, I had been nagging for years for him to go out on his own, and he just dragged his feet til he got laid off. That was the excuse he needed to finally get out on his own because he didn't have to take the risk of quitting a job before seeing if he could make any money. The first year, he made just a little, but this year, he's been incredibly busy, and it's mostly repeat business, so he's more confident.
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