Young Business Owners

[renderedawake]

I and another partner are in the process of beginning a business. We are planning on registering through LLC, however we have one issue we are interested in. At the moment, we are both 23 & full time students, so our parents still claim as as dependents for taxes. If we opened a business in our name, would our parents have to deal with this in any way, or is there a way just for us to manage & take care of the taxes for our business?

[pboychuk]

Hmm,

i am also a student, I claim myself as independent however.. regardless, if you have two people in your business, you are most likely going to have to pay yourself a salary, thus paying idividual income taxes, then you seperately file for your business, I operate my LLC as a SP, so I basically treat all my income as an individual, its quite easy, this is part of the reason I dont want a partner.

[rogercbryan]

I and another partner are in the process of beginning a business. We are planning on registering through LLC, however we have one issue we are interested in. At the moment, we are both 23 & full time students, so our parents still claim as as dependents for taxes. If we opened a business in our name, would our parents have to deal with this in any way, or is there a way just for us to manage & take care of the taxes for our business?

Nope... your parents would not pay taxes on the money you earned if you have a normal job... The only relation here is based on educational expenses. If you start your own company only the people on the Articles of Incorporation would be responsible for the taxes. I hope you have talked to a CPA about the responsibilities of owning a Corporation.. it isn't easy to keep up with all the required filings.

[dcutler]

I 2nd roger. You should talk to your parents about the savings they get from claiming you. Usually in order to get any type of education credits they must claim you - so if they are paying a ton for your college then it is probably the best for them to continue claiming you until you finish school.

However, if you do successfully start a business and show substantial profits then you will see you tax liability be extremely high especially without even being able to take your own deduction for yourself.

My recommendation (based on knowing nothing about your business) - make sure you write off EVERYTHING you can including all expenses relating to the startup of your new business. Most small startup businesses even though profitable can easily show little to no profits or even a loss after writing off everything.