Follow On TwitterMailbag: Taxes, FEINS, Inventory Management and Some Personal News
My wife and I went to the obstetrician yesterday and found out that she’s literally ready to deliver at any time now. So inevitably in the next day or so, we will be having another little boy in our household! The timing is also such that our new house closes escrow the day after we are due, my mom is flying in and my brother is getting married all around the same time too. It’s going to be a busy week.
It’s hard to tell how much of an impact this will have on our other activities, but I wanted to let you all know that I may be MIA for a couple weeks in terms of answering questions. But without further ado, here are a few questions for the week.
I’m creating a website to promote affiliate products. I wasn’t sure if I needed to apply for a separate taxpayer ID if I’m a sole proprietor. If I do get a taxpayer ID for the business, do I have to file a separate tax return, or can the business expenses/profits be included on my personal tax return?
No matter what business you are involved in, I would always recommend that you get a separate taxpayer ID. Otherwise, you’ll end up having to give out your social security number to all of your affiliate companies in order to get paid. Of course there is nothing wrong with that but it’s generally better to keep your SSN private if possible.
As for your taxes, whether you have to file a separate tax return depends on your corporate structure. If you have a flow through entity like an LLC or a sole prop, then you do not need to file separately. However, you will need to include a schedule C with your return.
I am 22 years old and currently working at a financial company. I have not yet finished my undergraduate degree due to lack of funds, and I was hoping that as I work now I can develop a web business that I can hopefully keep going to offset tuition when I go back to school next year.
My main question is how did you settle on wedding linens to be your focus? Were there other products that you first researched, and what resources did you use for this? Also, what storage solutions do you have for your inventory?
I am currently trying to brainstorm and organize my ideas for a my web business, but any tips you have would be great. Your website is so far a great resource, and I look forward to reading more.
I’m glad to hear that you want to start a small web business on the side. Picking a niche to pursue can be a pretty difficult task. Just keep in mind that depending on your motivations, your business idea doesn’t have to be a home run, knock it out of the park idea. With the proper marketing and positioning, you can make some decent money on a wide variety of ideas even if there’s a lot of competition.
The story about how my wife and I stumbled upon our niche is well documented on the blog already at the links below.
My wife and I looked into a bunch on non-web ideas initially as well because we were afraid of the learning curve involved with running a web based business. But I’m glad that we ultimately decided to run our business purely online. Here’s an article that talks about Business Ideas That Didn’t Pan Out For Us
Currently, we rely on our shopping cart software to track all of our inventory. To prevent selling items that are out of stock, our shopping cart will not let anyone complete a purchase unless we have sufficient stock on hand.
In terms of actual storage, all of our products are organized nicely on shelves, however we don’t yet have an automated way of tracking defective items and returns. Eventually, we plan on tagging all of our merchandise with a barcode and using a barcode gun to keep track of stray inventory.
Did you like this article? There are many more articles like this on entrepreneurship, kids and money and how to open an online business on this website. Read about our journey how we went from earning 0 to 100 thousand dollars in 12 months with our online business. Looking for some laughs? Read about some of our crazy customer stories.
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[...] This post was mentioned on Twitter by True Small Business, Colin Wright. Colin Wright said: Reading: Mailbag: Taxes, FEINS, Inventory Management and Some Personal News http://bit.ly/73u3Ab [...]
Having a baby is a beautifully terrifying experience. I wish you all the best.
You don’t need a separate tax ID. That’s only for LLC or Inc.
@Joe
Hi Joe. You are correct. You don’t need a separate tax id. That is why I specifically used the word “recommend” . It’s generally a good idea to keep your SSN a secret. Most if not all legit affiliates will ask you for either your SSN or FEIN. It’s much safer from an identity theft perspective to give them your FEIN
Hi Joe – I enjoyed your post. Inventory management can be an intimidating and time consuming task – unless one uses the right tools. It is essential for online businesses – I have seen clients have over $100k in inventory in their basement. It is essential to get a get firm grasp to survive. The bottom 30% of businesses have nine times more than their top 20% peers. This is huge risk and disadvantage. Having the right amount of inventory is a big headache. Our flagship software, Phitch, makes it easy for small businesses to optimize inventory. We think of it as being on autopilot. No mind numbing theories or formulas – just easy to understand color coded alerts.