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magicman
04-22-2009, 02:08 PM
Hello,

I am a magician and started out as a hobbyist. Performing started out when I was asked to do a couple of birthday parties.

I now want to start out part time/full time doing shows.

What do I need to start out?

I perform under a stage name, which is my first name, and my middle name. Do I need a DBA for that? I was told with a DBA you need to get a business bank account, is that true? If I get a dba, what name would go on it, just my stage name?

Is there a business license that I need to be an entertainer, or just a DBA?

Also, how would I pay taxes? I understand that I would self employed. Do I pay annually, or quarterly, how does that work?

What else do I need to do?

Thanks in advance.

rezzy
04-22-2009, 02:28 PM
Welcome first, welcome magicman! You are in the right place to get all your questions answers.

OK, so as far as the name your business operates under is up to you. If you want your business to be your name, then you can use that. If you would rather use another business name you can use that.

magicman
04-22-2009, 02:36 PM
If I use my stage name on the DBA, which is my first name and middle name, can I advertise as "First Middle Magic" or can I only advertise as "First Middle"?

rezzy
04-22-2009, 02:44 PM
For me, and the others will step in when they see it, you should advertise what your DBA is. You want to keep your business focused on one name. Not Super Duper Magic Guys in print and Magic Guys elsewhere. It could create a dis-countiunty between the two.

magicman
04-22-2009, 02:52 PM
If I put "First Middle Magic" on the DBA, and advertise as that, can still I perform as simply "First Middle"?

vangogh
04-22-2009, 03:38 PM
First welcome to the forum magicman. Thanks for joining the community.

When I started my business all I did was register the name with my state. I think it cost $8 and I renewed it about a year ago for $1. The name is your trade name. You can use anything you want as long as someone else isn't using it already in your state or has the name registered federally. Odds are your name will be fine.

You could still perform under any other name you want. The registered name is going to be more in how you interact with the IRS. However you couldn't perform under a name if someone else has registered it. Technically you could unless they choose to stop you, but most likely they will.

Ideally you'll register the name you want to perform under, though you could register as many names as you like. It's quick and easy and doesn't cost much. Search for the state department website for your state. I think that's where all the information for registering will be.

It's up to you whether or not to get a business bank account, but I'd recommend you get one if only to keep your business and personal accounting separate. You can go to whatever bank you use for your personal accounts and open a business account. Again it's simple. Maybe it'll take an hour. It's really no different than opening another personal account.

Paying taxes depends on what kind of business entity you decide to be. The easiest is a sole proprietor. Basically you'd still be filing taxes as an individual, but you'll fill out an additional form to show where your income came from. I fill out a 1040 and then the business income is from the 1040 schedule C. There are other forms you'll likely fill out as well. You'd still be filing as an individual, it's just the forms will be different and there will be a few more of them.

One of those forms is for estimated taxes. You pay 4 times a year. April 15, June 15th, September 15th, and December 15th. There are exceptions and there's a form telling you what you have to pay and how to estimate what you'll likely want to pay.

As far as a license that's dependent on industry. I don't know if a performer needs a license. My guess is the state department website will have that info. That's a good place to start your research. Another good source is the SBA (http://www.sba.gov/). They were a good source of info for me when I was starting.

I'll add that while a lot of this stuff seems confusing right now, it really does get easier. Takes a little while to figure some of it out, but I promise it's not as confusing as it seems.

Hope that helped.

magicman
04-22-2009, 04:06 PM
How does estimated taxes work? When do those forms get filled out, they are due on the 15th, or get sent in on the 15th? I just put what I made that quarter? When does the quarter end, on the 15?

Can you give an example of one tax year?

magicman
04-22-2009, 04:11 PM
I checked and could not find a license for performers or entertainers.

Spider
04-22-2009, 04:35 PM
I don't know if this is standard throughout the country but Houston has, what they call, Houston One Stop - it's a city government department that answers or redirects you to where your questions will be answered. Look in your local telephone directory blue pages and look for [your city] One Stop. It might be under Trade or Commerce.

In any case, it seems to me your questions can best be answered by a government office. Another good source for information of this nature is the Librarian at your local library. Librarians are a fantastic (and under-used) source of information.

vangogh
04-22-2009, 04:59 PM
Here's the form for estimated taxes. It's the 1040es (PDF) (http://www.irs.gov/pub/irs-pdf/f1040es.pdf).

Basically you estimate what you think you'll earn in the coming year and based on that you figure how much taxes you'll likely pay. You don't have to pay based on what you think you'll earn. I think you just have to pay as much (or a little more) as your taxes (or your estimated taxes) were the previous year. Better to pay based on what you think you'll earn though.

You fill out the form once, but you don't send it in. At the bottom there are smaller forms (basic info) with how much you're paying. You send in the short form at the end each quarter. There are 4 of them at the bottom of the form.

Figuring out the estimated part is pretty simple. We're not talking complicated here. It gets more complicated if you're itemizing deductions, but in the beginning it'll probably be some quick math.

cbscreative
04-22-2009, 05:17 PM
Let me also say, welcome aboard.

As long as the business name you want is available to be registered, then you will use that as your dba. For example, your company name would be First Initial Magic, and you would have that on all your materials (business cards, flyers, web site, company checks, minivan, etc.). When you are "on stage" you can still just introduce yourself as First Initial because I don't see a need to include the "Magic" when it should be clear that is what you are doing while you perform.

As you continue putting this together, take advantage of all the experience here. Your tax questions can be answered under Acct & Taxes, and we have many other categories as you probably saw already. It does seem a bit much at first, but it gets clearer as you keep doing your homework. Now that you found us, you'll discover that we can help in many ways.

Be sure to use the search feature as existing threads on this forum will probably answer a lot of your questions too.

magicman
04-22-2009, 05:56 PM
Here's the form for estimated taxes. It's the 1040es (PDF) (http://www.irs.gov/pub/irs-pdf/f1040es.pdf).

Basically you estimate what you think you'll earn in the coming year and based on that you figure how much taxes you'll likely pay. You don't have to pay based on what you think you'll earn. I think you just have to pay as much (or a little more) as your taxes (or your estimated taxes) were the previous year. Better to pay based on what you think you'll earn though.

You fill out the form once, but you don't send it in. At the bottom there are smaller forms (basic info) with how much you're paying. You send in the short form at the end each quarter. There are 4 of them at the bottom of the form.

Figuring out the estimated part is pretty simple. We're not talking complicated here. It gets more complicated if you're itemizing deductions, but in the beginning it'll probably be some quick math.

So I estimate what I will make for the year 4 times a year, or I estimate what I will make each quarter? Do I estimate the year and pay off the estimated tax over time and get a refund for anything over what I really made?

I am extremely confused. What are the forms that I fill out? Is there one for self employment tax? I understand that there is one for self employment.

I don't want to be a burden, but is it possible to break down a tax year, when each form is done and mailed out?

I really appreciate the help I am getting. Thanks!

vangogh
04-22-2009, 06:35 PM
You estimate once and then pay 1/4 of that each time a payment is due. What you have to pay is based on what you earned last year, but generally you want to pay more assuming your business is growing.

Say early on you think you'll earn $25,000 for the year and then mid way through you realize you're on pace to make $50,000. You won't have to increase your payments, but you'll probably want to. The idea is you don't want to be left owing a lot of money come April and the IRS insists you pay something.

Don't worry about all the questions. It can be confusing. What forms you fill out depends a little on your situation, but here's a list of what I typically fill out. Also to get the forms go to irs.gov and search their forms.

1040 - basic form. I found the others when coming to a question here that needed another form
1040sc - schedule C - profit or loss from business
1040se - the self employment tax - simple math based on your income from schedule C. Roughly 15% of your income
1040es - to estimate your taxes for next year

Everything else is really dependent on your situation. I usually fill out form 4562 which is for depreciation. When I buy a new computer or something like that. I fill out an 8829 which is for business use of my home. Since I work out of my home I can deduct a % of some home expenses.

Most of the forms will come down to you personally. For example I had never received the rebate everyone was supposed to get last year. This year there was a recovery rebate form to collect on that. Last year I happened to buy a home for the first time and was able to take advantage of a first time home buyer credit.

Basically you'll start with a 1040 (most likely) and that form will tell you what other forms you need to fill out. The ones 4 I listed above are the likely once you'll need to fill out and the rest depends on your situation.

Alternatively you could use something like Turbo Tax which will ask you a bunch of questions and fill out everything for you.

magicman
04-22-2009, 06:47 PM
The 1040es is mandatory, or is it an option so that you don't pay everything in one large amount? What happens if you pay more than you really make?

I always thought that income (1040) is annually.

Patrysha
04-22-2009, 08:49 PM
You really are stressing too much about the details. Concentrate on monetizing your business and hire an accountant to advise you on the tax stuff. For most of us, taxes are not the area of our expertise and is typically at least second hand. (Though there is a tax specialist amongst us if I'm not mistaken...I occasionally get personalities between forums mixed up...)

When you make money you can hire someone else to worry about those sorts of details while you concentrate on making your magic ;-)

It's a lot more fun that way!

magicman
04-22-2009, 08:57 PM
Not stressing, just confused. I want to understand everything before the time to do everything comes around.

vangogh
04-23-2009, 12:39 AM
I understand the confusion. To be honest most of it I figured out my first year when filling out taxes. It took me awhile that first year and takes a little less time each year since.

If you were working for someone taxes would be taken out of your check. The IRS wants it's money. Since your self employed there's no check to take money from. Also you won't know how much money you'll really make till the year is over.

The IRS says you have to pay estimated taxes 4 times during the year. However since it's estimated the amount you send is up to you within limits. If you look at the form you start by estimating how much money you think you'll make for the year. Following down the form there's a few exemptions which will reduce your estimated amount and you'll come up with a number for what you're expected to pay in taxes based on your estimate.

Then there's a box to show the tax you paid last year. You're required to pay the smaller of the two numbers over the course of the year. Say in the end you expect to owe $4000 in taxes next year. You'd send 4 $1,000 checks at the required times.

Since this would be your first year you have nothing to compare for last year. So everything will be based on your estimate, which can really be any number you want. I think there's a minimum amount you're required to pay the first year, but I'm not seeing it. I want to say it's the $835 you'd be taxed if you made up to $8,350, but I'm not sure. Assuming it is you'd have to pay $835/4 or roughly $210 each of the four payments.

However if you expect to make more than $8350 it's probably in your interest to pay more than $210 each time since you're going to owe it anyway. You don't have to though.

The easiest way to understand all of it is to download the form and read through it. It's one of the few that's not too difficult to understand.

Next year when it's time to fill out your taxes whatever you've paid in during the year will be deducted from whatever you might owe. If you gave more than necessary then you can get a refund, but usually you'll apply any refund to your estimated taxes for next year.

Dan Furman
04-23-2009, 02:42 AM
I'm pretty sure you don't have to pay estimated taxes the first year, and perhaps never if you don't make enough. I'm not an IRS / tax pro, but I'm pretty sure we never paid estimated for quite awhile.

Here's the simple solution: Keep receipts for *everything*. Keep a milage log. See an accountant at the end of the year. Figure you'll pay 30% of your gross in taxes (you won't pay that much after deductions, but if you plan on that, you'll save enough.)

If you still will worry about the details, see an accountant first - let he or she tell you how to set things up, etc etc.

As far as the name and advertising, as long as you aren't infringing upon anyone, you're fine. You can even name the business "Magic Enterprises" but advertise yourself as "The Great Wazoomba".

magicman
04-23-2009, 10:28 AM
Okay, so I do the estimation 4 times a year, after the first year.

June, September and December, and then in April along with the 1040, 1040se and Schedule C?

The estimation is just the regular income tax, or self employment tax? Or both? Am I taking out the self employment tax and then doing the estimated taxes?

With the 1040, can I use the 1040ez? The 1040 is my income after I take out the self employment taxes from my gross(?) income?

Is that the correct order for doing this?

vangogh
04-23-2009, 11:18 AM
No more 1040ez. You'll most likely fill out the 1040.

When you fill out your taxes next April you make the first payment. Then again in June, September, and my apologies, but I think the last one is January. The estimate is what you're going to owe in taxes overall.

The easiest way to understand this is to look at the forms. See the list I posted above. Download the forms from the IRS site and read through them. It's really not that hard.

Start with the basic 1040. It will point you to every other form you'll need.

magicman
04-23-2009, 01:22 PM
Okay, thanks.

So I make my first tax payment in april 2010. Cool.

Would turbotax be able to help me fill out the forms. If so, would I buy it now, or when the time comes?

vangogh
04-23-2009, 05:02 PM
Turbo Tax can help you fill out all the forms. It'll ask you a series of questions and based on your answers will ask more questions and fill out all the appropriate forms for you. You can wait to purchase it when the times comes.

magicman
04-23-2009, 05:09 PM
It won't help at all with the estimated tax, would it?

vangogh
04-23-2009, 05:22 PM
I don't think the estimated tax is in Turbo Tax, but I really don't know since I don't use it. That form is really easy to fill out though.

cbscreative
04-23-2009, 06:38 PM
This might be a good time to say I very much hope to see us switch to FairTax (http://www.fairtax.org). The IRS, alll the forms, all the 67,000 pages of Internal Revenue code, all the compliance costs, , the embedded taxes in everything we buy, all the business decisions that have to weigh tax implications, it all goes away under FairTax. I for one will dance on the grave of the IRS, and I think most people would, we just have to make it happen.

Just think, every thread we have here on taxes could become nothing more than a source of historical curiosity reminding us of this ridiculous oppression we now endure under a grossly convoluted tax system. You can now return to the discussion about how complicated it is just to get all this crap figured out.

I should mention, we need taxes. I'm not anti gov't and not against the fact that gov't needs to collect taxes, but the system we have should be illegal for the way it treats the taxpayers, and the way it imposes the resposibility on us to figure out something even the IRS itself can't keep straight.

rezzy
04-23-2009, 07:24 PM
I must say Steven, you explained alot of the things I was just going to wait and see about. Thanks.

magicman
04-23-2009, 10:42 PM
One more question, the 1040 is regular income tax, like a non self employed person would pay, right? If so, is that done after I take out the self employment tax?

So is it: gross income into self employment tax, then what is left after taking out the self employment tax goes into the 1040 as net income?

vangogh
04-23-2009, 10:46 PM
You'll have to pay self employment tax as well as individual income tax. There's boxes for each on the 1040.

magicman
04-23-2009, 11:05 PM
Yes, but is one done first, or are the both done on the same amount of money?

As an example: Say I make $1000, self employment tax is 15 percent and, income tax is 10%.

Self employment tax I owe is $150, leaving $850. Is the income tax then based on the $850 making it $85 or the original $1000?

vangogh
04-24-2009, 02:07 AM
You'd pay self employment tax on $1000 and then income tax on $1000. Your tax isn't deducted from your income.

I think you're putting the cart before the horse though, in trying to get this all sorted out now. Get your business going first and start making money. Until you do you don't have to worry about taxes. Trying to know exactly how your taxes will work now is just keeping you from the important thing that is actually starting your business.

Your taxes will work out fine and you have 11 1/2 months to look through the forms and figure it out. Get your business started now and worry about your taxes when it's time to pay them. If you're still not understanding how to fill out the forms say in 10 months you can hire an accountant or buy Turbo Tax.

Dan Furman
04-24-2009, 01:27 PM
I think you're putting the cart before the horse though, in trying to get this all sorted out now. Get your business going first and start making money. Until you do you don't have to worry about taxes. Trying to know exactly how your taxes will work now is just keeping you from the important thing that is actually starting your business.

Amen - taxes are a non-issue without income.

Go book a few parties and make some money, Magicman. Worry about the "business" stuff like names, accounts, taxes after you have booked a few. If things are starting to move, go see an accountant to steer you in the proper direction in setting all this up.

But go make some money first. It's the most important part of being in business.

vangogh
04-24-2009, 01:51 PM
Dan I was thinking of you and some things you write in your book when I said that. You were the voice over my shoulder, prodding my typing. :)

magicman
04-26-2009, 11:01 PM
Your taxes will work out fine and you have 11 1/2 months to look through the forms and figure it out. Get your business started now and worry about your taxes when it's time to pay them. If you're still not understanding how to fill out the forms say in 10 months you can hire an accountant or buy Turbo Tax.

So no estimated taxes until April 2010?

I start off with the 1040, then it will tell me what else I need to fill out?

vangogh
04-27-2009, 01:43 AM
I wasn't meaning you won't owe estimated taxes. I believe that as long as you're in business you have to pay estimated taxes even in your first year. However as there's no record of your business for past years I don't see how the IRS is going to come after you. They won't know whether your business us starting to make revenue now or on December 31st. If you don't pay any estimated taxes this year I doubt they'll care unless you happen to make a lot of money.

It's still in your best interest to pay estimated taxes or else you're going to owe a larger sum all at once next April. Grab the 1040es and go through the worksheet to figure out what you should pay. It'll take you about 5 minutes.

What I meant by 11 1/2 months, was to spend less time worrying about what you're going to have to pay next year and get your business started. At the moment you've made $0 so you'll owe $0 next April. Start making the money first then worry about how the taxes will work. You have a list of the likely forms you'll fill out in this thread. Download copies and look through them. Some things about the forms will be confusing, but most of it is simple enough to understand.

magicman
04-27-2009, 10:02 AM
I don't think I am going to take in more than $8,000 this year. I don't think that is that much, it will be less than that after expenses.

As I said earlier, I have already done some shows. Would that be a problem with anything? If I am going to continue, I want to do it right.

When they say wages, what does that mean? I get paid per show.

Dan Furman
04-27-2009, 09:52 PM
I don't think I am going to take in more than $8,000 this year. I don't think that is that much, it will be less than that after expenses.

As I said earlier, I have already done some shows. Would that be a problem with anything? If I am going to continue, I want to do it right.

When they say wages, what does that mean? I get paid per show.

I don't think you are going to get the definitive answers you are looking for.

You're asking a bunch of entrepreneurs about taxes, and we're all going to give you an opinion (usually what works for us.) But that means you are going to get nine different opinions, etc. Now that's ok if you can read all nine and say "yep, I got it now" by taking what you need from them.

This forum is astoundingly useful, but you really seem to want/need a clearer, more definitive tax answer than we're capable of giving.

Go see an accountant. Best advice I could give you - it'll pay for itself. They will look at what you are doing, and set you up the right way for your particular needs.

magicman
04-28-2009, 10:17 AM
I can use any name for the dba, and still perform under a stage name?

I can register something like "Presto Productions" and perform as The Great Joe Shmoe?

Dan Furman
04-28-2009, 09:14 PM
I can use any name for the dba, and still perform under a stage name?

I can register something like "Presto Productions" and perform as The Great Joe Shmoe?

Yup.

I do business / advertise as "clear writing" or "Dan Furman". But the checks get made out to Night Owl e-Ventures Inc.

magicman
04-29-2009, 10:18 AM
Can I register just my stage name, even though I already use it?

vangogh
04-29-2009, 11:49 AM
You should be able to register your stage name. The only reason I know why you couldn't is if someone else already registered it. Look for the website for the department of state in your state. Somewhere on the site they should have a way to search for trade names to see what's been registered.

Your stage name probably hasn't been registered, but you should check. Then there will be instructions for actually registering the name. Here in Colorado I had to visit their office, fill out a short form, and pay $8. It will The registration process will likely vary depending on where you live.