What is required as far as taxes go in the state of Illinois to move from magic being a wonderful hobby to magic being a lucrative business? Do I have to register myself as a business? what tax forms should I get and how should I keep track of income?

Thanks in advance,
Sammy the Kid

That's a pretty involved question Sammy. It took me three volumes and 640 pages to answer it in my course, but let me see if I can give you a shorter answer.

I don't know the specifics of Illinois regulations affecting businesses, but you can find them on your state tax department website. Regardless, you will first have to decide the form of your business. Will you operate as a Sole Proprietor," "a corporation (C or Subchapter S) or some other form (LLC). Get a basic home based business book from your local bookstore or library for more information.

You will most likely start out as a sole proprietor. In that form, your income is reported (on the federal level) on Schedule C. That income is offset by your expenses, also reported on Schedule C. A good place to start learning about what qualifies as a business deduction is Sandy Botkin's book "Lower Your Taxes - Big Time."

If you do business in your own name, you normally do not have to register (althought Illinois may have other specific requirements). If you do business under another name, "Magical Creations," for example, and have checks made out to that business, you will need to register a DBA (Doing Business As) with your county clerk (and possibly in every county you do business in). You will also need a DBA to establish a bank account and start depositing checks into that account.

Whether you do business in another name or our own, it is a good idea to open a separate bank account for depositing income and paying expenses. Get a good accounting program to track your income and expense. I use Quickbooks, that is designed for businesses (I operate as a Subchapter S Corp. The personal financial program, Quicken, will be just fine if you operate as a Sole Proprietor.

The most important thing is to operate like a business and take steps to show the IRS that you are a legitmate business and not a hobby. Any basic home based business book will take you through the steps. It is not necessary to show a profit initially, but you do have to meet a few other requirements. The IRS looks carefully at hobbies turned into businesses that lose money and are used to offset income from other sources.

If you visit the IRS website, you can download lots of publications that are devoted to the topic of running your own business, but then you have to wade through a lot of information that is confusing. Go to the library and get books on starting your own business, particularly any book for consultants, independent business owners or small business owners. You will find that information invaluable.

Good luck.

Jim

That's a short answer to get you started. I could have made it even shorter by saying, "Go talk to an accountant that handles small businesses." You may want to do that also.

Jim the accountant is a great idea.

It only took you 640 pages? THAT seems to be to be the short answer!

Sammy good luck.

640 pages?

wow that's longer than a Dave Dee sales letter Oh that's the other thread.

if it takes 640 pages to explain it I would suggest moving states

I've been doing business both as myself and using a DBA. In 20 years, living in Wisconsin, Iowa, and Illinois, I've NEVER had to register with any government office. I've had bank accounts using my DBA, and have never heard such a requirement from my tax accountant(s). Where did you find such a requirement?

In some states doing business as a DBA requires an ad in the newspaper (FL), some states require a local license (MA) and others??? If you go to http://www.businessnameusa.com/dba/state/illinois.htm you can see you are required by business codes. (Note that this is a fee site, usually filing for a DBA is pretty easy).

I’d say 640 pages for Jim’s course is pretty short (of course it’s a bargain, especially when you see all you get!) I haven’t gotten through the entire 2 volumes yet, but it’s well worth the money.

Dave

Wow it's very easy in Australia

you need an ABN number (australian business nuber) and you register for GST and if you make under $50000 a year you don't have to register gor GST

That's why Australia is still the land of opportunity.

Australia is so simple that's why I make my living there

I have been doing performing in Illinois full time for the last 15 years and have never regestered with the state for anything. My yellow pages ad was all I needed for my bank to open a seperate business account for me under my business name. I use that account to pay my business bills and it makes it easy to keep track of expenses. I am considered by the state as self employed and a sole propriator of my business. I file a personal tax return to both the state and government but nothing seperate for the business. The business income is my income and the business expenses are my expenses.