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Matt Adams
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Harvest, AL
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Here is Steve's reply to my questions:

The simple answer is yes, you have to pay state taxes in all those states.

Now for the complex issues.

Every state has a minimum amount of money that must be earned before any taxes are due. In some states that amount is as low as $1. You will need to visit each state's tax website to see if you do indeed need to pay any state tax.

Taxes paid to other states for income you earned there, should be able to be deducted from your home states tax requirement - in other words, you don't have to pay tax on the same income in different states.

My suggestion is to find a good tax person, who understands the complexity of your business, and multiple state income - or, you can do it all yourself with a very good tax program.

As for selling goods in other states, that one is a bit trickier. Most states usually require you have a presence in that state before you have to charge taxes. A presence usually means an office or store. Since you don't have that, it is unlikely that you will have to charge sales tax when away from your home state - nor should you have to pay taxes on goods sold outside your home state at the end of the year.

You will need a great recordkeeping system to keep track of your sales. You mentioned you may have sales in 5 states. I would suggest, as a minimum, a 5 or 6 column accounting pad (available from your local office supply store). Label each column with the name of a sate. As sales occur - you can write the description of the sale, and enter the amount in the appropriate state column. At the end of the year, add up all the columns. Your tax-person will know what to do with the information. You can do the same thing for your income (a separate set of sheets from that pad would be necessary).

If your state requires quarterly estimated tax payments (as does the federal government), this system makes it a lot easier to keep track of income and sales in each state.

Still have questions - feel free to write or call.

+++++++++++++++++++++
Steve Snyder
The Tax Magician
http://www.thetaxmagician.com
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seadog93
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So, as far as using your name. My name is Courtney Kolb and I've been calling my "business" Courtney Kolb Magic Shows. Does that count as using my name?
"Love is the magician who pulls man out of his own hat" - Ben Hecht

"Love says 'I am everything.' Wisdom says 'I am nothing'. Between the two, my life flows." -Nisargadatta Maharaj

Seadog=C-Dawg=C.ou.rtn.ey Kol.b
Skip Way
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From entrepreneurs.about.com :

A fictitious business name, assumed name, or DBA (short for "doing business as"), referred to as "trading as" in the UK, allows you to legally do business as a particular name at minimal cost, and without having to create an entirely new business entity. It allows you as a sole proprietor to use a business name rather than your personal name.

In some places you can use either your full name or part of your name plus a description of your product or service without filing an assumed name, e.g., Elena Garza Interior Design or J. Washington Investigataions. The exact rules vary from country to country and from state to state within the U.S., so check with your local business regulatory authority regarding your area. But if there's any implication that there are more people involved (Shawad & Sons, The Anderson Group, etc.), or if you just use the first name (Joe's Garage, Sam's Boat, etc.), you have to file an assumed name.
How you leave others feeling after an Experience with you becomes your Trademark.

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Bill Hegbli
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There is a difference between service sales company and a merchandise sales company. If you do not sell any merchandise but only your magic shows, then you are a service company and there is no sales taxes to collect or pay. I believe you do not even have to list the company with the state on a small scale. If you are making hundreds of thousands of dollars, this may have some influence on taxes and such and it is best to seek advice from an attorney and an accountant.

So if you made $5000 from shows one year, it is best to file as a hobby and be able to take all the deductions that come under income from a hobby.
Vietnam Veteran 1967, Sgt. E-5

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Bill Palmer
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Even this law varies from state to state. About 15 years ago, Texas, which has NO income tax, decided to start taxing certain aspects of the shows entertainers put on. For example, if you are a caricature artist, you have to pay sales tax on the caricatures you draw during your stint. There is a complex formula the state uses for this. This is different from a normal sales tax computation, because normal sales taxes are based upon items sold, so there is a concrete value for each of the items. With a caricature artist, they have to figure out the tax based upon how much they get paid to draw caricatures. This is even after the caricaturists lobbied to be classified as entertainers, because of the conversations they have with the people they are drawing.

When this first started, I called the State Sales Tax people and asked them about service taxes on entertainers. I had been under the impression that a magic show was "entertainment" and therefore not subject to sales tax. My argument was that charging a sales tax on a magic show was a selective income tax. The tax agent explained to me that there are many occupations in which labor is a taxable item -- auto mechanics, repairmen of various sorts, and they had made the same argument. The tax people were just waiting until they had a need to tax us.

My main advice would be to find a tax man locally, Mr. Snyder's expert and much appreciated advice notwithstanding, because your local situation will be different from that of other people.

My tax man is also an entertainer. He worked his way through college as a juggler, magician and piano player. He is also an attorney. This puts him into a unique position regarding handling the needs of entertainers. He isn't cheap, but he knows his stuff, and more importantly, he has already saved me a lot more money than I paid him to do my taxes.

The ONLY person you should pay any attention to who has answered the original post is Steve. He is a professional. Paying attention to "folk tax wisdom" can cost you a lot of money.
"The Swatter"

Founder of CODBAMMC

My Chickasaw name is "Throws Money at Cups."

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Matt Adams
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I wish this stuff were easier to understand. It'd certainly make it more attractive to be honest. Haha. But the great preacher, Charles Haddon Spurgeon, gave this challenge:

Lose all rather than lose your integrity, and when all else is gone, still hold fast a clear conscience as the rarest jewel which can adorn the bosom of a mortal.
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TomBoleware
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Matt, I've been a business owner, and I've been doing business taxes for many, many years.
You need to learn the basic tax stuff yourself even if you do have the best tax man in the world.

An important business saying, "Trust but Verify." Learn enough on your own to at least question the experts.

Tom
Do What Others Do And You Will Become Average

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Matt Adams
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I agree with that Tom. I've been learning all I can and trying not to be overwhelmed. It's not correct, but I figure "I'm doing what I can" - doesn't give me license to do things illegally, but I'm trying to be legit in all my business dealings. Whew...not so easy when there's so many ways to do it incorrectly!
Website: www.MattAdamsMinistries.com

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