I've tried doing some online researching and can't find a whole lot about the topic so if you guys know of any please let me know!
Hubby and I have just started reading some Rich Dad Poor Dad books and have both been intrigued by the business idea.
From what I understand, just about anyone can get a business license. Are there any requirements to getting one that I need to know about? The primary purpose for obtaining one would be for tax write offs. I'm not a financial expert by any means, never took any business classes so I don't know much about any of it. I wouldn't really be trying to set up an actual business (though if my blog takes off, that's great!) but if I counted my blog as my business, could I count my mortgage, electric, computer supplies, things like that? Could I purchase property in the name of my business? How does all of this work?
Thanks!
Of course you can't "write off" your mortgage and household expenses to a non-existent business that is (do I understand this correctly?) a blog that makes no money. Did that
Rich Dad Poor Dad book lead you to that conclusion? It's a crappy book and yes, I've read it.
In a general answer to your question: if you operate a business out of your home, the I.R.S. expects you to:
- prove a profit over a period of several years (I don't know that period, but am guessing it's something like 3 out of 5 years)
- use the portion of your house for which you are claiming expenses solely for the operation of your business
- operat your business primarily from your home
The I.R.S. has strict rules in defining what home expenses may be used for a business.
It really must be a money making operation, not the hobby you are talking about.My DH has operated his business from our house for a dozen years, and we don't claim any household expense because it's too complicated, not worth it. We would have to designate one room in our house for his office and use that only for his business. And then, we'd only be able to assign household costs of that one room to a potential tax write-off. It's not worth the hassle and certainly not worth the potential investigation by I.R.S.
Don't be greedy. The author of
Rich Dad Poor Dad seems to inflame greed in a lot of his readers. There is no free ride.
And a "business license" has nothing to do the I.R.S. Nothing. The purpose of you getting a "business license" with your municipality or county is to pay a fee to them so that they can recognize, and regulate, the municipal resources that you use commercially.
Read up on operating a sole proprietorship here:
http://www.sba.gov/content/sole-proprietorship-0