Business Owners and Lawful Money Tax Returns

[David Merrill]

I need some input here from any suitors that run their own businesses.

Hopefully you will sacrifice a little bit of your time and charitably contribute
to this thread.

I've been redeeming lawful money for over 2 years, and have copies (front and back)
of all checks that I've done this to.

I'm a sole proprietor, and have a business license from my state.

I do not have a "business" bank account. I just run two personal checking
accounts and a saving account, using one of the checking accounts for the
business, and the savings for the local sales tax I have to pay quarterly here
to the local borough.

Customers give me personal checks, or pay online with PayPal.

With Paypal, there was no way to do anything with a restricted endorsement
so I just withdraw from Paypal via check and apply the endorsement to that.

Running my business costs a reasonable amount of money (expenses), which are
to be deducted from the total (gross) amount.

The problem I'm having is if I only declare the amount of money that I wasn't
able to apply my demand to, I come out way negative (loss) after expenses.

This would be things like having to do an electronic transfer to my bank,
or making purchases direct from my PayPal debit card. This is a much smaller
amount than the lawful money amount.

The goal is obviously to be completely honest in all of my dealings, so on my return
I declare all of my expenses, which is what runs me into the red.

Maybe I'm missing something very simple here, but I need to figure out how to
do this accounting under this system.

If I only report expenses that I paid with Fed notes, then it will appear deceiving,
as my business would have obviously had more expenses than that.

So my question is how are you guys writing this up?

Thanks.

I tried to follow all that and well...

The question is how much withholdings are you paying? Your accounting should not be any different than normal. You have been redeeming lawful money so you have no taxable income - that is Zero. Therefore there is an amount of withholdings you have been paying in for state and federal income tax. That amount will automatically subtract from Zero and be your Refund.

Possibly you are not paying any Withholdings. Then you don't have to File because you have no taxable income. However it is turning up wise to file, include evidence you Demanded lawful money. This keeps the IRS agent from assessing you on the hearsay of others, like your clients/employers/bosses.


Regards,

David Merrill.

[Axe]

The question is how much withholdings are you paying?

There are no withholdings, I have to pay at the end of the year or quarterly.

Possibly you are not paying any Withholdings. Then you don't have to File because you have no taxable income. However it is turning up wise to file, include evidence you Demanded lawful money. This keeps the IRS agent from assessing you on the hearsay of others, like your clients/employers/bosses.

Yes, that's what I'm asking. I have "mostly" redeemed lawful money, but not all the time. I have been caught here and there where I had to do an electronic transfer and was unable to get the demand. I do not have the demand on my sig card at the credit union where I handle my affairs. I put the demand on the checks as they come in. Yes, I need to get that changed but it's not changed for 2010.

So I have some FRN liability.

So your saying that if you ONLY use lawful money then you shouldn't even file?

And if you do file, as a business, you have to list expenses in order to determine net profit.

If you list expenses with no taxable income, then you have a loss, and they want to send you
a check, at least at first. Do it for more than a couple years and they'll audit you.

If you are a business that is a corp or an LLC, then you have to get an EIN (employee id number)
from the IRS so they can send you your quarterly declaration forms.

So what, you have an LLC, you don't make any money but have expenses?

Or tell them you're not in business, and lie?

I just want to get my head around this. I appreciate everyone coming in on this to give me
a hand figuring this out. You're really making it all sound very simple, but the reality is different
when you're filling out the return line by line.

I would really like to know if anyone here is actually running a business, and filing in this manner.

[stoneFree]

Axe, my situation is probably similar to yours. I'm not an employee, but independent, making money trading/laboring. I don't (nor does my trust) have an EIN or a business license. I redeem checks/payments in lawful money and do not consider it "income" under the Revenue Acts. Most of the entities doing the paying do not file Form 1099 against the SSN (issued for me and/or my trust), therefore there is no IRS presumption that these payments are, in fact, income. I don't pay in and nothing is withheld. Therefore I do not file 1040s as there is no need or requirement.

I suspect you may have a virtual storefront which the banksters are hopeful to tap into with legislation like this authorizing a new 1099-K for Merchant Card and Third-Party Payments (PayPal):
http://www.auctionbytes.com/cab/abu/...03/abu0258/s03
I'm not sure if this even became law but, I think if examined closely, you'd discover it would not apply to those outside the Federal Reserve system.