I have a website, TeensandTaxes.com , to help teenage business owners understand if and when they owe any taxes on their business income.

Taxes can be confusing, so grab a copy of my ebook, Teens and Taxes: A Guide for Parents and Teenagers.  It will clear the confusion for you.

A 42 page ebook with chapters on

• employees
• independent contractors
• household employees
• kiddie tax on investment income
• business income

Read more about the ebook here

Read a sample chapter here

View the Table of Contents here

Available for immediate download for $4.99, or bundle with an audio for $7.99.

Read more HERE

Carol Topp, CPA

snare drum © by Vladimir Morozov

After looking for work for months and coming up dry, 18-year-old Eric Cieslewicz realized he already had the potential to work, using his passion for percussion. Eric decided to create his own micro business by offering his skills as a drummer for hire to young, aspiring drummers. He designed his own website, printed business cards, and began to talk about his services. After a short time, Eric now has 8 regular students and earns more than $400 a month from drumming lessons alone. Coupled with performing, Eric earns a tidy profit from his micro business. Eric took something he loves and used that to create a business.

Play an instrument? Turn that talent into a successful micro business! See my book, Starting a Micro Business, for easy steps to get started.

Courtesty of USA Today

Carol Topp, CPA

I want to start my own small business selling crafts. What (US) tax forms do I need to file?

Congratulations on living the American dream of being your own boss! Since you mentioned you are the only owner, your business will be a sole proprietorship. In the US, the owner of a sole proprietorship is considered self-employed and you will pay two types of taxes: income tax and self-employment tax. Self-employment tax is the same as Social Security and Medicare tax for self-employed people.

You will report all your income and expenses on an IRS form called Schedule C Profit or Loss from Business, which is part of the Form 1040. You should file your own tax return, separate from your parents. They can still claim you as a dependent on their tax return even though you file a separate return.

You will also fill out Schedule SE to calculate the self-employment taxes owned. The self-employment tax is 15.3% of your net income (profit). Many teens that own small businesses find that they may not owe federal income tax, but do owe self-employment tax. The threshold to start paying self- employment tax is $400 of net income (profit). So if you made over $400 in profit from a micro business, you need to fill out a Schedule SE and pay self-employment tax.

Keep good records of everything you earn and everything you spend in your business. This can help reduce your taxes. It is a good idea to talk to an accountant when you start your business. He or she will also be able to help you with issues like sales tax. 

My book, Money and Taxes in a Micro Business, covers taxes for business owners.

Price $9.95

Read  the Money and Taxes Table of Contents

View Money and Taxes Sample Pages

If you still have questions, I would be happy to answer them! Drop me a line at my contact page and we can get started.

Carol Topp, CPA

Cable Confusion © by e-magic

Do you have an idea for a business, but not sure how to get started? 18-year-old David Newick of West Sussex, England, faced the same problem. Growing up, David loved to tinker with gadgets and computers. As a teen, he found a job at a local electronics store. From this, David dreamed up the idea for a tech support business. To make his dream a reality, David entered the Young Start Up talent competition, a local entrepreneurial competition in which finalists win prizes of products and money to help start a business. The competition motivated David to start his own micro business, Connect-A-Gadget. His business operates strictly online and provides home entertainment, IT, and tech support solutions. David plans to expand his micro business to reach even more customers. His advice? “I would encourage anyone to enter the Young Start Up talent competition.” Who knows? It just might be the inspiration to begin your own micro business!

Ready to go? Check out my book, Starting a Micro Business. 

Courtesy of West Sussex County Times

Carol Topp, CPA

Start with a simple spreadsheet

Microsoft Excel or the free Open Office Calculate programs work well for keeping records for  thousands of micro businesses. Business expenses can be categorized in columns to make tax preparation easier. Totaling income by month, by customer, or by product is quickly accomplished. You can get a little more sophisticated and use multiple worksheets for each month that flow into an annual summary sheet. The spreadsheet is a powerful tool because of its simplicity and flexibility.

Personal Money Management Software

Some micro owners find that personal money management software like Quicken can work well for record keeping. Although these programs were not designed for business use, these may already be familiar software from your personal life. They are very intuitive because they look just like a checkbook register and they will generate simple reports showing income and expenses.

But personal finance software cannot create invoices or bill customers, record payroll, record sales tax, or track inventory. For those business-like functions you’ll need accounting software.

Small Business Accounting Software

Accounting software such as Quickbooks works better than personal financial software if you send your customers forms such as invoices, receipts, or statements for progress billing, or if you manage inventory. Accounting software can:

• Print checks, pay bills, track sales & expenses

• Reconcile bank accounts
• Create estimates, invoices & reports
• Track employee time and calculate payroll withholding
• Generate reports
• Download credit card & bank transactions
• Track inventory and set reorder points
• Create business plans, budgets & forecasts

Start with the simplest method you can for keeping your micro business records and graduate to more sophisticated systems as needed. A good CPA can help you set up an easy to use system whether on a spreadsheet or using software.

The important thing to do is to keep good records.

Carol Topp, CPA

© by Dominic

Could your online business land you a great job as Vice President of a national marketing company? It did for Alex Houg! The then-15-year-old Plymouth teen began his own online micro business which sold gaming accessories as a way to use his technological skills. To grow his business, Alex began to study marketing strategies and within months became a successful online businessman. Soon after, he started to offer marketing advice to local businesses. This service caught the eye of Blacksmith Marketing, a company specializing in online business advice, 3 years later. 18-year-old Alex was offered a full-time job as Vice President. His small beginnings running a micro business opened the door for a full-time position that Alex plans to keep for the rest of his life!

Inspired by Alex’s story? You can do it too! Learn how in my book, Starting a Micro Business. 

Courtesy of Plymouth Patch

Carol Topp, CPA

clothes © by Thing Three

Not too many 14-year-old teens have their own clothing line. California teen Jaela Evangelista does! Inspired by her graphic design father, Jaela drafted a few graphics that she thought would look great on T-shirts. After designing a variety of garments, like sweatshirts and bracelets, Jaela created her line, jsmirk. Now, she has customers across the nation and even as far as the Philippines. To keep up with demand, Jaela hired her younger siblings to be assistants and models for her clothing line. Jaela plans to eventually pursue a degree in entrepreneurship. But for now, the sophomore continues to add new products to her micro business.

Like this idea? Make it come to life with the help of my book, Starting a Micro Business!

Courtesy of Times Herald

Carol Topp, CPA

© by RambergMediaImages

The greatest entrepreneurs see a need and fill a need. This is just what then 17-year-old Marshall Haas did! Fascinated by architectural design, Marshall was hired part-time to work for an architect. While working, he noticed that many architectural firms didn’t offer images or renderings to their clients. Gathering a team of designers, Marshall launched his own company, AllRendered LLC, to design architectural images, like floor plans or buildings. Right off the bat, he had eight clients a month! Now, at age 20, he continues to run his business, while taking design classes at a local college. By providing a rare service, Marshall took a hobby and created a micro business!

Courtesy of 50 Interviews: Young Entrepreneurs by Nick Tart

My book, Starting a Micro Business, will give you everything you need to run a business just like Marshall!

Carol Topp, CPA

According to Wall Street Journal writer KYLE WESTAWAY, social entrepreneurs are creating companies that seek profit but also are devoted to a social purpose to create long term, sustainable value.

Social entrepreneurs believe a business can be a part of the solution to some of the world’s greatest challenges. It’s this kind of thinking that has given rise to such mission-driven companies as Better World Books, TOMS Shoes, D-Light Design and Warby Parker, to name a few.

But, until recently, social entrepreneurs would find themselves in the position of choosing whether to organize either as a for-profit company or a nonprofit organization. The problem was that sometimes a company would be too much of a business to be a nonprofit. Yet, it also might be too mission-driven to be a for-profit.

Fortunately, there are a few innovative legal structures designed for entrepreneurs who are driven as much by mission as money. The cost of using one of these new legal structures will vary depending on lawyer fees, but generally those fees shouldn’t exceed more than $10,000 for a start-up with fewer than 10 employees.

$10,000 in legal fees and 10 employees! Whoa! The author is not talking about micro businesses for teenagers (which have only one worker-the owner-and rarely need start up money), but what he has to say might still be worthwhile if you want to be a social entrepreneur someday. If so, read on…

L3C – Low Profit Limited Liability Company

Ideal for: Companies that want to blend traditional capital with “philanthropic” capital, such as from foundations

Available to start-ups in: Vermont, Michigan, Wyoming, Utah, Illinois, North Carolina, Louisiana, Maine and soon in Rhode Island.

The Low Profit Limited Liability Company is a new class of LLC for mission-driven companies.

An L3C offers the same liability protection and pass-through taxation as an LLC. But it must be organized primarily for a charitable purpose – and secondarily for profit. Unlike a traditional nonprofit, it may distribute its profits to owners.

The L3C is designed to attract both traditional investment and a very specific type of philanthropic money called Program Related Investments (PRI). PRI is capital – in the form of equity or debt – from a foundation to a for-profit company that is doing work in line with the charitable purpose of the foundation.

BENEFIT CORPORATION

Ideal for: Companies that want to create a measurable positive impact while and providing greater transparency to the public

Available to start-ups in: Maryland, Vermont, Virginia, New Jersey, Hawaii, California and soon New York

The Benefit Corporation is a new class of corporation with a corporate purpose to create public benefit, a broader fiduciary duty and is transparent about its overall social and environmental performance.

By definition, it must operate for the general public benefit – defined as a material positive impact on society and the environment. Every benefit corporation is required to publish an assessment using an independent, third-party assessment tool. To create a material positive benefit, a benefit corporation operates in a manner that not only creates value for the company’s shareholders, but also its community, environment, employees and suppliers.

FLEXIBLE-PURPOSE CORPORATION

Ideal for: Companies seeking to do good on their own terms

Available to start-ups in: California

The Flexible Purpose Corporation a new class of corporation that creates the maximum amount of flexibility for socially/environmentally conscious companies. It is designed for businesses that want to pursue profit along with a special purpose of its own designation.

The structure allows the designation of a special purpose that the company will pursue in addition to profit. For example, a flexible purpose corporation might be a for-profit developer that has a special purpose of building a public park in each of its developments.

This type of corporation must issue an annual report that is available to the public and provides details on the following: the special purpose; the annual objectives that it has set to achieve its special purpose; the metrics used to gauge the success of the special purpose; how it has achieved or fallen short of the stated objectives; and how much money was spent in furtherance of the special purpose. But it does not require any measurement against an independent third-party standard.

It is interesting to see how some states are coming up with new ideas and ways to encourage social entrepreneurship.

The business world is changing all the time.

Maybe you can be part of that change too!

Carol Topp, CPA

Soaps and Shampoos © by takot

17-year-old Jasmine Lawrence’s micro business has been a long time coming. At the age of 11, Jasmine used a hair product that severely damaged her hair. To avoid this in the future, she developed her own secret recipe of natural hair products. Jasmine was confident in the capabilities of her products; she borrowed $2000 from her parents and began a micro business, called Eden BodyWorks. Today, Jasmine’s business is flourishing, with mass sales through her website alone. However, she has now entered retail as well, selling her products in big name stores like Walmart. Her story shows that a bit of ingenuity in fixing a problem can go far!

Have a great idea? Follow Jasmine’s example and start your own micro business! Check out my book, Starting a Micro Business.

Courtesy of BusinessWeek

Carol Topp, CPA