 | Richard Ciemny is Vice-President, Director & Branch Manager of The First National Bank of Anthony, Wichita Branch. Richard has been in the banking profession for many years in the Wichita area. He has been an active member of the Kansas Bankers Association and the Community Bankers Association of Kansas. The First National Bank of Anthony, Wichita Branch, is located at 10111 W. 21st St. North. You may contact Richard at (316) 721-9000. |
Banking & Finance
2005-01-01 09:20:00
How to start a business (series)
: Is there a checklist where one can find the things that need to be done prior to and during the opening of a business?
ANSWER: As a matter of fact, there are several. Over the next several issues, I will try and provide you with a list of items that need to be attended to. Many of these things can also be found elsewhere, in places like the IRS’s website at http://www.irs.gov/The first thing you have to consider is whether it actually is going to be a business, or a hobby. It is generally accepted that people prefer to make a living doing something they like. A hobby is an activity for which you do not expect to make a profit. If you do not carry on your business or investment activity to make a profit, there is a limit on the deductions you can take. You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. You cannot use a loss from the activity to offset other income. Activities you do as a hobby, or mainly for sport or recreation, come under this limit. So does an investment activity intended only to produce tax losses for the investors. The limit on not-for-profit losses applies to individuals, partnerships, estates trusts, and S corporations. We will talk more about these structures next month in this same series. In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:• You carry on the activity in a business-like manner, • The time and effort you put into the activ ity indicate you intend to make it profitable, • You depend on income from the activity for your livelihood, • Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business), • You change your methods of operation in an attempt to improve profitability, • You, or your advisors, have the knowledge needed to carry on the activity as a successful business, • You were successful in making a profit in similar activities in the past, • The activity makes a profit in some years and the amount of profit it makes, • And, whether you can expect to make a future profit from the appreciation of the assets used in the activity.Next issue, we will talk about business structures, and selecting the right one for your business before you begin.
