Starting a Business

Check with the VIDOL&CA...you can find the number in the Gov't section of the phone book (www.viphonebook.com) 340-773-2226

Hi Bombi,

Good luck with the business venture...

I was in between major jobs about 3 years ago and did some consulting, so I was faced with some of the same questions. My situation was different because I figured that I wouldn't be consulting for more than a year or two (then I'd join another company that I was interested in). But, here is what I learned:

- I never found info, on the web, to answer questions like yours ("tax issues for self employed", "how to file taxes if self employed", "tax deductions for self employed", etc)

- I did stumble on "solo 401k". This is a tax deferred retirement system for self employed folks. I think they are typically pooled investment systems (other self employed folks form the pool).

- you can of course deduct cost of a home office (if that is all that room of the house is used for... for the most part). In my case, I found this to be useless, because I was bumping into Alternative Minimum Taxes (my wife also works, and makes more than I do!).

- I don't know about the liability issue. I now work for a small company (40 people) and have known the president for 10 years. I've had a few discussions with him along these lines to try to understand the basics. I believe that he does achieve some protection from law suits by being "incorporated", but I haven't dug into the details. I would think that many strings would be attached to becoming incorporated.

- I never felt that I understood all of the issues well, and never hired a financial consultant (I'm leery of opening my books to someone I don't know, and don't feel that the 18 yo kid at the bank knows anymore than I do... sadly, he probably does!). I cringed when I filed taxes (it spanned over the calendar year, so I had to deal with it twice); but haven't been audited yet.

- I deducted the cost of a new computer and printer, and some other office furniture as business expenses.

I'm sure that you're already thinking about how to keep track of things that might affect taxes (costs, dates, events, etc)... you can't start this too early, even if you haven't decided on the final format for your business.

Bombi,
Google American Society of Home Inspectors (ASHI). Retain a good Lawyer, and carry a good errors and omissions policy. Your Tax liability is secondary to your liability for non disclosure or missed disclosure on a real estate inspection for a fee. Good Luck.

Thanksfor the info. I'm a member of NACHI and I have liability insurance and am in the process of licenseing.

I guess my questionis < Is the tax rate higher on self employed or corporations? I realize that a corp helps to limit liability. I just hate taxes and want to pay as little as possible .

Hi Bombi,
Keep us posted once it's official. Good to know a home inspector to contact when needed.

Bombi,

I can only go by my own experience from being self employed for 23 years but not on-island. I pursued the Corporation idea when I started but found that it was costly (for me) and that there were no advantages liability wise. I went with DBA/Sole Proprietor and never found that I was paying any extra taxes. I did my own books and gave my end of year P&L to a CPA to prepare my taxes. I also had the CPA double check 1/4ly my payroll taxes and 1040-ES payments which prevented any excess liabilties and/or penalties. In all of those years I never suffered and audit. By the way, a home office is a big red-flag with the IRS. What I didn't know was that in my state you had to pay a "franchise" tax each year when you were a Corporation which has gone up 1,000% (yes, one thousand percent) in the past few years. Friends who had taken that route have been screaming about the increases to no avail.

I wish you well with your new business. In my opinion you had best visit with a Lawyer who knows the VI laws to find what is best for you. Even if you go the DBA route, documentation and registration are necessary.

There are a couple of lawyers in downtown c'sted that do help people thru the hassle/nightmare of starting up a business in the vi. It would be the way I would go. I can't remember their names but hopefully someone else will. If you need a good cpa, I highly recommend Jim Sheets. His office could probablly refer you to one of those lawyers as well.