The IRS has different tax rules for kids, so how do you know if your child is required to file a tax return?

In general, kids who are dependents (claimed on someone else’s tax return) must file a tax return if:

- they have earned income of $5,700 or higher (this is the standard deduction amount for 2009, the amount for 2008 was $5,450)
- they have unearned income (investment income) of $950 in 2009 ($900 in 2008)
- they have gross income (both earned and unearned) in excess of the larger of $950 or their earned income plus $300.

The most common reason kids would need to file a tax return is because they had earned income from a part time job or because they are lucky enough to have investments in their own name, as described in the above rules.  However, the following children may also be required to file a tax return:

- those who have earned income and who received advanced earned income credit payments from his or her employer,
- kids who had wages of $108.28 or more from a church, that is exempt from employer Social Security and Medicare taxes, or
- kids who had net earnings from self employment or their own business of at least $400.

Example:  Sarah is 15 and is claimed as a dependent on her parents’ tax return.  In 2008, her only income was $250 she earned from making jewelry and selling it to her family and friends.  In 2008, she is not required to file a tax return.  However, let’s assume that word about her jewelry spread and in 2009 she doubled her income.  Assuming her net earnings (after expenses) from her jewelry business was $500, she would be required to file a 2009 income tax return.

Filing your child’s tax return:

If your child is required to file only because he or she had investment income, you may be able to report the child’s income on the parent’s tax return, which would eliminate the need to file two tax returns.

If the child is required to file because she has earned income from an employer, or if she has a business of her own, then she will need to file her own tax return.  In addition, children with their own businesses will need to complete Schedule C – Profit or Loss From Business and Schedule SE – Self Employment Tax and attach these to their income tax return.

Kristine A. McKinley, CPA, and CFPÆ, offers financial and tax planning on an hourly, fee-only basis. She specializes in helping home based and online business owners understand and minimize their income taxes so they can keep more of their profits.  Link to tax blog: www.internetbiztaxtips.com

Most kids who start their own business do so because they want to make some extra cash to buy fun things or save for college.  Chances are, the last thing kids are thinking about when they start a business is the taxes they will owe on any profits they earn.

However, as a self-employed person, taxes could be one of your biggest expenses.  Self employed people are subject not only to federal income taxes, but to self-employment taxes as well.  As a result, this can be the biggest expense for a self-employed person, and can be quite a shock if you’re not prepared for it.

What is self-employment tax?  Basically, self-employment tax represents Social Security and Medicare taxes for people who work for themselves. This tax is used to fund benefits you receive when you retire (old age and hospital insurance). It is also used to pay benefits if you become disabled, or to your family in the event of your premature death (disability and survivor insurance).

Self-employment tax is similar to the payroll taxes withheld from the pay of most employees. The biggest difference is that as a business owner, you are required to pay both the employee and the employer’s share of the Social Security and Medicare taxes.  So while employees of a company pay 7.65%, self-employed people pay 15.3% in Social Security and Medicare taxes.

Even worse, this tax is on top of your regular income tax.  So if you are in the 10% tax bracket (we’ll assume no state income tax for this example), your taxes on your profit from your business could be over 25% (15.3% self employment tax plus 10% federal income tax).

When do you pay this tax?  The federal income tax system is a pay-as-you-go tax system. That means you pay taxes as you earn income throughout the year. If you are an employee of a company, you do this through withholding. If you are self-employed, you do this through estimated tax payments.

The general rule is that you must make estimated tax payments if you expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and tax credits.  Estimated tax payments are due on April 15, June 15, September 15 and January 15 of each year (or the next day if the 15th falls on a weekend or holiday).  Failing to make estimated tax payments on time could result in a penalty even if you are due a refund when you file your tax return.

Even if you don’t have to make estimated tax payments, it’s a good idea to set aside 20-30% of your net profits (depending on what tax bracket you fall into) so that you will have enough to pay your taxes when it’s time to file your tax return.

Parents: want to learn how to minimize your family’s taxes?  If you have a small business, or if your child has their own business, you’ll want to learn how to hire your children (insert affiliate link) to help minimize your family’s tax burden. Click here to learn more about how hiring your children in your own business can help minimize your tax bill.

Kristine A. McKinley, CPA, and CFPÆ, offers financial and tax planning on an hourly, fee-only basis. She specializes in helping home based and online business owners understand and minimize their income taxes so they can keep more of their profits.  Link to tax blog: www.internetbiztaxtips.com

“How much is this water slide, anyway?” he asked. Cyclone Twist Pool

“$600,” she replies.

“I didn’t even know they made Water Slides that cost that much so I said
lets go take a look at this thing”. They hopped into the truck and drove to
the store to take a look.

On the way there she started telling him more about the slide.
He asked her why she wanted such a Big Water Slide and she said, “Well, I
was thinking that I could have friends over to play in it and when we’re
not playing with it we could rent it out to other people for Birthday parties
and we could make some money!

He thought that was a darn good ideal so they bought it!

They’ve now had it since last Friday and her and a few friends played in it
over the weekend.

Soon they received a call from one of granddaughter’s friend’s parents wanting to know if they could rent it for two days while they have a family get together.

He called her and asked her if that would be OK and she said “Yes, that’s why we got it”. She also asked which days they wanted it for? I told her this Thursday and Friday.

So for $100 a day for two days! Talk about going green!

Check out WSOGold.com for some special offers.

10 Reasons Why a Teen Should Start a Business Over Taking a Job
By Stuart G Harris

Think seriously before you suggest a teenager should get a job. It could be very poor advice, particularly if you do not volunteer information regarding setting up in business as well. And while greater numbers of teenagers are setting up in business today, it is still worthwhile considering why a business is more feasible than moving into the labor force.

Here are 10 good reasons.

1. You Are in a Safer Place (especially in 2009)
What job would you be secure in today? Its the least secure career path on the planet. I recommend starting a business now. There is business opportunity galore!

2. You can act on your own ideas.
How often is the boss an idiot? Is he really there to run the business or is he filling the space? In most cases a new idea is shelved because its outside the daily routine – true! Its going to upset the system and possibly the paycheck at the end of the week.

As your own boss you can act on every idea, and chances are it will make you money! And today how critical are ideas, and the ability to change direction very quickly. Large business’s have been caught out by long time executive employees unable to make that key strategic change.

3. Avoid eternal psychological conditioning
What is a job really and what do you become in a predisposed conditioned environment? Be your own conditioner and levitate your self to a new and exciting place.

4. Get paid for what you produce
A job worker gets paid per every hour worked, and does not get paid the next hour until he/she works it. A business person builds a business that at least provides income for the standard business hours, and smart business people build passive income generating consistently around the clock. In both cases the bulk of your time can be invested in increasing your income instead of merely maintaining your income.

5. Gain experience in the experience.
What experience does a job provide doing the same thing 40-50 hours per week. Usually its repetitive process, and your exciting experience was the first 2 weeks when you learned how to do the process you will repeat everyday after then.

Business is the opportunity for new experience everyday. Even a failing business is a new experience and something a business person will experience at least once in their lifetime.

But the experience of business success is something that is difficult to obtain as an employee.

6. Ensure your tax is going somewhere worthwhile.
Employee income is the most heavily taxed there is and usually paid up front.

Business and entrepreneur tax is paid afterwards and usually with numerous expenses deducted. There is a certain degree of influence over the tax flow. How would you like it to be?

7. Create your own income.
The level of income is in your hands. Does a job offer the same control? Why is begging every 12 months considered an acceptable activity?

8. Freedom is part of the package
When does an employee obtain the freedom to have choice of other than what they can do on the weekend. When is the next holiday? What can I put on my desk? Will the boss let me go early on Friday? I can only have lunch at 1 o’clock!

If you’re the boss, what are the choices available to you? Even in the worst business you have the choice, always.

9. Choose your own social circle.
The friends you choose are the ones you keep, and they need not be in your immediate vocational sphere. In fact chances are you will create friends from a number of different circumstances, locations, environs and cultures. This is limited within the realm of employee where to a large extent your work colleagues also become your social colleagues.

10. Be responsible for your own results.
There is no one to blame but your self and there is no one to reward but yourself. No job worker enjoys this privilege and will often relent to blaming others regardless. In this regard courage, honesty, integrity, and honor are all at stake, no matter what you achieve.

At the risk of offending anyone in a job, the truth is in the 10 reasons listed above. I do not need to justify these reasons for they speak for themselves. But it would be unfortunate if these 10 reasons were not provided to every teenager what ever they choose for there life career path. A the very least they could make a choice or even do their own research to verify what has just been said.

10 very good reasons for a teenager to start a business today.

Discover the secrets to becoming a teenage millionaire. Receive your FREE ebook at http://www.successfulteenageentrepreneur.com

Stuart G Harris
http://www.stuartharrisonline.stuart-harris.net

Article Source: http://EzineArticles.com/?expert=Stuart_G_Harris
http://EzineArticles.com/?10-Reasons-Why-a-Teen-Should-Start-a-Business-Over-Taking-a-Job&id=2228894

More importantly, I implore you to teach your kids how to manage the money they do have!  Do you have control over your financial situation?  If you are wallowing in debt or don’t know where to begin, check out Dave Ramsey’s Total Money Makeover.  Ramsey, a debt-free evangelist, is amazingly inspirational.  I joined a few days ago and am completely hooked.

Wander over to   “Junior’s Clubhouse” and check out the Parents Room.   If you are looking for a great Christmas present for your kids, why not consider  “Financial Peace Jr For Kids” or the picture book “Careless Spending at the Carnival” which boast the message “Early Lessons that Create a Lifetime of Success!”  Click here to see the sample book.

Synopsis:  In the magical city of Nessibus, Tyler, dreams of sailing around the world. Without a father and mother, he has no idea how he will ever make this dream come true. That is until the Great Spirit of the Entrepreneurs, calls him to invent a great machine to help him do his homework and create a business to make many of these machines for his friends.

__________________________

Fae’s opinion:

I liked Tyler and His Solve-a-matic Machine, and I think it was a great way to get young kids interested in business.  I think it’s suited towards the 9-11 age group, who are old enough to understand the words, but young enough to be entertained by the wild story.  This story uses many words that very young children won’t understand, and concepts too complicated for them.  I still found the story light and fun, a bubbly sort of story that made me smile.

Tyler and His Solve-a-matic Machine has many funny and creative characters that help the main character, Tyler, on his quest to become an entrepreneur.  The characters are kept fun, but believable–if there is such a thing as unbelievable to a 9 year old!  Tyler wants to sail around the world, and invents a machine that he wants to sell to get him the money for it.  Tyler meets characters such as Soté, the one who starts him on his journey, and Giselle, a young girl like Tyler who keeps his spirits up and help him along whenever she can.  Tyler builds friendships along with his entrepreneur skills, something I found interesting.

I think that the best part of this book was that it teaches children about businesses and entrepeneurs.  The author included many clever metaphors that explained real life things that an entrepreneur would have to know about.  Copyrighting, for example, was personified by the “pirate parrots.”  There are very real lessons to be learned from this book.  I am looking forward to reading the next installment in this series!

]]> http://kids-in-biz.com/kib/87/tyler-and-his-solve-a-matic-machine/feed/ 1 http://kids-in-biz.com/kib/85/getting-started-pet-sitting/ http://kids-in-biz.com/kib/85/getting-started-pet-sitting/#comments Mon, 01 Sep 2008 00:23:44 +0000 treece http://kids-in-biz.com/kib/?p=85 If you love animals then it might sound really fun to start your own pet sitting business.  What could be better than getting to cuddle with animals all day long?  Pet sitting is a great way to make money, but there is a lot more to it than just playing.

In order to become a pet sitter and have people hire you they will want to make sure you know enough about animals to do a good job.  They love their pet and want their furry friend to have the best care possible.

That means you should have some experience caring for animals.  If you have your own dogs or cats that is a good head start.  If you’ve never had a pet you might want to visit a friend or family member who have one so you can see if pet care is something you are good at.  You might even volunteer to take care of your own pet without your family’s help for a couple of days, or volunteer to take care of your friend’s pet.

Taking care of a pet means:

• Feeding it on time
• Making sure it has enough water
• Taking it out to go to the bathroom
• Making sure it gets enough exercise
• Taking care of it when it gets sick
• Knowing what the pet likes and does not like
• Sticking with the pet’s routine

A friend, neighbor, family member, or client might hire you to do these things for their pet when they go away.  A lot of people would rather hire a pet sitter than send their pet off to a kennel.  You’ll usually go to their house to sit for the pet, which means the pet will get to stay in its home environment.  Sometimes the pet might stay with you in your house instead.

If you are too young to start your own business this might be something you can help another pet sitter do.  Sometimes pet sitters who have their own business like to have an assistant to help with things like going for walks or feeding.

If you are old enough to start your own business there are some things you need to do to protect yourself and get clients.

1. First, you need to learn all you can about taking care of pets.  There are several different books on the market that can help you.  “Pet Sitting for Profit” by Patti J. Moran is an excellent one to start with.

2. You or your parents need to think about protecting yourself in case something goes wrong while you are sitting.  Sometimes things do happen, and pets get sick.  A professional pet sitter with a business needs to be bonded and insured.  See this link for more details: Petsit.com.

3. You can also get accredited by joining at PSI.  This definitely encourages more people to hire you so you can grow your business.  You can find more information about becoming a professional pet sitter at this address: Petsit.com.

4. Since you want to provide the best service possible, it’s a good idea to find out what people consider to make up a good pet sitter.  This humane society article on choosing a pet sitter gives you a good idea of what people want: Choosing A Pet Sitter.

5.  National Association for Professional Pet Sitters (NAPPS) is another resource you can look at to become better in your business and get more credibility: Pet Sitters.

6. It can also help to read about how other people’s pet sitting businesses are going and how they handle the daily life of caring for pets.  A great example is: Pet Sitting Businesses.

Pet sitting can be a hobby that you do to help out friends and family members, and to make a little bit of extra money.  Or, you could make it a very profitable and long-term business by becoming accredited, getting insurance, and advertising for many customers.  It’s hard work, but it can be a lot of fun too!

Teaming up with an adult who can supervise and assist you is really important.  Animals can be unpredictable and having an adult available is essential.

It’s very true, and teens all over the nation are making good money as writers.  The best part is that this is one job you can do in the comfort of your own home.  No more slinging hamburgers on a hot day if you don’t want to.

Now, you might find paid writing internships at local newspapers, and that is a great step if you want to become a report one day.  The best opportunities, however, come with writing web content for businesses.

Have you ever visited a website and wondered who did all that writing?  Sometimes the webmasters or owners do the writing themselves if they have time.  Other times they will hire a freelance writer to do it for them.  This can also be called ghostwriting.

Do you know any local businesses who have a website?  It’s a great idea for you to offer to write some content for their site.  Explain that it will help them get more visitors, rank higher in the search engines, and make more sales.

Another way to get started is to set up a website offering your services.  You can even set up a free Squidoo lens if you’re not comfortable creating a website yet.  You want to include samples of your writing (that your English teacher would approve of) to show off your awesome writing skills.

You need to think about how much you are going to charge businesses and website owners for your writing.  Writers for the web tend to start out a little bit lower than normal to get their foot in the door.  This will help you get more clients that land you great referrals in the future.  $6-$10 is a good starting range per article.

Imagine that!  You can make money from the same kind of writing you would normally do for free to get a grade.  Often, you can make a lot more than you would working retail or at another job that teenagers typically take.

A great way to get started earning right away is to sign up for Associated Content at http://www.associatedcontent.com

Associated Content is a company that has you submit your articles before payment.  They will review your articles and then let you know how much they are worth.  You can accept the payment and they will pay right into a PayPal account (free at http://www.paypal.com ).

One problem you might run into as a teen who wants to write for profit is not being old enough or being looked down on because of your age.  You can prove yourself by writing great content and presenting yourself in a professional manner.  If you are simply too young to be accepted you can encourage your parents to help you get started.  They can be the ones with the writing business, while you help them out by writing some content (and getting paid in the process).

Writing for profit is the best option for you if you’re a teen who loves to write.  There are few jobs out there that can be so fun.  You can do this on your own time and feel like you’re really accomplishing something great.

The first thing you need to do to get started with your lens is open up an account.  You can do that at http://www.squidoo.com.  This account is completely free, and you’ll love it because you can start new lenses and organize the ones you have already made.  Squidoo has a lot of nice features that tell you how many people have visited your lens, how much money you have made off of them, and which ones could use a lot of work.

You’ll notice that many people talk about having multiple “lenses” rather than just one “lens.”  The reason for that is simple!  It’s so easy and fun to set these up that you’ll want to create them about many different topics you’re interested in.  The sky is the limit when it comes to lens creation.

When you sign into your account you’ll find a “Make a new lens!” button.  This button will take you through a series of steps to get your lens set up.  There are some options that get you started super fast by doing things for you, and there are others that give you more choices to get your lens looking just the way you want it.

These aren’t boring little Web Pages either.  Squidoo lenses are made up of what are called modules.  You choose the exact ones you want on your page and organize them just the way you like.

Some popular modules are:

• Text – you can write anything you want that is related to your lens
• Amazon – you can make money right from your lens by recommending information that is relevant
• Wikipedia – Sometimes you don’t want to have to write everything yourself.  You can enter in a word that describes your topic and Squidoo will find a Wikipedia article that fits for you to put on your page
• RSS – Do you have a blog or know of one you like?  You can enter in the blog’s RSS feed and it will pull content right from that blog to show your visitors
• Stickynote – Stickynotes are a lot of fun to use in real life, and they can really stand out on a website too.  You can call attention to any quick fact you want by using a sticky note
• Duel – If your lens is part of a debate you can set up a duel model.  This can get your visitors interested in interacting and debating with each other
• Guestbook – Having a guestbook on your lens is a lot of fun because your visitors can leave you message or have a discussion about your topic

There are literally dozens of different modules that you can use.  These will all help you add content, get your guests involved, or help make you money.

There are a few different ways you can make money through your Squidoo lens.  As you can see, there are a few modules that are already designed to fit with the topic of your lens and help you make money.  You will need to sign up as an affiliate with the company related to the module, then put in your special username or code to make sure the sales get credited to you.

If you have another website and you’re using your lens to try and get more visitors to your site that’s a great idea!  If you go a step further and write your own eBook or become an affiliate of a product you can even put your sales link right on your Squidoo lens.

The best way to get started with Squidoo is to go grab yourself an account to play around with. You’ll fall in love with its flexibility and features.  These little sites also rank very well with the search engines so you’re sure to get some visitors and maybe even make some money if you put hard work into it.

How do you safely and creatively teach kids about business? Ralph Williams, a father of two sons Patrick, 8, and Joe, 6, believes he has found the solution. When Williams’ son Patrick wanted to make more money in addition to his allowance, Williams shared a story of making beeswax candles as a boy and selling them in his family’s restaurant, offering them the idea of creating a candle-making business

Their first clients included family and friends and soon expanded to area businesses. Their product line has expanded to honey soap and other bee-related offerings. When they realized this was a fun and easy way to earn a little extra spending money, the brothers wanted to share this opportunity with children around the country, giving Williams the idea to create FranChild and the “My Kids First Biz” experience. Now they work with families from coast to coast and even internationally.

FranChild is a company that makes ‘franchise-like’ businesses available for children to operate. Like a franchise, kids and parents get marketing support, including an online community for the benefit of members called ‘the hive.” The cost to start-up a FranChild business is $25 for a standard annual membership which includes a FranChild Company Certificate acknowledging the child’s business launch; ready-to-print business cards from FranChild business templates; how-to instructions and ideas for marketing and selling products; access to the My Kids First Biz Resource Center, a $75,000 marketing system for creating customized packaging products; below wholesale pricing on materials; and access to the “hive” to share ideas with the FranChild Business community. A Web site is available for young entrepreneurs for an additional $2 per month.

There are four FranChild product categories that carry the bee theme: beeswax candles, organic soap, apparel and jewelry. All natural in the materials they are made of, each FranChild line is “green-friendly”. In most cases, FranChild offers ‘below wholesale’ pricing, so kids can experience wholesale and retail sales of their chosen product line.

FranChild Candle Company – Children have the opportunity to make and sell candles made of 100% beeswax. Included in the candle start-up kit are 50 sheets of natural colored beeswax, 36 feet of wick and instructions for making candles. Additional colors are available seasonally and voted upon by the “hive” as to which ones are brought to the market.

FranChild Soap Company™ – Hand-made organic soap is available in a variety of refreshing scents including citrus, honey and peppermint. Kids are able to make their own custom labels, including private labels for businesses to sell their own brand of organic soap.

FranChild Apparel Company™ – Two collections of organic cotton t-shirts made in America by Stinger ApparelTM feature the FranChild logo and BEEmotionsTM featuring bee-themed expressions such as “Bee Happy” and other seasonally themed sayings.

FranChild Jewelry Company™ – The Royal Jelli Jewels™ line includes rings, earrings, bracelets and necklaces. The themes include butterflies, dolphins, flowers, hearts and starfish. More designs will be added as the community of FranChild Jewelry votes and decides which item to bring to the marketplace next, including of course, a bee. Jewels come finished and are purchased in quantities of six of the same type and style in assorted colors.

In addition to learning the basics of business, young entrepreneurs can experience concepts like manufacturing (candles), marketing, packaging, branding, private labeling, sales and money management. FranChild allows kids to set their own pricing giving them the control to set the profit margin. In turn, they learn about spending money, earning money and hopefully saving money.

FranChild, LLC is an online community of parents and children sharing a fun project with an applicable and valuable life lesson, learning the basics of business. For more information on the company or to launch a FranChild business with your child, visit www.FranChild.com.