[DooWop]

Frank, thank you for the replys to my questions on EO. My next question would be this; actually it is several questions at once.
1) Can the truck payment also be deducted on the income tax? 2) On a used D-unit, say one year old when purchased, how would I go about getting the depreciation on that? Would that be depreciated over 5 years, even tho it would be 1 year old when purchased? 3) What percent could be deducted per year? 4)What would be the advantages and disadvantages of incorporation as opposed to a sole proprietorship? 5) If one decides to go the sole proprietorship route, would you recommend purchasing extra insurance to protect your assets, such as a pension and/or 401k/or 403b?
I appreciate your advice and answers.

Regards

DooWop

[Fkatz]

Doowop, sorry for the delay a few days in answering your questions again,

#1, Can the truck payment also be deducted on my income tax,

Yes, It must be broken down between principal and interest
You may also claim liability, cargo, bobtail, Occ Insurance, but not health

#2 on a D-Unit, say one year old when purchased, how would I go about getting the depreciation on that.?
it doesnt matter what year it is, it is the day you first put it in service
Filling out the depreciation form, for the Cost basis of the truck, price less deposit. deposit you take on a 179 deduction and it is only allowable for 3 years depreciation with a 4 year life. NOT 5 AS YOU THINK.

#3 What Percent could be deducted per year?

that I cannot give you exactly, but it is around 1/3 2/3 1/3 depends on when it is placed in service by month of year then it is a percentage from that date.

#4 What would be the advantages an disadvantages of incorporation as opposed to sole proprietorship.?

Corportations,
Advantages, first of all i would not go corp 1 first couple of years until you feel that you should be incorporated. thats my own opinion. IT PROTECT YOUR PERSONAL ASSETS FROM BEING LOST UNLESS YOU USE YOUR HOUSE, OR OTHER PROPERTY FOR COLLATERAL
THAT THE MAIN ADVANTAGE.

DISAVANTAGES. A. POSSIBLE DOUBLE TAXATION, FILING FORMS 1120, B. IRS RUNS INTERNAL AUDITS ON ALL CORPS. PLUS YOU PERSONAL 1040,
C:MUST GET AN EMPLOYER IDENTIFICATION # OR EIN. D: HAVE TO SET UP COMPLETE BOOKS, FOR AS EMPLOYER, YOU ARE THE EMPLOYEE. E: HAVE TO HAVE A PAYROLL ACCOUNT TO PAY YOURSELF, TAKE FEDERAL, SOCIAL SECURITY, MEDICARE, AND UNEMPLOYMENT TAXESOUT OF YOUR INCOME, f: FILE FORM W-2 AT END OF YEAR, EVEN THOUGH YOU ARE PAID ON A 1099misc, g.THE LEASE COMPANY YOU SIGN ON TO WILL MAKE THIS OUT AT THE END OF THE YEAR AND SEND IT TO YOU. h.MUST KEEP VERY ACCURATE BOOKS. OF ALL ITEMS YOU EXPENSE.

#5: If one decides to go the sole proprietorship route, would you recommend purchasing extra insurance to protect you assets, such as a pension and /or 401/or 403,

That is up to you weather you can afford to purchase the extras, the only insurance to purchase is loss of income (short and long term,Disability) Health Insurance unless you are married and your wife is covered at her job, otherwise there is none, very expensive.

As far as a pension, an IRA would be the better choice depending on your age, you can contribute up to $3000 each, between you and your wife if married. totaling $6,000. or into a SEP self employed plan
The IRA is cannot be withdrawn at all for 2 years. that is the stipulation on that. but if you are not 65 years of age any pension, or retirement plan would be taxed at 20% upon recieving it and another 10% IRS penatly on top of the, so if you took out lets say,
$20,000, $ 4000 Fed would be withheld upon recieving it ans another
$2,000 penalty on filing of your return for that year.

Frank