My wife and I have a small music business based in our home. It’s just the two of us along with one independent contractor (we get work, collect payment, and pay her to do it). I want to know if it is worth considering incorporating. We bring in about $60,000 a year. As for expenses, we have a home office, vehicle mileage (driving to clients, performances), some traveling, and misc supplies.
A few questions about incorporating: we have children over at our ‘home studio’ to take music lessons. If I incorporate, will this protect me if someone falls and hurts themselves? I have insurance that should cover me now, but would forming a corporation be different in terms of liability? Also, would incorporating change how we would deduct our home use for the business? Finally, we a rental property (not related to the music business). Would this change things regarding the business type for taxes?
Second, we drive a lot for the business (it’s our main expense) and currently use the standard mileage deduction. We are thinking about buying a vehicle for our business. I am a little confused on the deduction…I understand the standard mileage and actual cost methods, but the depreciation is ridiculous. Can someone give me advice on this? Also, does the Section 179/over 6,000 GVW SUV/Truck rule still apply, as long as it is under $25,000? We do haul some equipment around (we moved a piano recently) and could justify a large vehicle, but I would rather have a small truck if I received a similar deduction on it. If I was to buy a smaller vehicle, how do I depreciate it? We both have a personal vehicle so it is easy to separate business use…the vehicle would be 100% business.
A few questions about incorporating: we have children over at our ‘home studio’ to take music lessons. If I incorporate, will this protect me if someone falls and hurts themselves? I have insurance that should cover me now, but would forming a corporation be different in terms of liability? Also, would incorporating change how we would deduct our home use for the business? Finally, we a rental property (not related to the music business). Would this change things regarding the business type for taxes?
Second, we drive a lot for the business (it’s our main expense) and currently use the standard mileage deduction. We are thinking about buying a vehicle for our business. I am a little confused on the deduction…I understand the standard mileage and actual cost methods, but the depreciation is ridiculous. Can someone give me advice on this? Also, does the Section 179/over 6,000 GVW SUV/Truck rule still apply, as long as it is under $25,000? We do haul some equipment around (we moved a piano recently) and could justify a large vehicle, but I would rather have a small truck if I received a similar deduction on it. If I was to buy a smaller vehicle, how do I depreciate it? We both have a personal vehicle so it is easy to separate business use…the vehicle would be 100% business.
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