As a serial entrepreneur and startup consultant to many successful businesses, I have observed cautionary business tales starting with "under the table." I'm here to tell you that even if money gets tight, you don't want to cut yourself off at the knees like them. What you need is a strategy that accommodates the big picture.
Why You Don't Want to Start and Run Your Business Under the Table
The IRS states that if you make $400 or more from a side hustle, you must file a tax return. If your hustle is meant to be profitable, it isn't considered a hobby to the government, and if you have aspirations, I’m sure it’s not a hobby to you, either. Before we discuss the rewarding benefits of picking the legitimate path, let's take a look at why illegally running a business is a short-sighted approach with negative consequences:
Personal Credit Considerations
Business Credit Considerations
Tax Benefits of Legitimate Bookkeeping
For all of the above to happen, you must keep good expense records, set aside the appropriate amount of your net income to pay income taxes each quarter, and keep expense receipts, invoices, and statements from a business bank account. It helps to have a reputable bookkeeper, and in all cases, an accountant as well. (I am happy to share my rolodex of the business service professionals I have personally vetted to my business consulting clients.)
The Freedom of Marketing
The Psychological Benefits
When you decide to operate under the table, you subliminally decide not to reach for the sky.
Please don't misunderstand me. I am not saying that I love the taxation laws in America today. I am not saying that I disagree with you when you say that the middle class is overtaxed. I have felt the defeating feeling that it's nearly impossible to get a leg up when you're handing 35% of your income over to the government. But the journey from starting from nothing to achieving the echelon of incorporation proves something to yourself and the world. Anytime we accomplish the impossible in life, we learn we can do anything we put our mind to, and no one can take that away from us. Not to mention, you now appear to be well-founded, reliable, and experienced to creditors, landlords, and customers for time to come.
There are operational and tax strategies that you can employ along the way, with the help of a consultant like myself and a competent CPA, that can save you money. There are also organizations like the SBA who can offer you manageable loans that make sense and help you succeed faster.
How I Can Help
With 15 years of experience, I offer a variety of services that will help your startup grow, including business consulting and marketing. To succeed legally, fill out our contact form for a complimentary introductory consultation.
If you want to work under the table, consider whether you want to grow your business and change the landscape of your financial life. Instead, run your startup professionally. The patient sacrifice pays off!
*The information in this article is not to replace the advice of a Certified Public Accountant.
Rebecca LeClaire is the CEO of STS Media, Marketing and Consulting Agency, and has been helping small businesses grow since 2008 with Business and Marketing Consulting, Marketing, and Website Design.