I want to start a new company John's XYZ. (john being my name) I see from another question that I still have to file a DBA becuse I am including XYZ and it's not just John Smith. I'm not sure how much business I will get this year and am not planning on doing my own bank account, employees or anything like that until I know the business is good and needs it.
My question is that if I just get the DBA (and never do any work under it), will that change my tax status and/or make me pay more taxes? What if I do one job for $200 and that is it for the year?
If you operate a business, you will be required to pay all applicable federal, state, and local taxes. These include but are not limited to income taxes on the income you earn from the business and franchise taxes for the privilege of operating a business in your local jurisdiction. Some taxes may have a certain minimum threshold before you are required to file or pay - check with your taxing authorities (IRS, state, and local) or with an attorney licensed to practice in your jurisdiction as to which taxes your business may be subject to.
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John L KoenigMergers / Acquisitions AttorneyWaltham, MA ·
Just filing a DBA should not change your tax obligations. The prior response outlines those tax obligations. Filing the DBA is done under state law so people know who is running a business.
The quick answer to your question is no. State franchise tax only applies to business entities (corporations, limited liability companies, and limited partnerships). Federal corporate income tax only applies to C corporations. As a result, any income you earn through your DBA will pass through to your personal income tax return and will not result in an extra layer of tax, but will increase your personal taxable income.
