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  #1  
Old 01-28-2017
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Default Using Family Members, bad idea?

I am trying to open a new shop after having my original shop closed down. Our family ran this shop as our only income and went through a family emergency which took us away from the shop unexpectedly. We got behind on orders and it trickled from there. We are now back and ready to get back to work. I tried opening a new shop with my husbands name but was shut down after 2 days. I have now learned all of the things that need to be changed in order to try to get around the system.

My question is, my mother, who has a different last name and address, is willing to basically open a shop under her name. She is ready to get the proper paperwork registered for a new business name, get new bank accounts, etc. She lives only about 15 minutes away. I would be willing to buy a new computer to use from my house (as I am not sure if I can properly erase all of the cookies and change IP addresses). I have heard people suggesting not to use family members, but I haven't understood why. My mom's accountant has suggested that should the shop make 10k for example, she hire my husband and myself as independent contractors and pay us 8k (which we will get 1099 from her at the end of the year) That way she is only getting taxed on 2k of it (which we will pay those taxes for her) and we will still show income on whatever we get 1099 on. Can anyone tell me why this won't work? We desperately need to get our shop back opened asap.
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

Is anyone available to comment on this? Just hoping to get any advice to see if I may be missing something. Would like to get my new account up and running asap
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

si

......
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

This is such an in-depth scenario that I doubt you'll get many relevant answers on this forum. This place is more about being sneaky than it is about staying compliant.

With that being said, I don't see anything wrong with your plan. Especially if you'll be operating as a business. It sounds like you've got the blessing of your mom and her accountant, so I'd move forward with that..

So.. as a business with 2 part time employees whom I withhold no income taxes for, should I also create 1099's for them so I can write off what I've paid them in 2016 on my taxes? I know you aren't an accountant but you seem to be more knowledgeable than most in this arena...
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

If your mother has absolutely no problem with you using her name then by all means go ahead and do so. You wont even have to have her get a 1099 since eventually youll be forced to add an EIN to the account anyway (or your mother's SSN - which I would avoid to simplify matter). Via that EIN youll get taxed directly.
You dont need a new laptop. Just open a new windows user account for use with it.
You WILL need a new IP address though. I would advise you to get the stealth guide and read it through - especially the section about changing your IP address - it sounds like in your case all you need to do is change the MAC address of your router to get anew IP address and you should be good to go.
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

The plan is to put the EIN in the mothers name so the tax liability will be the mother's at the end of the day.

Why not get the EIN in your own name? I'm guessing this has something to do with Etsy requiring an SSN during registration?
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

It was my understanding that as of recent, E*sy does not accept an EIN number alone. It sounds as though they will follow up and still require a SSN. Maybe I have heard this wrong? I have purchased the guide and am surprised to report that by following it, I was able to make the new account on the computer and change my IP address. I just feel like I have one shot at this, so I am hoping I haven't missed anything.
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

Quote:
Originally Posted by phaz0rz View Post
This is such an in-depth scenario that I doubt you'll get many relevant answers on this forum. This place is more about being sneaky than it is about staying compliant.

With that being said, I don't see anything wrong with your plan. Especially if you'll be operating as a business. It sounds like you've got the blessing of your mom and her accountant, so I'd move forward with that..

So.. as a business with 2 part time employees whom I withhold no income taxes for, should I also create 1099's for them so I can write off what I've paid them in 2016 on my taxes? I know you aren't an accountant but you seem to be more knowledgeable than most in this arena...

I believe you would just want to make sure that they understand that you will be filing a 1099 form with their earnings. This will go from a situation of being paid under the table to now them have reported earnings that they will pay taxes on. I could be wrong though
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  #9  
Old 02-02-2017
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Default Re: Using Family Members, bad idea?

Quote:
Originally Posted by desertstar View Post
It was my understanding that as of recent, E*sy does not accept an EIN number alone. It sounds as though they will follow up and still require a SSN. Maybe I have heard this wrong? I have purchased the guide and am surprised to report that by following it, I was able to make the new account on the computer and change my IP address. I just feel like I have one shot at this, so I am hoping I haven't missed anything.
I believe slokor's post may have been geared more towards Paypal. My understanding is, as of 2017, there's no getting around giving your SSN to Etsy unless you register in a foreign country. My wife made an account last week and her SSN was required for "Etsy direct checkout". Some users here have said you can get around that by only accepting Paypal, but I'm not knowledgeable enough to comment on that one.
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  #10  
Old 02-02-2017
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Default Re: Using Family Members, bad idea?

Quote:
Originally Posted by desertstar View Post
I believe you would just want to make sure that they understand that you will be filing a 1099 form with their earnings. This will go from a situation of being paid under the table to now them have reported earnings that they will pay taxes on. I could be wrong though
Thank you. I really appreciate you taking the time to reply.

To the best of your knowledge, am I required to withhold income taxes for employees if I plan to issue a 1099 for them? Or would they be counted as "independent contractors" like you mentioned in your original post?

If you don't know or care to comment, it's no big deal. I've been putting off talking to a professional...
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

If my old e*sy account was linked to a gmail account, can I still use gmail to make a new email account for my new e*sy account? I had read somewhere that gmail will sync all of your accounts together and you could get linked that way. But in the stealth guide it states that gmail is the preferred email to use.
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Old 02-02-2017
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Default Re: Using Family Members, bad idea?

Quote:
Originally Posted by phaz0rz View Post
Thank you. I really appreciate you taking the time to reply.

To the best of your knowledge, am I required to withhold income taxes for employees if I plan to issue a 1099 for them? Or would they be counted as "independent contractors" like you mentioned in your original post?

If you don't know or care to comment, it's no big deal. I've been putting off talking to a professional...
To the best of my knowledge, No. If you are filing a 1099 on their behalf, they they are responsible to pay the taxes. Just like E*sy. They tell the government how much you made in the 1099, and then the !RS comes to you for payment of the taxes on that money.
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  #13  
Old 02-02-2017
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Default Re: Using Family Members, bad idea?

Also, there are specific requirements that have to be met for someone to be considered an independent contractor vs. an employee. If they don't meet those guidelines and they are considered employees, then the tax filing form and taxes paid will be different.
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  #14  
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Default Re: Using Family Members, bad idea?

Quote:
Originally Posted by desertstar View Post
If my old e*sy account was linked to a gmail account, can I still use gmail to make a new email account for my new e*sy account? I had read somewhere that gmail will sync all of your accounts together and you could get linked that way. But in the stealth guide it states that gmail is the preferred email to use.
They will only sync your accounts like that if you're using the same browser and user account as you did on your old account.

As long as you'll be using at the very least a new browser, then you've got nothing to worry about on the Gmail front.
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  #15  
Old 02-03-2017
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Default Re: Using Family Members, bad idea?

all y gmails are linked together by design. Makes replying to questions much easier from a phone, tablet etc.... Never heard of a ebay/paypal/etsy/amazon etc...being linked by gmail before.
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