Quitting your job isn't the first thing you should do if you're ready to leave your job and start an RV based business. You need to consider taxes, insurance, cash flow, agreements, etc.
Plotting the Great Escape: Leaving Your Job for Self-Employment
by Martin M. Shenkman, CPA, MBA, JD
So you've part-timed in your RV and are ready to pull the plug and quit your old job and take up on your own – your own business in your own RV. Lots of excitement at gaining what might be the ultimate in flexibility and control over your life. Lots of trepidation as to whether you'll be able to make it financially and in other ways.
Before sending in your resignation letter, there might be some important steps to plan and evaluate to help launch your new self-employed life. The following discussion addresses a few of them.
If you are a shareholder or partner in the business you are leaving, you might have a host of obligations in addition to a non-complete. There may be confidentiality provisions that prevent you from disclosing or using key business information or technology.
You may have a much longer advance notice requirement than an employee. You might have to give notice as much as several months, or more, to your partners. Failing to follow the detailed requirements of the agreement may reduce or eliminate any buy out (price paid for your ownership interests) that you might be entitled to.
If you set up your own business and operate it individually, you're a "sole proprietor." You'll simply report business income and expenses on your personal income tax return, Form 1040, Schedule C.
If you set up an entity to operate your business, other tax forms as well as tax and legal issues will have to be addressed. This topic will be addressed in several future columns.
While you're an employee, your employer withholds taxes from your income and pays the appropriate tax authorities. When you're self employed there is no withholding and you have to pay estimated taxes every quarter to the IRS and perhaps to state tax authorities.
Be sure to investigate the rules and plan ahead to address filing requirements and cash flow.
I broke this article into several sections. Click on the links that follow to read more.
Quitting your job and starting your own RV business can be exciting, liberating, and challenging. Plan ahead, long before you stop your current job. Look into all the possible implications of resigning your existing job, as well as starting your new job.
Martin M. Shenkman, CPA, Esq. sponsors a free legal website LawEasy.com.
Martin is an RVer with a special cause. He is an avid fundraiser for the National Multiple Sclerosis Society and The Michael J. Fox Foundation For Parkinson's Research. Besides RV business tax and legal information, he will share some of his RVing and fundraising experiences with us.
Caution: This article and other columns can never substitute for professional legal, tax, and accounting guidance. These columns can provide only broad general advice, which may not apply to your situation. The rules differ substantially from state to state. Tax, business, and other laws change rapidly over time so there can be no assurance that the information in this column is current. The best approach is to review the ideas in this article with your own CPA and attorney. The application of general tax and legal principles to some of the unique facts presented by RV working is particularly complex and there is little specific law providing guidance to rely upon.