Legal Question in Business Law in Texas

Hi,

I will try to make this as brief as possible. I am starting a new business venture. I am helping a friend of mine with his online art business. He is in the Army and currently stationed over in Afghanistan. Basically, my job is to manage the website, process orders, make shipments, and provide customer service support for his business. It's kind of like he is out-sourcing for a customer service rep, because he doesn't have the time to manage that part of his business. We have set up the website, along with a merchant account. The merchant account is set up with my business name and is linked to my bank account. We just had 3 orders come in a few days ago, and the money for these orders ($1,375.00) was put into my bank account. For tax purposes, is this going to appear as MY income to the IRS (even though I immediately transferred the money out of my bank account, minus my weekly pay). I just want to make sure I am doing this legally and that I won't end up having to pay tax for income that does not belong to me. The money is simply passing through my account. Any recommendations on this?


Asked on 11/06/10, 7:01 pm

1 Answer from Attorneys
Kevin B. Murphy Franchise Foundations, APC

As a franchise attorney, I can say you need to have the merchant account linked to a business banking account, not a personal account. The IRS regulations require separate books and accounts for any business operated. It's not a big deal at this point, so it should be relatively easy to accomplish. Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Attorney

Franchise Foundations APC

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Answered on 11/12/10, 6:06 am


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