Quiz Test Your Small Business Know-How By the editors of Kiplinger's Personal Finance May 26, 2017 iStockphoto Starting your own small business may sound like a good deal. You can call the shots, set your own hours and eliminate long, pointless meetings. But how much do you know about getting started — and achieving financial success? Or maybe you're already running your own show and all the challenges that come along with it. Either way, try our ten-question quiz. We bet you'll learn something helpful along the way. Start Quiz Quiz | Test Your Small Business Know-How Question 1 of 10 There's a 50% chance the small business you've just opened will not be around in five years. A. True B. False Quiz | Test Your Small Business Know-How Question 1 of 10 There's a 50% chance the small business you've just opened will not be around in five years. A. True According to the Small Business Administration, only half of new enterprises survive five years or more. It's best to know what you're up against when you're starting out. B. False Next Question Quiz | Test Your Small Business Know-How Question 2 of 10 Which one of these costs is deductible as a business expense? A. Advertising B. Business travel and entertainment C. Employee Compensation D. Home office E. All of the Above Quiz | Test Your Small Business Know-How Question 2 of 10 Which one of these costs is deductible as a business expense? A. AdvertisingB. Business travel and entertainmentC. Employee CompensationD. Home officeE. All of the Above All of these business expenses are tax deductible as long as you adequately document their business use. But for home offices you can't deduct more than the amount of the income generated by the business. And only half of the cost of business-related meals and entertainment is deductible. Next Question Quiz | Test Your Small Business Know-How Question 3 of 10 All small businesses have to be incorporated. A. True B. False Quiz | Test Your Small Business Know-How Question 3 of 10 All small businesses have to be incorporated. A. TrueB. False While small businesses do not have to be incorporated, there can be financial benefits to declaring your business an LLC or a corporation. Next Question Quiz | Test Your Small Business Know-How Question 4 of 10 When you own your own business, you may pay more in taxes than if you were employed by someone else. A. True B. False Quiz | Test Your Small Business Know-How Question 4 of 10 When you own your own business, you may pay more in taxes than if you were employed by someone else. A. True Employees pay 7.65% of their wages for Social Security and Medicare taxes and their employers kick in an equal amount. As an entrepreneur, you're responsible for paying both the employee and the employer share — for a total of 15.3% of your self-employment income. So if you earn the same a... Read more ˅ Employees pay 7.65% of their wages for Social Security and Medicare taxes and their employers kick in an equal amount. As an entrepreneur, you're responsible for paying both the employee and the employer share — for a total of 15.3% of your self-employment income. So if you earn the same amount of money as you did working for someone else, you'll pay more in Social Security and Medicare taxes. At the same time, you may get to claim certain tax write-offs to lower your taxable income that payroll employees can't, and such deductions reduce both your income and Social Security and Medicare taxes. Still, such savings may not make up for the so-called self-employment tax you owe. Less ˄ B. False Next Question Quiz | Test Your Small Business Know-How Question 5 of 10 If you're self-employed, you can deduct premiums for which of the following insurance products: A. Health care (including Medicare) B. Dental care Long-term care None of the above All of the above Quiz | Test Your Small Business Know-How Question 5 of 10 If you're self-employed, you can deduct premiums for which of the following insurance products: A. Health care (including Medicare)B. Dental careLong-term careNone of the aboveAll of the above Some limitations: You can't take deductions if you are eligible to be covered under an employer-subsidized health or dental plan offered by your employer or your spouse’s employer. The ability to deduct the cost of long-term-care insurance depends on your age. And, your deductions can't exceed you... Read more ˅ Some limitations: You can't take deductions if you are eligible to be covered under an employer-subsidized health or dental plan offered by your employer or your spouse’s employer. The ability to deduct the cost of long-term-care insurance depends on your age. And, your deductions can't exceed your self-employement income. Less ˄ Next Question Quiz | Test Your Small Business Know-How Question 6 of 10 You can start a business out of your home. A. True B. False Quiz | Test Your Small Business Know-How Question 6 of 10 You can start a business out of your home. A. True You may have to first obtain proper work and/or zoning permits. Such permits will allow for increased foot traffic and mail volume to your home, for example. Check at both your local and state level business associations. B. False Next Question Quiz | Test Your Small Business Know-How Question 7 of 10 If you need a small-business loan, try approaching: A. Your local credit union. B. Your community bank. C. Friends and relatives. D. Any of the above. Quiz | Test Your Small Business Know-How Question 7 of 10 If you need a small-business loan, try approaching: A. Your local credit union.B. Your community bank.C. Friends and relatives.D. Any of the above. Looking for seed money? In general, credit unions and community banks provide friendlier terms than the big banks. If you have deep-pocketed family members or friends, be clear about when (and whether) you'll be able to pay it back. Put it in writing. Next Question Quiz | Test Your Small Business Know-How Question 8 of 10 If you have employees, you need an employer ID number. A. True B. False Quiz | Test Your Small Business Know-How Question 8 of 10 If you have employees, you need an employer ID number. A. True A business owner who has employees must have an EIN to be recognized as a business. An EIN also acts as a tax identification number for depositing payroll taxes and filing income taxes to the IRS. B. False Next Question Quiz | Test Your Small Business Know-How Question 9 of 10 As a small-business owner, you're allowed to save as much for retirement as you would have at a corporate job. A. True B. False Quiz | Test Your Small Business Know-How Question 9 of 10 As a small-business owner, you're allowed to save as much for retirement as you would have at a corporate job. A. True Believe it or not, you may actually be able to save more with a solo 401(k) than you could to a regular 401(k) because you can contribute both the employer's and the employee's share — in 2017, you can contribute $18,000 plus up to 20% of your net self-employed income, with a maximum o... Read more ˅ Believe it or not, you may actually be able to save more with a solo 401(k) than you could to a regular 401(k) because you can contribute both the employer's and the employee's share — in 2017, you can contribute $18,000 plus up to 20% of your net self-employed income, with a maximum of $54,000. Another perk of the solo 401(k): You can borrow up to half of your balance (up to $50,000) if you need money. The calculators at www.401khelpcenter.com are a good resource to determine the best retirement plan for you. Less ˄ B. False Next Question Quiz | Test Your Small Business Know-How Question 10 of 10 Most auto-related expenses are tax deductible for small businesses. A. Yes B. No. Quiz | Test Your Small Business Know-How Question 10 of 10 Most auto-related expenses are tax deductible for small businesses. A. Yes Charges for items such as gas, oil changes, insurance and preventive maintenance are tax deductible. You have two options: Choose the standard mileage rate of 53.5 cents per mile (in 2017) or deduct the actual expenses. But be careful — business use of a vehicle is a red flag for th... Read more ˅ Charges for items such as gas, oil changes, insurance and preventive maintenance are tax deductible. You have two options: Choose the standard mileage rate of 53.5 cents per mile (in 2017) or deduct the actual expenses. But be careful — business use of a vehicle is a red flag for the IRS. Make sure you keep detailed mileage logs and precise calendar entries for the purpose of every road trip — a number of apps, such as MileIQ, make this easy. Sloppy recordkeeping makes it easy for the service to disallow your deduction. Less ˄ B. No. See Results Quiz | Test Your Small Business Know-How Results Next QuizCan My Boss Do That? See All Quizzes answer_num=1,5,2,1,5,1,4,1,1,1|answer_text="A. True","E. All of the Above","B. False","A. True","All of the above","A. True","D. Any of the above.","A. True","A. True","A. Yes"|total_questions=10|url=/quiz/business/T049-S001-test-your-start-up-know-how/index.html|total_pages=22|page_id=10513|evaltext_num=0|kipad_id=small-business Advertisement Advertisement Sponsored Financial Content