@Legions36 wrote:
@scenery_guy wrote:
Why do you think you need a LLC? It's a lot of extra paperwork both now for start up and every tax season. Here is a brief comparison. Honestly you would be fine as a sole proprietor. You should apply for a Federal EIN and here is the location to get started.
Feel free to ask more questions and I will try to help as I can. Over the past 20+ years I have had a C Corp, S Corp, a LLC partnership and have been a sole proprietor. Easiest by far (for my needs) is sole proprietor. Reporting gross sales in excess of 1MM per year and no issues with IRS or business banking. One tax return as a sole proprietor, business and personal money does not need to be kept separate (but I do thru business credit cards and banking accounts) and there are some pretty sweet perks as far as tax deductions.
Well what im looking to do is be able to give myself paychecks for amounts that i make money. To be honest I really don't want to have to keep records for the money that i make thru the business, i just want to do the taxes thru paychecks like im working and then not really have to do to much thru the company other than create credit. To be honest i'm just going to start it from my home address and take it from there.
Let me ask u if i do the (sole prop) do i need to to thru the whole setup process like an LLC? They want me to pay certain fees like how legalzoom has.
Thanks for your help and if i could save myself time and money right now that would be great, your probably right about that. I think you have a good idea at what im trying to do.
Skip the whole Legal Zoom thing, it's a waste of funds. Depending on where you live (I am in Florida) setting up a sole proprietor is simple. You can do this to test the waters and see if you really want a business without an outlay of cash. Honestly many people start up but fail in a few years (not pointing at you, I failed on my first try). Closing a sole proprietor is a simple as not doing what you were doing and letting the IRS know you are closed.
With a sole proprietorship the funds can mingle as there is no separation of personal and business funds. I understand you want a paycheck but there will be some additional steps to cut yourself a check and have taxes withheld. You can always claim all sales as personal income (you will be dong this anyhow see #7 below) and when you apply for a credit card you indicate you are a sole proprietor and provide both SSN and FEIN and then provide your gross sales as your gross income. You can also provide other sources of income if you have them.
If you really want a paycheck then I suggest you look into a PEO to handle the payroll. Messing with remitting payroll taxes just plain sucks. If you screw it up the IRS will be all over you quickly. A PEO or payroll company (sometimes called employee leasing) will take funds from you and then cut you a paycheck. They will charge you a percentage to cover taxes, cost of direct deposits or paper checks and a profit for their services. I use a PEO and it's great. I have employees and I could do it myself but I have better things to do with my time than fill out forms and remit payroll taxes and other stuff. This will be important if you ever need employees as it's the only insulation you have as far as liability. The employees technically and legally worth for the PEO and you are just leasing them. If something goes bad (and eventually it will as we are talking employees here) then the PEO handles it all. You are untouched.
Google "opening a sole proprietor business in (your state) and you will find some helpful stuff. Here is my simple take:
1. First you need a Federal EIN as that makes your business official in the eyes of the Feds. No cost. Apply, fill out what you will be doing and you get the number instantly online. Print it out and save a copy as a PDF as you will not get a copy in the mail. Do not misplace this form as it's a pain to get it again.
2. Before you go much farther you need to decide if you will have a fictitious name for the business (Joe's Great Stuff) or if you will just be using your own name. If you want to name your business then you need to file for a fictitious name with the state and county (depending on where you live). It can be a simple as filing one form and then advertising in a local paper that you will be doing business as (insert company name). The paper knows what to do, just call advertising and tell them you are advertising a fictitious name.
3. You need to search and see if your state requires registering your business. In Florida it was not required for me to register with the state as a SP in my own name but I did as I was able to receive a special sales tax exemption if I did.
4. If you will be buying and selling stuff a sales tax certificate (sales tax number) might be required. It allows you to purchase stuff for use or resale and not have to pay tax at point of purchase. It also requites you to be an agent for the state and collect and remit sales tax. It's simple to do and can be done online for the most part. DO NOT SCREW UP WITH SALES TAX, EITHER FILING ON TIME OR NOT REMITTING THE FUNDS YOU COLLECT. The state does not screw around so be responsible (yes, I messed this up to years ago).
5. You will need an occupational license (sometimes called business tax receipt). Might need for city and county. Look on your city and county web sites for all the info. Using your home address is OK. This renews yearly, simple to pay and renew. Remember you are in business and everyone wants their cut. City and county no exception.
6. Open a bank account for the business. You could skip this step as a sole proprietor (I have used one account for everything in the past but it's simpler for me to have a dedicated account and the services of a business banker now that I have good sales to show). If you decide to open a separate account make sure it's a zero fee account as nobody likes paying fees, perhaps use same bank as your personal accounts. If you are serious about building business credit you need a separate account.
7. Keep good records of purchases and sales and be prepared for a much more strenuous IRS filing as there are many more forms that need to be filled out. All sales are reported as personal income. Look into a tax filing software like TurboTax for personal and business. It's a good product and it will step you thru everything you need to complete. Or hire a tax person if you think you might screw it up. DON'T SCREW UP YOUR FEDERAL TAXES. DO NOT CROSS THE IRS - EVER! (Yes, I did this one years ago). Look into paying estimated federal taxes quarterly if you need to as one big check can be tough to write come April of next year.
Hope this helps or get's you started.
