I am looking into doing a sole proprietorship and the cost to start one is more than I expected (about $400). Anyone have resources to offer or info?
QUOTE(Dr Evil @ Jun 23 2009, 02:28 PM) 
I am looking into doing a sole proprietorship and the cost to start one is more than I expected (about $400). Anyone have resources to offer or info?
What's the $400 for, state registration, insurance, lawyer's fee, or what? If it's a state fee to register your business then not many alternatives. What exactly are you trying to achieve?
I went to legal zoom to see what it would cost. They charge $99 for the file service (not bad), state fees are $187 (Why???) I forget that the rest was for. I want to charge and pay taxes. I can get discounts on parts I buy and shipping I do this way. However, it seems kind of stupid to do this since this will likely be the last profitable year for me as once I start my residency I will not be doing rebuilds much. Maybe $500-1000 a year.
You should be able to download the forms and file them yourself. It is pretty easy actually. If you arent using your name as a business name, then you will need to file a DBA.
Ya, I think the DBA fee was one of them as well. I have a friend's mom that is a paralegal and can likely get me the forms and do the filing for free....we shall see.
The legal status of a sole proprietor is useless.
Any business with you as the 100% shareholder is not a legal entity that is secure, even if you split it with your wife, its still not decent protection..thus not worth the fees.
To obtain an EIN number for tax purposes, you need a business.
Go to the town hall and ask for the registration forms...its that and the IRS form for the EIN number.
Rich
Any business with you as the 100% shareholder is not a legal entity that is secure, even if you split it with your wife, its still not decent protection..thus not worth the fees.
To obtain an EIN number for tax purposes, you need a business.
Go to the town hall and ask for the registration forms...its that and the IRS form for the EIN number.
Rich
It varies for each state. In GA, I have created two C corps over the years and have done it myself online for a $100 each. With the little income you are generating, I'm not sure I would bother. Then, there are tax issues. You may want to get some advice from an accountant.
Ah yes...taxes.
A C corp provides ZERO protection for a 100% owner.
It does come with the business tax....so you pay twice for the money you recieve...once for the C corp..then you pay again on your individual taxes...worst way to go tax wise (ever)
The only reason for a C corp today is if you plan to list on the stock exchange, or sell shares.
S corp was designed to eliminate the double taxation issue...it worked for a bit, but the fed and state Corp fees are still to high so it never was a great idea.
The new flavor of the day is an LLC/LLP. It also provides flow through taxing so you wont be double taxed on the business revenue. It still gives you a vehicle to write off business expenses and obtain an EIN number.
The LLC also allows you to include partners in the LLC by selling units (basically shares, but not) and you can give them away..(you cannot do that in a corp...loads of rules) so its not as complicated as a corp...way less fees and can be done fairly quickly and cheap. The LLC is still being tested, but its the wild west right now...you can make up your own rules for the LLC, legally and its how it is done.
I would suggest an LLC, its cheaper and provides a better tax setup than a sole proprietorship at the end of the day...you can write off more of your expenses.
Rich
A C corp provides ZERO protection for a 100% owner.
It does come with the business tax....so you pay twice for the money you recieve...once for the C corp..then you pay again on your individual taxes...worst way to go tax wise (ever)
The only reason for a C corp today is if you plan to list on the stock exchange, or sell shares.
S corp was designed to eliminate the double taxation issue...it worked for a bit, but the fed and state Corp fees are still to high so it never was a great idea.
The new flavor of the day is an LLC/LLP. It also provides flow through taxing so you wont be double taxed on the business revenue. It still gives you a vehicle to write off business expenses and obtain an EIN number.
The LLC also allows you to include partners in the LLC by selling units (basically shares, but not) and you can give them away..(you cannot do that in a corp...loads of rules) so its not as complicated as a corp...way less fees and can be done fairly quickly and cheap. The LLC is still being tested, but its the wild west right now...you can make up your own rules for the LLC, legally and its how it is done.
I would suggest an LLC, its cheaper and provides a better tax setup than a sole proprietorship at the end of the day...you can write off more of your expenses.
Rich
Mike :
Check out a LLC. you can incorporate as a S.Corp. and have the type of
protection you need. If some fool decides your rebuiled job was the reason his 914 hit someone and killed them. All they can get is the assets of the corp. NOT EVERY PENNY you make for the rest of your life. My 2 cents
Check with a lawyer before you do anything, please. Dave
I would definitely rather do an LLC, but I was finding it even more expensive to do. I will look into it. I just dont make enough on the side to justify paying to make a few bucks on the side. Ya know what I'm sayin'?
They said it before I could.
You need to set your business as an LLC, not a S.Prop. There is a TON of added protection.
However, unless you are worried about an audit, I'd consider not doing this at all and continuing to work under the table. If you were not going into residency in a few months, I'd not suggest this.
Zach
You need to set your business as an LLC, not a S.Prop. There is a TON of added protection.
However, unless you are worried about an audit, I'd consider not doing this at all and continuing to work under the table. If you were not going into residency in a few months, I'd not suggest this.
Zach
keep in mind the "corporate veil" is easily broken, especially when it is just you. If, for example from above, somebody died and it could be directly attributed to your trans rebuild, a good lawyer will pierce that veil and take your assets. C Corps are the hardest to pierce (as I recall with the various requirements to be one and so forth) but even those get pierced, especially when it is a small group of people, let alone an individual.
Also when I had my own biz and wanted to set up as a corp for that veil, the facts are that pretty much any agreement that I had to enter (such as my lease for space) I had to sign the bottom line, I couldn't sign it as the corp - they wanted my name on the line or nothing at all. Same for all of my suppliers - they wanted a name on the bottom line so if I decided to walk away they were gonna get paid or get some right my personal assets. My accountant advised I not even bother with paying the fees and doing all of that - I got a resale # and a DBA from my local city and called it a day.
Lastly, you should be able to have a biz, declare income and losses on your personal taxes, and not have a resale # or DBA, especially if it is a labor biz. You can't typically tax labor (check your specific state I guess) so you don't have to have all that setup. If you want the resale # to have access to distributor pricing, pass part taxes to the customer, etc, then just do the local stuff.
Best advice I can give in the end tho' is find an accountant with somewhat questionable scruples and get his opinion
one that is willing to state how things really are, not how they are on paper 
Also when I had my own biz and wanted to set up as a corp for that veil, the facts are that pretty much any agreement that I had to enter (such as my lease for space) I had to sign the bottom line, I couldn't sign it as the corp - they wanted my name on the line or nothing at all. Same for all of my suppliers - they wanted a name on the bottom line so if I decided to walk away they were gonna get paid or get some right my personal assets. My accountant advised I not even bother with paying the fees and doing all of that - I got a resale # and a DBA from my local city and called it a day.
Lastly, you should be able to have a biz, declare income and losses on your personal taxes, and not have a resale # or DBA, especially if it is a labor biz. You can't typically tax labor (check your specific state I guess) so you don't have to have all that setup. If you want the resale # to have access to distributor pricing, pass part taxes to the customer, etc, then just do the local stuff.
Best advice I can give in the end tho' is find an accountant with somewhat questionable scruples and get his opinion
one that is willing to state how things really are, not how they are on paper
Unfortunately, this all varies from state to state as well. I have a S corp for my veterinary office, and am a member in a few LLCs as well. It all seems to make the accountants and lawyers happy, but usually I just see fees appearing from the State of Illinos and Feds all the time.
You may really just want to keep it simple and do as you've been doing. A sales tax number and business license should allow you to get distributor pricing if you meet your supplier's minimum order amounts.
Best of luck with your venture, but figure you won't be seeing the light of day until your residency is over! Then you can go for the big bucks (probably by rebuilding transmissions as the government wants to take over healthcare and pay the doctors and other medical professionals squat)!
You may really just want to keep it simple and do as you've been doing. A sales tax number and business license should allow you to get distributor pricing if you meet your supplier's minimum order amounts.
Best of luck with your venture, but figure you won't be seeing the light of day until your residency is over! Then you can go for the big bucks (probably by rebuilding transmissions as the government wants to take over healthcare and pay the doctors and other medical professionals squat)!
S corp is an IRS only status.
In ohio the fee for Incorporation with 100 shares of stock is about $120
There is a great book I got years ago and has helped me greatly, check you local library for:
"Desk Book for Setting up a Closely Held Corportation" by Robert P. Hess.
I have had three small closely held corps over the years and am willing to trade my understanding of this matter for transmission work to be performed at a later time.
PM me.
-Duane
In ohio the fee for Incorporation with 100 shares of stock is about $120
There is a great book I got years ago and has helped me greatly, check you local library for:
"Desk Book for Setting up a Closely Held Corportation" by Robert P. Hess.
I have had three small closely held corps over the years and am willing to trade my understanding of this matter for transmission work to be performed at a later time.
PM me.
-Duane
> A C corp provides ZERO protection for a 100% owner.
Where are you getting that info?
-Steve
Where are you getting that info?
-Steve
This is a "lo-fi" version of our main content. To view the full version with more information, formatting and images, please click here.