Thread: 6 month old $60k/mo business, now what?

Sounds to me like you already know what to do. Once you set up as an LLC or corporation you can run everything through the entity as a tax write off. You got the bucks now. Make good use of the pros. I wish I was at that stage and Had those kind of problems. Just almost getting over the start up hump. About a few more grand to go. LOL

doubledutch do not be cheap right now, this may be your only shot. Pay someone highly recommended to help do it for you, i would not even try to set anything up myself your bringing in enough where it makes sense to get someone who knows what they are doing to set things up for you, then expand.

Agreed. A good lawyer and tax accountant combo are not going to cost you money... they are going to save you money. It will be a breeze to get a corporation set up, get the paypal account converted over from personal to corporate, and keep going.

Make SURE you get the accounting issues handled before the end of the year. If you don't get the corporation in place, you will lose thousands of dollars in legitimate write offs.

Good luck! Keep going!

Talk to everyone you know who owns or runs a business. Get recommendations. Go interview and select an accountant and lawyer that fit your passions, direction, and philosophies. Let them put together a good plan to do what is needed to setup your company for the long term and for possible future sale.

Now the IMPORTANT part. In the mean time, go do your due diligence. Learn about all of these things (incorporation, tax structures, etc.) and determine what you think is best for your company. Do not just accept what they say without confirming for yourself. If I had listened to our accountant (who is top notch and very experienced), our company would not be set up they way it needed to be. No one understands your business the way you do. But you should only set the direction....use their professional expertise to do the paperwork and help steer you to the correct choices.

Finally, (I was done after the last paragraph, but this incredibly important point jumped into my head)..... MAKE the time to do this. Schedule 90 minutes twice a day that is completely uninterrupted to handle this task. Stay on it until completed. There is nothing more important you will do for your business than to first understand and then to do this right.

Hope that helps and good luck.

Originally Posted by theBiz

doubledutch do not be cheap right now, this may be your only shot. Pay someone highly recommended to help do it for you, i would not even try to set anything up myself your bringing in enough where it makes sense to get someone who knows what they are doing to set things up for you, then expand.

AGREED- @60k per month and 60-70% profit, I would say to do it right. See if you can find someone to recommend a good accountant and a good lawyer.

Good Job! Keep it up!

Whoa you guys are awesome! Thanks for all the encouragement! I was tempted to say "I got lucky and.." but as MJ says that is kind of an insult. I have worked my a$$ off to get to this point and I agree with the people above it's no time to get cheap--I want to take this as big as possible so I can move on to the real fun--growing money trees like MJ recommends!!

Originally Posted by Vigilante

Agreed. A good lawyer and tax accountant combo are not going to cost you money... they are going to save you money. It will be a breeze to get a corporation set up, get the paypal account converted over from personal to corporate, and keep going.

Make SURE you get the accounting issues handled before the end of the year. If you don't get the corporation in place, you will lose thousands of dollars in legitimate write offs.

I have been thinking about this. Do you guys think it makes sense to try and bust out some huge capital expenses, like spend 60-70% of my profits on stuff that will support the future growth of the business?

I'm honestly afraid if I don't stay liquid enough I will not be able to respond to potential changes in the business with enough agility.. however I don't want to get rakes over the coals on taxes either. What's the right amount to spend to minimize tax liability but still have the war chest to get freaky when needed?

(Again I realize this is a super vague question, so if you want more details, please let me know. Of course I can't share too much on a public forum but some stuff I'm sure is safe.)

You need help in properly structuring your business immediately. You are operating with an enormous amount of risk when generating this amount of monthly cash.

It paints a huge bulls-eye on your back.

There are lots of things that can be done to minimize your risk and lower your tax burden. Let me know if you have any questions.

Originally Posted by GlobalWealth

You need help in properly structuring your business immediately. You are operating with an enormous amount of risk when generating this amount of monthly cash.

This is what keeps me up at night.

Originally Posted by GlobalWealth

There are lots of things that can be done to minimize your risk and lower your tax burden. Let me know if you have any questions.

Yes I've got a million questions. Hitting you up on PM..

Dutch. Talk to a tax guy. Don't take anyone's advice from here without talking to a legit tax strategist. They will probably tell you to set up a c-corp where you can leave the cash sitting in the company vs. an s-corp where it passes through to your personal taxes. Someone might accidentally give you bum advice on here. You need a pro at this point.

I have never been a fan of spending money on capital expenditures to create taxable savings events. What I was referring to on tax savings for this year is expenses you already have that an accountant can itemize differently if the expense is attributed to a corporation. Many more angles you can give an accountant to play with.

Originally Posted by doubledutch

The structure this corporate lawyer came up with is a holding company (a private LLC) in a tax-friendly Asian country which he calls a "licensor" and then local "licensees" set up in the US (my home country) and my partner's European country. He has single-digit profits then staying in the holding company, which is the Asian country's required minimum retention. Then the rest being paid to the licensees (for which there is only 1 shareholder each--me and my partner respectively).

I would take it a step further and set up the 'holding company' in a no-tax country. Then use a US company only for local operations. This way you can shift a large amount of profit into a no-tax country and defer there indefinitely.

I have been thinking about this. Do you guys think it makes sense to try and bust out some huge capital expenses, like spend 60-70% of my profits on stuff that will support the future growth of the business?

well i dont want to get into your business but what are you doing? Are you selling an automatic seo product or something. It depends if this is a real long lasting business or just some quick buck thing like selling an e-book on how to train your dog until 5,000 other people enter and your making 2k per month instead of 60k.

I'm honestly afraid if I don't stay liquid enough I will not be able to respond to potential changes in the business with enough agility.

30% of 60k is 18k per month. Anyway to increase your profit margin (even though 70% is crazy high)? Anyway to capture anymore of that 18k not going in your pocket?

Also you have to ask yourself what are your monthly expenses, i swear if you tell me $1,000 and your asking this question ill be mad. You should be rolling over 30% profit IMO if you think this has a future.

Do you have any family members that will bridge you if something goes wrong or you need to expand?

Stop doubting yourself your bringing in 60k per month, your the man right now, not me, or anyone else, you obviously know what your doing, hopefully your business has some difficult barriers to entry though.

Originally Posted by Vigilante

Dutch. Talk to a tax guy. Don't take anyone's advice from here without talking to a legit tax strategist. They will probably tell you to set up a c-corp where you can leave the cash sitting in the company vs. an s-corp where it passes through to your personal taxes. Someone might accidentally give you bum advice on here. You need a pro at this point.

Yeah as a guy who knows zip about tax laws or incorporation I think I am just going to have to go with getting a couple different guys to look at each others' plans and rip them apart, then see what's left standing. Does it always work this way--e.g. talk to 10 different tax guys, get 10 different plans?

Originally Posted by Vigilante

I have never been a fan of spending money on capital expenditures to create taxable savings events.

Is your reason in order to stay more liquid so you can pump up your war chest and stay agile? Or something else

Originally Posted by GlobalWealth

I would take it a step further and set up the 'holding company' in a no-tax country. Then use a US company only for local operations. This way you can shift a large amount of profit into a no-tax country and defer there indefinitely.

There are no-tax countries?!?

Originally Posted by doubledutch

There are no-tax countries?!?

yes, there many of them.

Sounds like you need a legitimate business mentor/coach and not one of the IM gurus to help you with the actual running of a business. Or HIRE an Operations Manager.

There has been some great advice about how to handle tax, legal stuff etc on here but you need to take control of the business from a management perspective. Also you don't need an "offshore" holding company to escape taxes. For example, South Dakota is an extremely tax friendly state for businesses.

I have a ton of resources for actually setting up a business if you are interested.

Originally Posted by bluepensuccess

Also you don't need an "offshore" holding company to escape taxes. For example, South Dakota is an extremely tax friendly state for businesses.

This is a generalized, unqualified comment as each business has different situations.

Online businesses are actually perfect for an offshore structure as are many companies with various intellectual property or non-US assets.

With proper planning and structure, offshore planning can be greatly beneficial.

Yes, SD is a good tax friendly state with no state income tax, but we still must consider federal income tax.

Global, is it much better/easier to set up an online biz offshore as you start it? Is it more complicated/costly to do it later after you get it up and running?

Originally Posted by CommonCents

Global, is it much better/easier to set up an online biz offshore as you start it? Is it more complicated/costly to do it later after you get it up and running?

Generally speaking, its better/easier to start offshore if that makes sense for your business from the beginning.

The issue I have come across is that most Americans start their business in the US (big market) and move it into the global marketplace. In this case, you have no other choice but to transition after the fact.

For example, you have a business that sells almost exclusively to the US, but over time your business moves towards 70% foreign. this is likely a slow process, but you should be aware of the opportunity to move offshore.

If your business begins with the ability to be offshore, then by all means, go that route.

From an asset protection perspective, there are many, many good reasons to have your business and some amount of your wealth offshore.