Startup business registration timing and tax issues

[EastWind]

I'm currently working on my current project. I don't want anything in my name, I want to get the domainname, and start putting some of these expenses in the business name. But I don't know how the TAX situation works, I figure I will have no income in the next 6 months to a year.

If I create an LLC business, how soon from the date of incorporation does one start filing tax, and how often? Seeing that I'll have no income, will it be easy to file by myself?

thanks.

 

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[PaulRobert]

I think your best bet is to talk this over with a CPA.

You can always file an LLC by yourself, but you should be somewhat familiar with the documents needed.

 

[Bond]

You can also check this to learn how to do it.

SD 16 | From Idea To Company In 7 Days | Startup Daddy Home Business Development

 

[EastWind]

You can also check this to learn how to do it.

SD 16 | From Idea To Company In 7 Days | Startup Daddy Home Business Development

thanks for the link, do they have a transcript? do they talk about TAX issues?

update: okay, i listened to it, they didn't address what i wanted.

 

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[EastWind]

First, figure out WHY you want to set up a corporate entity at this time. Is it for the tax benefits? Probably not, as you don't plan to have any income for a while. Is it for the asset protection? What assets do you have to protect, and can they just as easily and cheaply (maybe more so) be protected with a general liability policy from your insurer?

Don't just create a corporate entity because it SEEMS like the right thing to do. Do it for a reason, and validate that the reason is worthwhile. Talk to a CPA. Talk to an attorney.

You may very well find that putting off the creation of the company will help you down the road, as you'll be better able to judge your level of risk and income down the road, so you'll have a better idea of what type of entity will be most useful.

As for filing taxes, if you'll need to register with your state and with the Feds, but if you're not earning income and not paying yourself a salary, you won't have to do any filings (unless your state requires it) until the end of your first fiscal year.

I want to register the domainname and the hosting. I don't want them to be in my name. To be honest, that's the only reason.

 

[GlobalWealth]

First, figure out WHY you want to set up a corporate entity at this time. Is it for the tax benefits? Probably not, as you don't plan to have any income for a while. Is it for the asset protection? What assets do you have to protect, and can they just as easily and cheaply (maybe more so) be protected with a general liability policy from your insurer?

Don't just create a corporate entity because it SEEMS like the right thing to do. Do it for a reason, and validate that the reason is worthwhile. Talk to a CPA. Talk to an attorney.

You may very well find that putting off the creation of the company will help you down the road, as you'll be better able to judge your level of risk and income down the road, so you'll have a better idea of what type of entity will be most useful.

As for filing taxes, if you'll need to register with your state and with the Feds, but if you're not earning income and not paying yourself a salary, you won't have to do any filings (unless your state requires it) until the end of your first fiscal year.

Even though I would normally recommend ownership of your business to be held inside a corporate entity (esp considering this is my business), I agree with JScott here. Why would you try to 'put the cart before the horse'?

Rule number one in creating is a business - you must first have a customer. The rest of the BS tends to figure itself out. Unless you have some plan to rocket launch into a $1m plus business in the first year, concentrate on getting customers and making money. Once that starts to happen, figure out the rest.

And you can always register your domain, but keep ownership hidden. Most of the registries allow you to hide ownership.

 

[PaulRobert]

Rule number one in creating is a business - you must first have a customer. The rest of the BS tends to figure itself out. Unless you have some plan to rocket launch into a $1m plus business in the first year, concentrate on getting customers and making money. Once that starts to happen, figure out the rest.

What if the customers you might be dealing with, are different businesses? (B2B) IMO I think that they would take you more seriously if you come to them as an entity instead of as an individual.

I see how the situation can sway and it varies on the type of business you have going on.

MJ posted this over a year ago..

I'd recommend setting up your corporate entity immediately. You've already made the BIG DECISION that you will be an entrepreneur. All your entrepreneur ventures will just shell under your corporation. (At least until one becomes your bread-n-butter.) If you fail, so what. You corporate continues as it just engages into a new line and/or industry.

When I got started, my corporation was always the underlying entity, despite having many failures. There is also significant tax advantages to being structured as an entity vs a sole proprietor.

That said, I recommend incorporating immediately.

Don't incorporate as: MyWebsite.com, LLC (Limits scope to 1 venture)

But something like:

Plymouth Rock Media, LLC
Rock Solid System Development, LLC

These have unlimited scope.


THE ABOVE IS NOT LEGAL, TAX, OR ACCOUNTING ADVICE BUT MY PERSONAL OPINION.

 

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[GlobalWealth]

What if the customers you might be dealing with, are different businesses? (B2B) IMO I think that they would take you more seriously if you come to them as an entity instead of as an individual.

I see how the situation can sway and it varies on the type of business you have going on.

MJ posted this over a year ago..

Of course I am a bit biased, but I normally recommend some type of business entity for anyone looking to start a company.

My 13 yr old daughter asked me a few months ago "what do you have to have to start a company?" My answer was "a customer".

Ironically she was hung up on the logistics of the business side of things like structure, banking, accounting (yes, she really was, but she can't help it, she's my kid) and not thinking enough about the source of this income.

Like JScott said, run the business for a bit and maybe then you will have a better understanding of what entity best suits your needs. Of course, if you have a business plan ready to run and will be making money from day one, start it right. Get everything done in advance. But if you are selling tshirts with some witty screen print art on them in small batches or one at a time, just worry about selling that next tshirt.

If you are B2B and you need the corporate entity to show credibility, then of course do it. In some B2B environments the vendors and clients will require you to have a DUNS number. You will need a proper structure and a tax id in that case.

 

[EastWind]

Why not?

the type of business, need to remain anonymous, privacy and liability.

 

[EastWind]

As mentioned above, with domain registration and hosting, it's no more difficult to remain anonymous as an individual as it is with a business (just one more level of indirection).

If liability is an issue, you should consult an attorney. A corporate entity may or may not help (depending on the type of entity and the type of liability) and a general liability policy may be just as effective and a whole lot cheaper/easier...

so what you are saying is that if i do domain registration and have it anonymous, i can later on switch the contact info later on to the name of the LLC without my name being exposed?

 

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[GlobalWealth]

so what you are saying is that if i do domain registration and have it anonymous, i can later on switch the contact info later on to the name of the LLC without my name being exposed?

no problem