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Why can't I just handle the business?

Discussion in 'General Entrepreneur Discussion' started by Strategy, Dec 28, 2007.

  1. Strategy
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    Strategy New Contributor

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    I've did tons of research trying to stay compliant with the regulations and guidelines dealing with the legal issues of owning a corporation but as it seems its never ending and theres always something new to learn. My question is why can't I just have someone that handles everything to keep it in order and pay them and let me run my business rather than having to spend majority of the time I could be using to actually conduct the business doing all of this research to try to get everything in order.
     
  2. kurtyordy
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    kurtyordy Bronze Contributor

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    That is called having an attorney and accountant on your team.
     
  3. Strategy
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    Strategy New Contributor

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    okay... but in a small business situation with a min. budget what would be the best thing to do
     
  4. kurtyordy
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    kurtyordy Bronze Contributor

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    what are you trying to do? Are you overthinking things?
     
  5. Diane Kennedy
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    Diane Kennedy Bronze Contributor

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    In another thread you said you had started a C Corporation. That's the most complicated structure there is. There would have to be a VERY compelling reason before I would EVER put a new biz owner in a C Corp.

    So, keep it easy - dissolve the C Corp (if you already set it up) and start with an LLC. You might pay a little extra in tax if you have income, but it will save you lots and lots of hassle in the beginning. Once you know how to run it and are making money, you can either decide to move to a different type of structure that you run (which makes no sense to me) or (better answer) hire someone to do it for you, so you can do what you do best - make some money.
     
  6. hakrjak
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    hakrjak Bronze Contributor Read Millionaire Fastlane

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    It's not ridiculously expensive... I pay my accountant $600 a year to manage everything involved with keeping both of my corporations legal & clean on the books.

    - Hakrjak
     
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  7. Russ H
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    Russ H Gold Contributor Read Millionaire Fastlane Speedway Pass

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    hakrjak-

    Just to clarify:

    You have 2 C-corps?

    And your acct does all the corporate filings and meeting summaries for you, PLUS annual acctg, for $300 per corp?

    Wow.

    -Russ H.
     
  8. Strategy
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    Strategy New Contributor

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    Thanks for all of the valuable information, I hope to be able to contribute more and more as the years go on with these forums. I am also a former Rich dad poster but its pretty much dead.

    the only reason I went with a corp is because the health insurance deduction, that was a big thing with me that I needed and wanted.

    So tax wise it would be way simpler with an llc?

    also, with the corp all I've done so far is file the articles of incorp, haven't even put the notice of incorp out yet. no money deposited or anything. Would it be free to dissolve it or would it cost?
     
  9. Diane Kennedy
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    Diane Kennedy Bronze Contributor

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    S Corp can now take the medical insurance deduction as well.

    The issue with the C Corp is that you have to draw out cash through salary, benefits or non-deductible dividends. With an LLC, it is much easier to put money in and out. An S Corp (which you could get with your current C Corp by filing the S Corp election) is also easier than a C, but you have to have a payroll (which means you or someone) is going to have to calculate and prepare payroll withholding and reporting.

    I don't mean to make this sound impossibly hard to do. You just will have a big learning curve. I have too often seen people who get mired down at this point with all the details and "what ifs" of a corporation, and never get a chance to really have their business.
     
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  10. Strategy
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    Strategy New Contributor

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    Also, I wanted to have an EIN and no a one person llc can't get one... I wanted to be able to build credit and eventually get loans for the corp, if you dont have an EIN that isn't possible right (If i formed LLC)
     
  11. Strategy
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    Strategy New Contributor

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    also could you breakdown all of the taxes specifically if I did the LLC, you would have federal, state, and I been wondering about county, also with the llc do you do any kind of extra taxes like unemployment, or something else i dont know about?
     
  12. Diane Kennedy
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    Diane Kennedy Bronze Contributor

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    A one member LLC can get an EIN - Form SS-4. I'm curious where you are getting your information - I really recommend that you get an experienced advisor and read some books (other than IRS literature - which is practically incoherent) to help you because it seems like you've gotten some incorrect advice.
     
  13. Diane Kennedy
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    Diane Kennedy Bronze Contributor

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    I really recommend that you read "Loopholes of the Rich" because i do go through all the types of tax in that.
     
  14. Strategy
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    Strategy New Contributor

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    so DIANE Im debating on going with LLC or just change it over to S-CORP...
     
  15. Strategy
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    Strategy New Contributor

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    Dianne, my situation now is should I close the corp out and run with an LLC, or elect the C-corp into an S-Corp? Now my question is, in the state of GA what would the overall taxes be for each that I would be paying, I still haven't fully grasped that concept yet because I got bombarded with different info such as having to pay worker's comp, unemployment (even if its just one person) and all of this other...

    Im waiting on a good answer before I finish filing my notice of incorp with the publishing company.

    so if you could please break down in simple terms what all taxes I would be liable for with my business as an LLC, or as a S-CORP.

    I surely will be reading your book but I got to make this decision soon ...


    Also if I formed the corp on 12/20 and haven't did anything would I be liable for 07 at all to provide anything?
     
  16. JesseO
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    JesseO Contributor

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    Diane's book, "Loopholes of the Rich" is free (plus shipping) through this website. I ordered and received my copy several weeks ago. It has been an excellent read and I suggest that you look into it, Izzalap. Best of luck on your business =)
     
  17. LightHouse
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    LightHouse Legendary Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Diane this post took the words right out of my mouth. I am also curious as to where you heard you could not get an EIN for a SM LLC! Atleast if you call a local professional they can advice you of costs up fornt and you could get that money in order and get solid advice based on your individual situation!
     
  18. Diane Kennedy
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    Diane Kennedy Bronze Contributor

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    Let's see if I can make this simpler:

    Income taxes are based on income. How much taxable income will you have?
    (Federal, state income tax)

    Payroll taxes are based on payroll. How much payroll will you have?
    (Social Security, Medicare, Unemployment, Worker's Comp)
     
  19. Strategy
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    Strategy New Contributor

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    ^ Thank you... that is what i've been trying to actually figure out..

    now the question is, sitting here with my C-Corp, yet to actually file the notice of incorporation, would I be better off electing an S-Corp or closing it out and changing it to an LLC....


    also, with an LLC, can you build actual credit through your company like you could a corporation?
     
  20. Strategy
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    Strategy New Contributor

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    Okay. after looking into the situation some more I think my best bet is to dissolve the corporation and form the LLC...

    I made a mistake by jumping into it and forming the corporation like I did but I do not regret it at all, its all apart of the learning process...

    so overall, as an LLC correct me if I'm wrong but I will be paying

    -15.3% for the self employment taxes
    - Federal Income taxes
    - State income taxes

    and all of these income taxes I pay will be from my personal level correct? or does LLC's have to pay state tax?

    I'm sorry for all of the questions and wrong information but I really do appreciate all of the help and will support you in anyway I can.
     
  21. Strategy
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    Strategy New Contributor

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    After reading that from your thread though Dianne, I'm questioning on just changing the C-Corp to an S-Corp but I also read the way an S-Corp is even if you don't end up making any money you still have to pay yourself a reasonable salary and you could end up paying taxes on income that was your's from the get go..

    If you get a chance please fill me in on the best thing I could do in this situation... I really do appreciate it..

    right now im sitting here with a C-corp and haven't even filed the notice of incorporation yet so I'm on the edge of my sit waiting on the best thing to do..
     
  22. Strategy
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    Strategy New Contributor

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    don't forget about me, dianne ...... I need you!!! lol
     
  23. Diane Kennedy
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    Diane Kennedy Bronze Contributor

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    IZZALAP:

    You have a couple of threads going and I got confused. I'll just answer on this one (although I wonder if it shouldn't be in the tax area)

    In another thread I asked you how much taxable income you would have from the business and how much payroll you would have.

    I understand you are confused, but without good information, you can't get a good answer.

    So, I'll repeat those questions. When I say payroll, btw, I don't mean what gets paid to you - I mean other people. We can adjust your salary, especially in the first few years, depending on how the income from the company goes.
     
  24. Strategy
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    Strategy New Contributor

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    I will be the only employee right now if that helps at all. The company is an entertainment services company, offering music production, cd duplication and printing, graphic design, marketing, recording time, and it will be hosting many events and showcases which will bring profit...

    It's hard to give you a number for taxable income because this is the first year I am incorporating all of these services together. In the past 6 years I've just been selling rights to the music production and averaging 5-6k a year (before expenses)

    But this year, with all of the new services I plan on building many new clients in markets I've never touched with the cd duplication, printing, and graphic design services such as music artists needing cds manufactured all the way to businesses' needing catalog's, flyers, ad's made.

    I also plan on the official website to be a success with alot of helpful information and an online place to order products.

    In the more distant future I plan on having a commercial location that will be home of the company and offer the services at the home base.

    I hope this helps you understand what's going on a little more...

    so in conclusion, I truly believe if I play the numbers right the amount of taxable income could be relatively high and you should always aim high but I am still being realistic knowing this is the first year and it's a lot of growing that will need to be done to get it off the ground.

    The problem I'm facing now while I'm finishing up the prices, web design, and going out generating leads is getting this tax situation and business structure in place correctly before I start generating income.

    Thanks so much..
    When this thing blows up I will surely include you in everything I do and help you the same way you helped me.
     
  25. Diane Kennedy
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    Diane Kennedy Bronze Contributor

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    IZZALAP -

    This is the part that's hard. I could give you an answer (probably tell you to elect S Corp), but I have no idea if it's right or wrong because I dont' know what the taxable income is.

    Taxable means after expenses, so after expenses is it.... a loss? Less than $50K? $50K - $150K? More than $150K?
     

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