Posted on 08/18/2022 12:16:21 PM PDT by Eccl 10:2
It's just me in the business so I can help a friend who is a building contractor. 5-10 hours a week.
So I don't want to pay large setup or annual fees.
I just don't want 87,000 heavily armed IRS agents battering my door down.
I'm in North Carolina if that matters.
LLC?
S Corp?
DBA?
You should do research for your own state, but generally just set up an LLC. Low-cost, easy to do. You may want to look at doing an S-corp, but again up to you and your state and doesn’t consider your any possible state professional licensing rules.
LLC is the way to go IMO. LegalZoom works.
Why not just keep it simple with a sole proprietorship & file a Schedule C? There would be no set-up cost for a sole proprietorship.
You can get a FEIN (tax ID) for a sole proprietorship if you don’t want to have your SS# on documents or invoices. You can get this online at the IRS website, no cost.
You can file for a DBA to use a more professional business name other than your personal name. The DBA would be minimal cost.
Check the website for the Department of State in your state. You have to file some paperwork with the state. You should also have articles of incorporation for a corporation or membership agreement for an LLC.
Most states let you file an LLC youself.
CA takes 5 minutes on the SOS website.
Legalzoom is too costly imo.
My wife has her business set up as a Sole Proprietor. Her income and tax deductions get added onto mine. We use it lower my W2 taxable income with write offs.
I don’t know about the laws in North Carolina but here in AZ you can just file a business return as an individual for the income from your consulting business. BUT it’s imperative you keep meticulous records and receipts. You want the results of any tax audit to be a refund from the government. If you think you might need protection you can file a LLC but if you are basically going to only have one client you don’t need to go to all that trouble (unless your state requires it)
DBA...I did it for years.
Sole prop. For now. If it gets bigger deal with it later.
I wish I had known that but including trademark registration, it wasn’t too bad.
There is zero tax advantage for a LLC over a sole proprietorship. A Single Member LLC is a disregarded entity for IRS tax purposes & you would still file a Schedule C. The LLC is subject to self-employment tax, same as a Schedule C.
The S-Corp would help you bypass some of the self-employment tax, but you would need to do payroll, or hire a payroll company.
It depends on your Gross Income & Expenses and how much Profit you expect to make whether it is worthwhile to set up an entity. Also, how long do you plan on doing this? If only a for a year or two, then it might not be worth it.
I agree. For one client, 5-10 hours a week, S-Corp is definitely overkill, but LLC is likely more than needed as well.
Schedule C...office in home...no problems.
actually the irs is hiring ;)
I would consider re retiring and do it right next time since you want to un retire
You should ask your accountant.
Open a separate business checking account with your local Credit Union. It is cheaper than an account from a bank. Deposit all business payments to this account, then transfer funds to your separate personal account as needed.
Transfer your tax reserve to the savings account that goes with your business checking account. Then you will always have enough on hand to make your quarterly tax payments. Do this every month. Do not ever skip this step and do not raid the tax fund for any reason. Oh, and make those quarterly tax payments on time, every time.
Best of luck to you!
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