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Vanity: I'm retired and want to become a part-time accounting consultant. Need advice on business formation. Thanks!
Legal Zoom ^ | 08/18/2022 | Self

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.


TOPICS: Business/Economy
KEYWORDS: braking; breaking; businessideas; ccorp; contractor; corporation; cpa; disasterinthemaking; freelegaladvice; helpafriend; honestnigerian; legaladvice; llc; llcforthisisajoke; needadvice; nonprofit; overthinking; scorp; scorpion; scorplmao; vanity
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To: gubamyster

Home office; sole proprietorship; independent contractor ... being in California you should obtain a business license from your city or county to make your “independence” official. Many firms will ask for confirmation.


21 posted on 08/18/2022 12:33:18 PM PDT by glennaro (Live life unbullied and unafraid. Choose to ignore or fight the irrationality that surrounds you.)
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To: flamberge

If the person looking to be a tax consultant didn’t know that stuff….


22 posted on 08/18/2022 12:34:45 PM PDT by Vermont Lt
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To: Eccl 10:2
I just don't want 87,000 heavily armed IRS agents battering my door down.

In that case, you can kill a lot more of them than they can of you simply because there would be a lot more of them than you.

Incorporation generally brings in more state than imperial entanglements.

I bought a number of books regarding incorporating, and then set up the company myself. If you have doubts, just hire an attorney.

I presume you already know how to do accounting. Hopefully, you will not pursue such a business unless you already know how. Filling out tax forms correctly and making the quarterly deposits will keep the tax boys off your lawn.

23 posted on 08/18/2022 12:35:08 PM PDT by GingisK
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To: glennaro

True on the business license. Sole proprietorship, LLC or S-Corp would all need a business license from the city/county.


24 posted on 08/18/2022 12:35:46 PM PDT by gubamyster
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To: flamberge

Exactly what you said.


25 posted on 08/18/2022 12:37:37 PM PDT by RFEngineer
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To: Eccl 10:2

Later.


26 posted on 08/18/2022 12:38:14 PM PDT by wjcsux (RIP Rush Limbaugh 12 Jan 1951- 17 Feb 2021. We really miss you. 😢)
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To: Eccl 10:2

Once you become an actual company, you’ll find the government at various levels wants money out of you. Therefore, just go word of mouth and work without being a standard corporation. Only if you get big enough should you incorporate.


27 posted on 08/18/2022 12:38:25 PM PDT by Gen.Blather (Wait! I said that out loud? )
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To: Eccl 10:2

Free advice on Free Republic? What could go rwong?


28 posted on 08/18/2022 12:38:56 PM PDT by Honest Nigerian
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To: Honest Nigerian
Free advice on Free Republic? What could go rwong?

You never know when there might be a CPA on FR.

29 posted on 08/18/2022 12:42:06 PM PDT by gubamyster
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To: gubamyster
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.

The importance of an LLC is in the name: LIMITED LIABILITY. If you get sued they can only go after the assets of your LLC, not your home or your life savings. A sole proprietorship exposes you to unlimited personal liability.

The single-owner LLC acts exactly the same as a sole proprietorship for tax purposes. It gets "disregarded as a separate entity" by the IRS: You file the same Schedule C, make the same business expense deductions, etc. The only difference is you add the name of the LLC to the form.

For the liability protection to work you have to carefully keep all your business transactions separate from your personal spending. Otherwise in a lawsuit they could try to "pierce the veil" to go after you personally. Open a separate bank account under the name of the LLC and use it exclusively. Get a Visa debit card for the bank account. (Never use a personal credit card.)

As an extra benefit if your business gets audited by the IRS you can easily show all your business transactions by just giving them the business bank statement, keeping your personal transactions private.

30 posted on 08/18/2022 12:43:20 PM PDT by Gideon7
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To: Eccl 10:2

For 5-10 hours a week with a singular customer, why not just go W-2 employee?


31 posted on 08/18/2022 12:44:29 PM PDT by gloryblaze
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To: Eccl 10:2

I work full time as a company accountant and have a bookkeeping business on the side. Very simple.


32 posted on 08/18/2022 12:52:42 PM PDT by cotton1706
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To: Gideon7

You can always open a separate bank account for your sole proprietorship business. I would recommend it for anyone starting a SP. Also set up a separate company file in your accounting software. And keep all transactions separate.

Since the SMLLC files a Schedule C on the personal tax returns, it is combined with all other personal taxes if ever audited. If the IRS wants to audit the SMLLC, they will need the taxpayer’s Form 1040, including the Schedule C.

There might be some legal liability protection of a SMLLC, but not for tax purposes. Working 5-10 hours a week for a friend in accounting may or may not necessitate legal protection. That would be up to him to decide.


33 posted on 08/18/2022 12:54:00 PM PDT by gubamyster
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To: Eccl 10:2

If you have no foreseeable liability for damages caused while conducting your business, why bother with incorporation? Just track your profit/losses, expenses, revenue, etc., to make sure your accounting is perfect for your annual return (or quarterly payroll tax payments). Best to set up separate accounts for the business activities, even if under your own name.

You can get a 2mm+ umbrella policy to cover yourself w/o the incorporation.

Btw, if you do incorporate, you are on the public record in your state and you’ll get scumbags trying to sell you sh* all day long.

Good luck!


34 posted on 08/18/2022 12:54:57 PM PDT by nicollo (arbitrary law is not rule of law)
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To: Eccl 10:2

I’ve been through multiple iterations of businesses over the years. The easiest way to get started is a sole proprietorship. As business circumstances change, regulations, tax code, and any liability considerations change you can quickly change forms of business. In the past, I started a consultancy as a sole proprietor. That morphed to an S-Corp after adding employees and a crackdown by the IRS on my customers. Basically, the IRS wanted my customers to treat me as an employee. Later I dropped the S status for the business to be a normal corporation. That had to do employee benefit plans and executive (me) plans. I had a competent CPA, lawyer and banker that guided me along the way. The key is to have reasons to change forms of business. Most of the time you will find the government forces you into those decisions. Weigh alternate decisions against the profit you make under each form of business.


35 posted on 08/18/2022 12:56:33 PM PDT by ConservativeInPA (Scratch a leftist and you'll find a fascist )
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To: Repealthe17thAmendment

That was excellent. Thank you!


36 posted on 08/18/2022 12:56:42 PM PDT by Eccl 10:2 (Prov 3:5 --- "Trust in the Lord with all your heart, and lean not on your own understanding")
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To: Vermont Lt

I’m not a tax guy. I’ve always been in larger companies and never had to deal with the administrivia like this.


37 posted on 08/18/2022 12:59:53 PM PDT by Eccl 10:2 (Prov 3:5 --- "Trust in the Lord with all your heart, and lean not on your own understanding")
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To: gubamyster
$50 fee for filing a DBA in Pennsylvania. We organized it as a partnership so I could add relatives or friends as needed. This protects the name from use by someone else and gives you access to perks like bonus premiums for business checking accounts. I can still file on a Schedule C as long as the only partner is a spouse with whom I am filing jointly.

I write only a handful of checks monthly and the $300 bonus from the bank paid for the DBA filing, business cards and a nice business size set of checks and book with about $180 to spare.

38 posted on 08/18/2022 1:02:10 PM PDT by Vigilanteman (The politicized state destroys aspects of civil society, human kindness and private charity.)
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To: gloryblaze

Good question, but it’s possible that down the road I could work for other businesses.


39 posted on 08/18/2022 1:02:15 PM PDT by Eccl 10:2 (Prov 3:5 --- "Trust in the Lord with all your heart, and lean not on your own understanding")
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To: gubamyster

In Auburn (CA) a business license for a home consulting business (no inventory, etc.) is 110 bucks ... not a big deal and simple to get.


40 posted on 08/18/2022 1:07:42 PM PDT by glennaro (Live life unbullied and unafraid. Choose to ignore or fight the irrationality that surrounds you.)
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