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Starting a Limited Liability Corporation

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Junebug0525 posted 1/11/2014 08:56 AM

I'm forming an LLC for photography. I have no idea what I'm doing! I never took business classes and not quite sure about the tax stuff. Anyone ever done this before? Advice?

NotDefeatedYet posted 1/11/2014 09:23 AM

Make a business account for ONLY business expenditures. If you link your personal account to your business account, or make personal purchases out of the company account, you lose your LLC protection. You can link them electronically so you can easily transfer money between the two though.

The paperwork here was easy. You fill out the paperwork through the state attorney general and pay your fee. You should be able to go online and look to see what business names are taken. We have a business tax, but unless you make more than $250K a year, you aren't required to pay a tax. You are, however, still required to fill out the form and send it in indicating you owe nothing. Check for that sort of stuff in your state.

It's not that difficult, but there are things you learn along the way. We started an LLC in 2010 and that is my wife's full time job.

sisoon posted 1/11/2014 17:07 PM

An LLC has advantages over a corp, but in Illinois it's $400/year, and a corp is $100. For a micro-business, I think the corp is a better structure in Illinois. Check the costs in Texas.

[This message edited by sisoon at 5:07 PM, January 11th (Saturday)]

tushnurse posted 1/11/2014 18:41 PM

We did this for our bee business this past summer and I too have limited experience with business and tax law. We set up a separate account with Bank of America and they helped with the LLC forms and submission.

We made sure we came out no profit for tax purposes this year per my Husbands rec's he has a business finance degree and knows a lOt about tax laws due to his occupation. The extra funds we had at end of bee season were invested in equipment.

unbreak_my_heart posted 1/12/2014 15:54 PM

check with a licensed CPA in your area, they can and will explain it to you. And help with your needs. (check with a few to get a feel of who will be best for you, most have free consultations)

lynnm1947 posted 1/12/2014 16:31 PM

In Canada, the governments have booklets that inform you of all the stuff you need to do to get started, and to keep up month to month.

Junebug0525 posted 1/23/2014 10:59 AM

Thanks all! It's formed, just need to sit down with a CPA for the tax stuff!

TrulyReconciled posted 1/23/2014 12:03 PM

The best advantage is that (as a single-member LLC) you don't do payroll taxes. You bring home draw and pay income tax on that.

As a sole member, you may be exempt from paying workman's comp insurance on yourself too - depending on state law.

[This message edited by TrulyReconciled at 12:07 PM, January 23rd (Thursday)]

sparklezombie posted 1/23/2014 12:58 PM

I've done this before. I own my business and have for 5.5 years. I also counsel business clients and set up LLC's and Corps as part of my job.

An LLC is great for liability protection, but talk with a CPA about filing an S-Corp election. This will allow you to take a reasonable salary (upon which you pay employment taxes as an employer of about 15%), then anything over that reasonable salary does NOT incur the employer taxes. So you save 15%. It's huge in the long run.

I generally recommend that you use that savings to beef up your retirement. You can use a SEP IRA or a Simple IRA (depending on whether you have employees or not). You don't need a 401k for a small business - the fees are way too high. I have two employees and have a simple IRA. Works great and is cheap.

Talk with the CPA about setting up Quickbooks. I know it may seem like overkill when you're first starting out, but QB is universally known by CPAs, easy to find support on and easy to use. It will allow you to track your spending, clients/customers, income, expenses and do taxes really easily. You can also do payroll through QB for an additional yearly fee. I use it and love it. I can email the file to my CPA to work on and he sends it back to me.

Keep all business and personal stuff separate. I use a business credit card (through Citicards) and put all business expenses on it. Don't commingle accounts. Period. Don't do it. The LLC won't work to protect you if you commingle accounts.

The bottom line is that finding a good CPA will be worth the time and money. Find one that works with small businesses so the fees will be reasonable.

If you want to chat more, feel free to send me a message.

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