I'm thinking about incorporating

[draggar]

My wife incorperated her business earlier this month and it was roughly $40.

The past few days I've been thinking of the same, but I am unsure if I should do it or not.

The advantages:
Tax writeoff for domain purchases, hosting, internet access, PC equipment, books, software, etc..

Disadvantages:
More to report to Uncle Sam, have to report income from parking, adsense, and domain sales.

Any thoughts on this? How should I go about reporting income? All? Some? I'm not planning on leaving my full time job at this time, though so I'd say 95% of my taxes (99% next year) will be from that.

Edit: I just spoke to my wife and it was a couple of hundred dollars to incorporate, $40 was for the business license. But, I might be able to get a license under her incorporation.

 

[anatoly]

plus you need an accountant to do the taxes as it is far more complex then for individuals.

 

[jdk]

Why not do an S-type LLC? Less paperwork and documenting.

I'd admit, I used to do my taxes, but have someone else do them now with all the business stuff. It is definately worth doing with all the deductions you can get.

edit - If you are going under her license, I believe you can get a DBA or fictious name which wouldn't cost much.

 

[JohnnJohnn is verified member.]

Are you making more than $250,000 a year?

 

[draggar]

plus you need an accountant to do the taxes as it is far more complex then for individuals.

This year (2008) is the first year in a very long time we didn't use an accountant, we know a very good one so I'm only wondering about the increased cost.

Why not do an S-type LLC? Less paperwork and documenting.

I'd admit, I used to do my taxes, but have someone else do them now with all the business stuff. It is definately worth doing with all the deductions you can get.

edit - If you are going under her license, I believe you can get a DBA or fictious name which wouldn't cost much.

My wife has an LLC and suggested that is the way I should go, which is the $40 license. Not sure about the DBA but I'm also not sure about which name to use, right now I operate with two business names (DNCoyote and CanineComputing - I may stick with Canine Computing since my wife's business lisence is for dog training (amongst other things).

As for deductions, too bad I just paid for two years of hosting last month but I know I could get ISP, domains, even new computer equipment as a deductible since the business will be web development and domain reselling.

 

[jdk]

This year (2008) is the first year in a very long time we didn't use an accountant, we know a very good one so I'm only wondering about the increased cost.



My wife has an LLC and suggested that is the way I should go, which is the $40 license. Not sure about the DBA but I'm also not sure about which name to use, right now I operate with two business names (DNCoyote and CanineComputing - I may stick with Canine Computing since my wife's business lisence is for dog training (amongst other things).

As for deductions, too bad I just paid for two years of hosting last month but I know I could get ISP, domains, even new computer equipment as a deductible since the business will be web development and domain reselling.

You'd have to talk to a tax advisor, but when you register an LLC or corporation, it does not automatically assume control of all your assets. Therefore the hosting you paid for 2 years out of your personal pocket, your business could "buy from you" therefore the business has hosting for two years. Same with the domain names.

As far as the name, I'd choose something generic, this way if you decide to do other things your name would still work. I registered one but now since a domain became available I was looking to switch names, but it would be a pain.

 

[Gerry]

Why not do an S-type LLC? Less paperwork and documenting.

I'd admit, I used to do my taxes, but have someone else do them now with all the business stuff. It is definately worth doing with all the deductions you can get.

edit - If you are going under her license, I believe you can get a DBA or fictious name which wouldn't cost much.

Lord YES! LLC is the way to go. I am in NC but licensed out of Delaware.

I also agree with the option of the DBA. No need to get a ficticious name. Most states it is just a matter of amemding the business license of that incorporation. Or simply filing a new one.

 

[draggar]

Are you making more than $250,000 a year?

With domains and web development? Not even 1% that.

You'd have to talk to a tax advisor, but when you register an LLC or corporation, it does not automatically assume control of all your assets. Therefore the hosting you paid for 2 years out of your personal pocket, your business could "buy from you" therefore the business has hosting for two years. Same with the domain names.

As far as the name, I'd choose something generic, this way if you decide to do other things your name would still work. I registered one but now since a domain became available I was looking to switch names, but it would be a pain.

I already have the .com for both businesses and I don't think either is already incorperated (IMO - both would already be registered if they were). CanineComputing is very generic for what I'd like to do - anything with computers. Web development, computer consulting, installations, etc.. so I could move it around as needed. DNCoyote is pretty limited but I think I'm going to stick with that for a while.

 

[JohnnJohnn is verified member.]

- File the business at either: Delaware or Nevada
- DBA to save additional filing with the state for fictitious name

 

[draggar]

Even though I don't have an office in DE or NV? (don't forget - I'm completely new at this).

The incorporation is based in Florida now.

 

[JohnnJohnn is verified member.]

Most companies file from these two states - It does not matter where you live.

 

[jdk]

I read the comparisons and went with filing mine in FL where I live instead of DE.

 

[Rockefeller]

Learn how to spell it first...incorporate.

 

[jdk]

Learn how to spell it first...incorporate.

:lol:

 

[Theo]

Since you're based in Florida, that's where you should incorporate. Avoid tax opportunity havens like Arizona and Delaware, because Florida would still require you to pay local fees. In other words, go to Sunbiz.org and do it online. Remember: a single member LLC is not the same with an LLC that has more members. If you keep it as a single member LLC then it's a transparent "projection" of yourself, in other words your income through the LLC at the end of the year will be declared as if it were your own. So even if you'd love to have your wife as your business partner, avoid it. With regards to expending stuff, buying domains is not an expense; your cost is subtracted when you sell them. Renewal fees are expenses for the year they cover. My advice: get a CPA to do your taxes at the end of the year. When you form a business you need to keep track of everything. Also, you should have been declaring all income (e.g. from parking) regardless; it's your obligation to pay taxes on all income.

 

[draggar]

Learn how to spell it first...incorporate.

13 responses and you're the first to notice..

 

[jdk]

13 responses and you're the first to notice..

What do you expect? He's a spelling teacher.

 

[draggar]

Since you're based in Florida, that's where you should incorporate. Avoid tax opportunity havens like Arizona and Delaware, because Florida would still require you to pay local fees. In other words, go to Sunbiz.org and do it online. Remember: a single member LLC is not the same with an LLC that has more members. If you keep it as a single member LLC then it's a transparent "projection" of yourself, in other words your income through the LLC at the end of the year will be declared as if it were your own. So even if you'd love to have your wife as your business partner, avoid it.

Good suggestions, even if it is a little over my head (single member LLC?). Right now I don't have the money to be incorporated (in the beginning I was actually thinking of getting a business license - but in order to do that don't I need to be incorporated?).

With regards to expending stuff, buying domains is not an expense; your cost is subtracted when you sell them. Renewal fees are expenses for the year they cover. My advice: get a CPA to do your taxes at the end of the year. When you form a business you need to keep track of everything. Also, you should have been declaring all income (e.g. from parking) regardless; it's your obligation to pay taxes on all income.

When I spoke to my accountant in 2007 he said that I didn't have to worry about income unless "it was more than a couple of thousand dollars". Plus, this is the first year that I actually have noticeable income from parking (all of 2007 was probabaly less than $5).

Also, my wife mentioned something along the lines of only having to show a profit two out of the first seven years - is this a fact or something she is misunderstanding?

 

[jdk]

I believe you are correct. I remember mine saying the first 2 or 3 could be shown as a loss and then you have to show a profit the next and then you can show a loss again for the next couple of years. I do not remember the exact # of years.

I'd talk to a CPA

 

[zabijaq]

I don't like paying TAXes as most of it goes to pockets of politicians and their supporters. And I have some good friends at tax directorate so I'm not worried