Young Enterpreneur Advice (small business, attorney, analysis, c-corp)

[goodbyehollywood]

As a Sole Proprietor, you can maintain a HSA to max out your health insurance deductions and a solo 401k to sock away a ton for retirement, all while lowering your tax bite. Unless you plan to have a lot of employees or have some other very good reason for wanting to do all that paperwork, I'd go with the SP. That's what every self-employed person I know has. But check with a financial advisor to be sure. Good luck!

[npumcrisz]

Is DBA the same as sole proprietor?

[pghquest]

Originally Posted by npumcrisz

Is DBA the same as sole proprietor?

Yes, DBA is a sole proprieter, the only difference is

Sole proprieter, you run the company under "your name", get checks written out to you in "your name", and open up bank accounts under "your name".

A DBA, a very simple process, which is filing a one page sheet of paper usually with your state, you can open up seperate bank accounts under "your name, DBA Company name", so you can cash checks, which are then written under the company name.

It offers no legal protection from yourself in the even the "company" is sued, and you file company income as your income on your tax returns, but its very easy to open up the "company" and close it down in the event you stop operating.

[Rapture]

I also have several home based businesses and this is how I set everything up. I asked the same question on here several months back and received a lot of different answers.

Finially I went to the SBA for advice and an accountant.
1. Realtor - SP (might change that when I actually make a decent amount of money)
2. Web Design & Maintenance- SP
3. Sales Rep for two companies - SP
4. Internet business - LLC/S-Corp

For the SP, I just fill out a 1099 at the end of the year and been doing that for four years with no problem.

The LLC I set up this year and it was very easy and I haven't had any problems. You can do it online for less then $150 but my bookkeeper did it for me for $30 + the $110 you have to pay the state. I set that up because it was highly recommended by many people to separate my personal assets from my business.

[Joe107]

If I were you, I would set up as sole prop. Once you prove you can be successful, then start to think about those other things. Your main focus should be on bringing in business....if you can't do that it doesn't matter what legal business structure you have.

[emilybh]

Originally Posted by goodbyehollywood

As a Sole Proprietor, you can maintain a HSA to max out your health insurance deductions and a solo 401k to sock away a ton for retirement, all while lowering your tax bite. Unless you plan to have a lot of employees or have some other very good reason for wanting to do all that paperwork, I'd go with the SP. That's what every self-employed person I know has. But check with a financial advisor to be sure. Good luck!

Actually an HSA is the only protection a greater than 2% shareholder of an LLC or Sub-S is allowed to take advantage of. So while the insurance premiums are passed along to you on your personal income tax, AT LEAST you can make the maximum allowable contribution into your HSA account and deduct that against your adjusted gross personal income.

To clarify, you do not have to be self-employed to take advantage of an HSA plan. EVERYONE can and should have one. the insurance costs associated with the high deductible health plans used with HSA accounts have lower premiums and offer better protection AND a better value -- even after you ad in the high deductible (and subtract the tax savings) as compared to a low deductible/co-pay plan. It doesn't matter what kind of business entity you have.

[emilybh]

Originally Posted by Joe107

If I were you, I would set up as sole prop. Once you prove you can be successful, then start to think about those other things. Your main focus should be on bringing in business....if you can't do that it doesn't matter what legal business structure you have.

The main reason people choose the other entities is to protect their personal assets so, if sued, only the business assets are at risk. However, many people say that as long as you have enough insurance protection, a sole proprietorship is a good way to go.

[AONE]

Im thinking S-corp.

[Jonotastic]

You shoulld definetly have a corporation, regardless of the business. You do not want the liability of a sole proprietorship or a partnership. There are a few pros...less government regulations, one time taxation, complete control, easy to set up. However, the main con is the most important. You will have full liability. If someone falls or an employee gets seriously hurt, if there is a judgement against you for $500,000, if you don't have that money, not only can they take your business, but can also take your personal assets, your house, your car etc. Where as a corporation is almost like another person legally. Only the business is liable. However, there are some bad things...double taxation (corporate tax and personal income tax/capital gains tax) and it's a bit confusing to set up. The question should be...should you get a C Corp or a S Corp. The only reason I'd open an S Corp would be if you plan on loosing money the first couple years. Otherwise, go with a C Corp. Good luck!

Don't do a sole proprietorship once again. I cannot stress that enough. Don't put your life at risk. You are basically putting your soul, yourself and family as collateral. Take any business course and they will tell you the same thing. My family has owned 5 businesses ranging from coffee shops, a nightclub, a full-service hotel and a restaurant.

[StoneOne]

I do a lot of editing and translating, as well as some general communications consulting. I work entirely for myself, but I have set up as an LLC.

One thing to keep in mind, clients will very much appreciate the fact that you are incorporated, as it cuts down on annoyances like 1099 forms.

Regardless of your business, incorporation or an LLC allows you to present a more professional image.