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Are you guys working as self-employed or did you guys formed LLC?

Discussion in 'Offline Marketing' started by creativepotion, Aug 15, 2012.

  1. creativepotion

    creativepotion Regular Member

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    Are you guys working as self-employed or did you guys formed LLC for these offline businesses?

    Are there any unforeseen liability for internet marketing?
    (Ie: Client trying to sue you for drop in ranks etc.)
     
  2. jstover77

    jstover77 Executive VIP Jr. VIP Premium Member

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    There are many advantages to forming an LLC. All of my businesses are LLCs. If you file your taxes as self employed you will pay 15% self employment tax (here in the US) regardless of how much you write off. At least that is what I remember before I formed my LLCs. My best advice is to talk to an accountant.

    As far as people suing you for drop in ranks, it is highly unlikely, but if you score a client that is paying you a lot of money every month, the best thing to do is have a contract that protects you.
     
  3. creativepotion

    creativepotion Regular Member

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    Thanks Jstover,

    I see that you are a very experienced marketer both online and offline.
    When you provide a quote, do you usually include 'retail tax' or no?

    and can the 'retail tax' be written off? Or is it just the corporate tax that can be written off only?

    thx
     
  4. jstover77

    jstover77 Executive VIP Jr. VIP Premium Member

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    Until someone makes me charge taxes, I'm not charging shit.
     
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  5. _clicking_

    _clicking_ Power Member

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    Just formed an LLC myself. Didn't cost that much more(different states have different fees) and all my personal assets are protected.

    I believe the chances of getting "sued" are slim but at least you have peace of mind.
     
  6. minx2012

    minx2012 Newbie

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    Its not just getting sued. Its any financial dispute. Lets say you use a subcontractor to do some coding or whatever. Or lets say the client asks you to use a particular graphic artist. If there is any conflict on who should pay these bills, your personal assets and income are protected and worse case you walk away from a LLC with judgements against that has gone insolvent.
     
  7. b1step-ahead

    b1step-ahead Power Member

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    If your just starting out,, go with sole prop.. in some cases it's smarter to file as a LLC OR scorp, since changing things later causes a nightmare,, like a car dealer.
    In my case, I had a llc from a previous venture, so I changed the name and type of business. Advantages of a llc, clients take you a little more serious, sometimes they will ask you for advice on how to form a llc, and that might be some consultant opportunity.
    - Also, down the road you might need to apply for healthcare, or other biz related items. Makes things a little smoother.
     
  8. trieuphu

    trieuphu Newbie

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    Is it better to present yourself first as a independent marketing consultant or should I register my company as an llc and present myself as a company ?
     
  9. DeskCoder

    DeskCoder Regular Member

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    I formed an LLC, went to a CPA, and he set me up to file taxes as an S-Corp. Filing my taxes as an S-Corp is going to save me $6K plus in taxes.

    Talk to a CPA, but tell them what you want to do (some will just do it). Explain your situation, and ask what they recommend.

    Also, set up a separate bank account for your LLC, which means getting an EIN. Just in case someone sues you, if you don't completely separate your LLC and personal stuff, you can still get hit.
     
  10. willinabox

    willinabox Registered Member

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    Why would you sign up for an LLC as an internet marketer, arent we talking 15% vs 35% (obviously depending on your income)
     
  11. creativepotion

    creativepotion Regular Member

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    1. Liabilities
    2. Tax Deduction (expenses)
    3. Growth - Why would you want to work independently all your life?
     
  12. WCO12

    WCO12 Junior Member

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    Sole Props, Partnerships, LLCs and S Corps all feature passthrough taxation. Meaning there are no income taxes on corporate profits. Everything passes through to the owners, who pay it as normal income. . Note that there are a few exceptions - for example, here in Ohio they replaced the business income tax with a corporate activities tax that does affect traditionally passthrough entitites.

    If you're making any reasonable amount of money you are probably going to want to look at either an LLC or an S Corp. S Corps have some more serious filing and continual paperwork requirements than LLCs, but also have some other benefits.

    The big thing is that there is existing case law for S Corps stating that you don't have to pay self-employment taxes (12%-15%) on all of your earnings on top of whatever your normal income tax bracket is. Instead, you take a portion of your business income as a salary and the remainder as a profit distribution. The IRS does require that you take a "reasonable" salary for whatever it is you do, so you can't avoid all of the self-employment tax. Your CPA can help you figure out what is "reasonable" enough to make the IRS happy. So, while you won't save the full 15%, you'll save a pretty big chunk of it.

    According to my CPA they also routinely file LLCs this way, there has just never been a case that the IRS brought where case law could be created from the result. So it may be slightly more risky to do it that way.

    Additionally, since LLCs are a state entity and not dealt with by the IRS, you can opt to have your LLC taxed as an S Corp. This does mean you will need to meet some (but not all) of the normal S Corp requirements, however they are all organizational features and you still can avoid keeping BOD minutes and other obnoxious stuff.

    The #1 thing is that you should talk to a CPA. They will give you much more complete and personalized information than we can here. Most will give you a free consultation to try to earn your business. Don't settle for a CPA that wants to just be a QuickBooks-checker. Search for CPAs that deal in business formations and strategic tax planning. You want a guy in your corner that's always on the lookout for strategic ways to save you cash, make your life easier, and protect your wealth. If you find one you like you should put his ass on your Christmas card list for sure.
     
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  13. jmelwak

    jmelwak Registered Member

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    been an scorp for almost 6 years now... pay taxes every year with a CPA. I think if you file in Nevada or Wyoming there are some benefits to corporations. In Nevada we dont have a state income tax....
     
  14. DesignerDrug

    DesignerDrug Registered Member

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    I formed a LLC after making 16k in a years time. If you make a certain amount for the year, you have to file taxes on it, if in the u.s. , so I figured since I made over the limit, I needed to set up my own llc, which in turn, is great for business.
    If you are making small money, I don't know if it matters as much
     
  15. Tangy

    Tangy Regular Member

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    My business is incorporated (I'm in Canada) as I have about 20 part-time and contract staff. The last thing you need is to be writing contracts in your own name instead of that of a business.

    If you're in this for the long haul, spend the money and get a LLC or an incorporated company. It's relatively quick and painless these days and is a very worthwhile investment of cash.
     
  16. queenmery

    queenmery Power Member

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    What does llc means? I do not have any idea about this. Make this thing clear first.
     
  17. radarsurge

    radarsurge Regular Member Premium Member

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    LLC = limited liability corp.

    LLC makes a lot of sense if you plan on writing in partners at some point. Make sure you talk to CPA though. I have both a C-Corp and a S-Corp so double check with a CPA to see what makes the best tax sense for you.

     
  18. kboxer7

    kboxer7 Jr. VIP Jr. VIP Premium Member

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    My thoughts exactly.

    As it stands currently, my CPA advices "services" performed online are not "taxable goods." As such no sales tax needs to be collected. Obviously rules and regulations may change. Always best to get an accountant's advice for your specific situation.

    As for LLCs/companies. I wrote up a long reply on it in another thread. Look at my post history and you'll see it if you are interested.

    My short answer is that if you make any significant amount of money, and/or operate in a med-high risk business it's always best to form some type of "legal entity" (i.e. a business). For most, an LLC is the best option. That said, if you make high $xx,xxx - $xxx,xxx per year, a Corporation with S-Corp election may be best suited as you can avoid some of that pesky 15.2% self-employment taxation by simply paying yourself a "reasonable" salary and the rest in dispursements which avoid the 15.2% tax.

    There are limitations to this, additional paperwork as it requires you to be an actual W2 employee of your own company, and extra costs during incorporation and tax filing fees. Which is why normally it only makes sense if you are making enough money to make it worth your time.

    Regards,
     
  19. worldbh

    worldbh Registered Member

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    WARNING - Do not listen to street corner advice from people who have no experience in protecting your assets or youself from litigation. If you have never been sued - you would not enjoy the ride!

    I have a lot of years experience in business and you need to listen to the recommendations about obtaining the services of a CPA with knowledge of business structures. Better yet hire a TAX attorney [because of privledged communications] who can recommend you to a CPA if you want real protection from the IRS.

    LLC's are not all equal, not even close. Thinking that if you just form an LLC you are protected is naieve and silly at best.

    I'll give you some clues...
    If you get a judgment against you as a member of an LLC and the holder of the judgement sends a demand to your LLC for your assets in the LLC [Known as a charging order] what happens?

    You better know the LLC laws of the state in which you create and LLC.

    Secondly, which state is the only state that allows Bearer Share Memberships, Trust memberships, Foreign Corporation memberships and more? The IRS is not happy about this I can tell you.

    If you do not know the answers you better look around and find out.

    Protect yourself, your business and your family and get the help and advice of the pros who have been there and done that!

    Unfortunately, I cannot PM and I do not know how to set up my account to receive updated notices about this thread.

    When all else fails "Sue the Bastards" or "Get Sued by the Bastards"
     
  20. robotluv

    robotluv Junior Member

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    We started as a sole, then went to LLC and now we're S-CORP out of Delaware. Good laws there and some groovy services to help you get setup. They do most of the work for you.