1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Is it the right time to form a business?

Discussion in 'Business & Tax Advice' started by goose8808, Jul 11, 2011.

  1. goose8808

    goose8808 Registered Member

    Joined:
    Feb 2, 2011
    Messages:
    77
    Likes Received:
    10
    So - after finally taking some action - I'm starting to earn money daily. Right now, I'm not earning much, but all I needed was proof that I could. Now that I've got it, I'm going to scale up, and give it everything I've got.

    My question is, should I start a LLC now? Are there any advantages/disadvantages to doing now, and not doing it until I start earning significantly?

    Maybe I'm already behind because I haven't started on yet?

    Sorry if this seems like a very 'noob' question, but I needed to believe that you could actually start earning online before I even thought about making it a business venture.

    BTW - I know at a certain threshold you have to claim the income on your taxes, but I don't think I'm there yet, maybe in a month or two? (I think it's 600?)

    Any help would be appreciated!
     
  2. teeniegenie

    teeniegenie Supreme Member

    Joined:
    Aug 28, 2010
    Messages:
    1,296
    Likes Received:
    662
    Location:
    The Cool Part of Vegas
    Give us some more info - how much are you earning? Do you live in the US or elsewhere? Do you have assets to lose if you got sued? If you are some college kid with hardly a penny to your name and are now just starting to make money I would say wait on spending $$$ for a LLC/Corporation.
     
    • Thanks Thanks x 1
    Last edited: Jul 11, 2011
  3. goose8808

    goose8808 Registered Member

    Joined:
    Feb 2, 2011
    Messages:
    77
    Likes Received:
    10
    Right now - roughly 150-20 a month, give or take so roughly 2,000 this year. Like I said, certainly not much. However, I plan on scaling up and making significantly more (I know that's everyone's plan) by putting out more product, and possibly (down the road) consulting. I am living in the US.

    Not in college lol, almost 30, and I currently have a full time day job. As for personal assets, I don't have much (car, very meager savings, etc), but I'd like to protect what I do have, especially my credit because I just got done rebuilding that. Additionally I'll be purchasing a house the end of this year, plan on getting married, etc lol. So this year will be a big one for me, and I'd like to separate any risk from those goals.

    Additionally - since I'll technically have to report the income, wouldn't it be beneficial from tax standpoint to have an LLC?

    Thanks so far for the feedback, do you need any additional information?
     
  4. teeniegenie

    teeniegenie Supreme Member

    Joined:
    Aug 28, 2010
    Messages:
    1,296
    Likes Received:
    662
    Location:
    The Cool Part of Vegas
    The tax savings (if any) would be minimal on $2k/year...save your time/money you would invest in a LLC for now. IMO, until you are making $30k-$50k a year I wouldn't worry about an entity.

    If you have concerns with being sued/personal liability, purchase an umbrella liability insurance policy. You can get $1,000,000 liability coverage for cheap...

    This isn't legal advice, just my two cents...LOL

    Hope that helps!

     
    • Thanks Thanks x 2
  5. StartupBros

    StartupBros Regular Member

    Joined:
    May 16, 2009
    Messages:
    237
    Likes Received:
    124
    Occupation:
    Founder of StartupBros
    Location:
    Tampa, FL
    Home Page:
    Run it as a sole proprietorship until you have enough cash flow to start caring about getting tax deductions ;)

     
    • Thanks Thanks x 1
  6. goose8808

    goose8808 Registered Member

    Joined:
    Feb 2, 2011
    Messages:
    77
    Likes Received:
    10
    Thanks! That certainly a big help!

    Like I said - right now it's peanuts, I know. But hopefully by the end of the year I should be making a decent income from this, and wasn't sure if it would be prudent to do everything now, or wait until I actually AM earning that income.

    Seems like waiting would be best, but I'd be open to any other feedback that people may have!
     
  7. TaxMan

    TaxMan Newbie

    Joined:
    Jul 11, 2011
    Messages:
    3
    Likes Received:
    1
    Occupation:
    CPA and Tax Planner
    Location:
    Dallas, TX
    You want to keep your cost low. So need to make sure that the cost of getting everything setup does not to exceed the benefit. And you want to keep it simple. So the advice to wait before setting up an LLC, maybe sound.



    Simplest and Cheapest
    1. Sole Proprietorship
    2. LLC
    3. S-Corp
    4. C-Corp
    I am a CPA and I do a lot tax planning for small business clients and generally the cost of forming an enity and filing all the reports exceeds the benefit until you are making over $30k per year but it depends on a number factors. Again it depends on alot of factors but once you get to $50k per year the benefits of having a tax plan might save you over $3,500 in taxes per year.

    If you like you can send me a private message I be glad to answer a few questions.
     
  8. liquidx

    liquidx Power Member

    Joined:
    Dec 10, 2009
    Messages:
    507
    Likes Received:
    108
    I'm in the same boat but feel like establishing an LLC for me right now since I do not do very much affiliate marketing would be more beneficial since I am offering services to people.
     
  9. CenTex Hosting

    CenTex Hosting Jr. VIP Jr. VIP Premium Member

    Joined:
    Nov 8, 2009
    Messages:
    1,518
    Likes Received:
    576
    Gender:
    Male
    Occupation:
    Admin
    Location:
    Austin, TX
    Home Page:
    any time is really a good time. Your never going to give it 100% until you jump in and that is the only income that you have. It takes some faith just to jump in. But if your heart is in it you will do fine.
     
  10. VMagick

    VMagick Registered Member

    Joined:
    Jul 22, 2011
    Messages:
    63
    Likes Received:
    7
    Occupation:
    Cl Marketing - wilbahotty@gmail.com
    Location:
    Here There Everywhere
    Another bit of advice if you have not done it already open a business checking or savings bank account, that will come in handy later on as well, in case you apply for merchant accounts etc..
     
  11. kralcx

    kralcx Junior Member

    Joined:
    May 25, 2010
    Messages:
    164
    Likes Received:
    49
    most books I have read say until you make close to 60K a year its not worth forming a corporation. I realize a LLC is not a corportation, however you have a ways to go before you need it.