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Limited Liability Co.(LLC) vs. Doing Business As(DBA)

Discussion in 'Business & Tax Advice' started by crackedcreative, Jan 7, 2014.

  1. crackedcreative

    crackedcreative Registered Member

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    Hi guys,

    Tax season is here. This is the first time I have made over $100,000, mostly from sales.
    and I assume the tax game is different once you hit 6-digits.

    Why should I have a LLC?
    and what is the difference between an LLC and DBA?
    How do I get these titles.

    Thanks in advance.
     
  2. KevinK

    KevinK Junior Member

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    It's a little late to do anything, although there are standard deductions
    and you can file using the long forms...
    You needed to start your business in the year you made your $$$.
    A dba in the US usually runs $25-27 and is Doing-Business-As, vs.
    to register a LLC (Limited Liability Corp) you need board members,
    meetings, etc. and the filing is usually $250 on up.
    Using a LLC will help you protect you company assets, while there
    is no protection with a dba.
    You should probably go online and find all this out through the
    SBA (small business association) or check out your local COC
    (chamber of commerce).
    What you're really wanting to do is put expenses against the earnings
    to pay the least amount of required taxes that need to be paid on your
    net income.
    And of course, no tax advice is complete without the input of a CPA.
     
  3. stretch361

    stretch361 Junior Member

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    To clear something up...you can have an LLC, AND have a DBA. A LLC is a legal entity, a DBA is not. There are a few different types of legal entities: Sole Proprietor (which is probably most commonly associated with DBA), Partnership, LLC, and Corporation (S-Corp and C-Corp). Sole Proprietor and Partnership provide no legal protection whatsoever. If someone sues you, they can take all of your personal possessions. In a LLC or Corporation, if you are sued, they can only take what the business owns.

    A DBA is a fancy way of saying "My business name is ....". If you do an LLC, the official name MUST have LLC in the name. For example, the company may be named "Jon's Tire Shop, LLC". So, Jon gets a DBA of "Jon's Tire Shop". Later on, Jon opens up a new website called "TheBestTiresEver.com". In order to legally use that name to accept payments under it, Jon would need to get another DBA for "TheBestTiresEver.com", OR accept payments as "Jon's Tire Shop". Legal entities can have multiple DBA's. In fact, my company has something like 9.

    Yes, you are a little behind the ball regarding taxes. Everything you did will be situated as normal income. Assuming you documented all of your expenses, you still can write off your expenses.

    Disclaimer - I'm not a tax professional, and I am not giving legal advice. These are simply my opinions based on my experience.
     
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  4. tony_d

    tony_d Elite Member

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    I'm an advocate of incorporating offshore, and booking all the revenue there... I suggest you look into it :) It's cheaper, easier, and faster than it's popularly believed to be, and even with $100k/yr income can save you sh*tloads.
     
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  5. crackedcreative

    crackedcreative Registered Member

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    Okay, so considering I cannot file taxes "as a business"

    How can I file taxes without filing it under "self-employment" and getting hit by that high self-employment tax?


    Thanks for the input btw fellas.
     
  6. stretch361

    stretch361 Junior Member

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    For this year, there's nothing you can do.

    For 2014 and going forward, the only way around the self-employment tax is a S-Corp or C-Corp. On an S-corp, you would only do self-employment tax on the "salary" you give yourself. Any additional profits the company has is then considered "distributions", which are taxed at normal rates.

    In a C-Corp, you are basically just an employee, and taxed as a regular employee. Any profits the company makes itself are subject to corporate tax rates.

    If you are going to make significant money in 2014, talk to an actual accountant to get some good advice for your specific situation.
     
  7. tdivan

    tdivan Newbie

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    Personally always incorporate into a LLC at least. It protects your personal assets in case of a legal action against the business. As everyone has said DBA is just a paper trail for money a LLC is a legal structure. It depends on your state how much it costs I did a LLC for I think a 20.00 filing fee and to keep it alive its like 10.00 a year. You definity need to talk to a tax accountant to prep for 2014 to bank as much of that as you can and only give the tax man the least you legally can.