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Question about setting up a business - sole propiretorship or do i need to?

Discussion in 'Business & Tax Advice' started by ictown775, May 10, 2012.

  1. ictown775

    ictown775 Newbie

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    Do you guys recommend filing a sole proprietorship or llc.

    Or can I just do business under my own name john doe and report all income and expenses on Form 1040.

    This is for buying wholesale and selling stuff on ebay and craigslist.

    Whether or not if i need to file sole proprietorship, i still need an ein number/state tax id correct?
     
  2. kshatriya

    kshatriya Regular Member

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    Don't take my advice. Seek a professional

    A sole proprietorship will only add on to your existing income and that could push you up into a higher tax bracket.

    An llc would give you the benefit of getting paid in dividends rather than wages/salary which are taxed at different rates.

    Rule of thumb is that if your business income is low, then go for a sole proprietorship and later when it increases go for an llc.

    -Don't Take My Advice. Seek a professional tax accountant!
     
  3. fairhaven73

    fairhaven73 Registered Member

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    Make appointment with your local SCORE chapter.
    Those retired business owner may be able to steer you in right direction.

    But, if you're just selling on ebay etc, and your chances of getting into legal trouble
    are none(depending upon product), Then sole proprietorship is simple solution.

    Just add your business income to your 1040. Your social security number will be your tax id.
    You don't need any EIN, if you're not hiring anyone.

    However, if you want to have no personal liability. Then LLC is the answer.
    No one can go after your non-business property(house, car etc), if you're a LLC.

    You file for incorporation with your state. And then apply for business license.

    You'll be issued an EIN. And a tax id.
    You'll pay your incorporation dues annually.
    For income tax, you'll do a schedule K-1. And attach it to your 1040.

    Tax wise, there no advantages in LLC, just protection of your personal assets.
    It's basically a sole proprietorship with limited liability.

    For tax benefits, you need to look into S corporation. Do this if you're making a killing.
    Otherwise, go with SP or LLC.

    I hope this helps you, or gives you something to pick your accountants brain.
    Wish you all the best.
     
  4. Jammy01516

    Jammy01516 Registered Member

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    According to your Business Nature Sole Proprietorship is beneficial for you until your Income increased.......LLC will increase your taxing work..