Legal Business Questions

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Re: Legal Business Questions

Postby sheldonk » Thu May 15, 2008 5:19 am

You do not need to incorporate, a simple LLC is really all you need.


Actual, with an LLC you are incorporating. An LLC is just a more recent (and simple) form of corporation. There usually is one downside. States like to charge LLC's a yearly fee, which they don't charge other corporations. Here in Connecticut it is $250.

My feeling is this:

If in the beginning you keep your day job, and all you are doing is creating slide shows for people, start out with a schedule C. The purpose of incorporating is to shield you from liability. You have to ask yourself, how much liability could I have if all I do is meet with someone, look through their photos, and mutually agree upon a slide show that you will create. You take the pictures back home, (paper and/or digital), make the show and return the photos to the client along with the slide show. They watch the show, cry tears of joy and oh yea, they pay you.
Your biggest problem in the beginning will be getting business. If things get going...swell!! Then you can think about incorporating.

Sheldon

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Re: Legal Business Questions

Postby debngar » Thu May 15, 2008 12:13 pm

In CA, you can establish a business as a sole proprietor and not bother to incorporate. You only incorporate if you want to have a flow through tax advantage and to protect yourself from someone coming after your personal property.

So you go to the city (may be different if you are in the county) and fill out a business license form, pay the fee etc. You also should check to see if the name of your business is unique. If it is not, you may run into trouble with another similar named company.

Choosing a sole proprietor means you don't have to fill out the legal forms to make it a corporation which is a real pain in the behind nor incur fees involved to incorporate too and other time consuming activities, etc. Also with a corporation, you have to register for a tax ID online, etc. write some other things associated with the corporation paperwork and maintain that stuff.

Our hardware store is incorporated.

I have also owned businesses as a sole proprietor.

You also will have to go and fill out a form to get a resale license because you will have to charge sales tax to your customers and be a flow through to pass that on to the state. That I can remember, this does not cost any money but the gas to go down there and time to sit in line. At the time you fill out your form, you will have to estimate what kind of yearly sales you will be generating so they can figure out whether to make you file yearly, quarterly or monthly sales taxes.

The DBA is only if you don't use your own name in your business as was mentioned.

If you do a DBA, you have to pay for the newspaper ad that declares you DBA info. etc - more $$

Also good to have a separate checking account which keeps your business and personal funds away from each other and more manageable. But then you have two accounts to balance and pay for.

I am not a lawyer but this is the way I remember doing it.

Debbie
Last edited by debngar on Thu May 15, 2008 3:19 pm, edited 1 time in total.

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Re: Legal Business Questions

Postby ctimaging » Thu May 15, 2008 2:22 pm

debngar wrote:You only incorporate if you want to have a flow through tax advantage.


The most important benefit is as an LLC the member(s) are not personally liable for its debts and liabilities but also have the benefit of being taxed only once on their profits. Moreover, LLCs are more flexible and require less ongoing paperwork than an S corporation.

As a sole proprietor you have absolutely NO personal protection from liability and/or debt. Trust me, the small added expense (about $600.00 one time) is well worth helping me sleep better at night...

Any reoccurring fees will most likely be the same as a sole proprietor (I can only speak about Ohio).

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Re: Legal Business Questions

Postby BarbaraC » Thu May 15, 2008 2:41 pm

It must be different from state to state because my husband has had two different S corporations, and the only paperwork was the K-1 forms, which are essentially a joke when it's just the husband and wife who are involved in the company.

But why go through any of that trouble when it's just one person creating slide shows? Why not have it as a simple sole propietorship? I used to be a potter, and that's how I set it up. I filed a DBA and that was an end to that. It was insanely simple.

Barbara
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Re: Legal Business Questions

Postby debngar » Thu May 15, 2008 3:21 pm

an LLC the member(s) are not personally liable for its debts and liabilities but also have the benefit of being taxed only once on their profits. Moreover, LLCs are more flexible and require less ongoing paperwork than an S corporation.


Paul,

I had forgotten to mention that but you are so right. :oops: Can you tell that I hate to do paperwork? :wink:

Thanks for catching that.

Debbie

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Re: Legal Business Questions

Postby BarbaraC » Thu May 15, 2008 4:16 pm

Debbie, I'm surprised at this. All the paperwork we had in our larger business that was an S corporation was the same paperwork required for any business: keeping the books up to date and dealing with payroll. I'm sitting here trying to remember any corporate paperwork other than doing the yearly K-1's, and I can't think of a single thing. I'll have to ask my husband about it because I might be forgetting on purpose. (I hate paperwork too.)

Barbara
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Re: Legal Business Questions

Postby debngar » Thu May 15, 2008 4:41 pm

That I can recall, I had to create proper "articles of incorporation" that declared who the officers are, CEO, Secretary, etc etc. and the purpose of the corporation.

Then you technically are supposed to have regular corporate meetings, keep note/track of the minutes, etc.

For non-profits, there are further questions, forms, declarations etc.

They get sent in with a fee and you get them back with an official stamp on them.

Debbie

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Re: Legal Business Questions

Postby sheldonk » Fri May 16, 2008 4:33 am

Then you technically are supposed to have regular corporate meetings, keep note/track of the minutes, etc.


A subchapter S and an LLC don't need all the minutes stuff. I recommend an LLC. You specify once who the members are in the articles of incorporation and that''s it. With my LLC, I have elected to file my taxes on Schedule C. I have all the protection of a corporation, but the simplicity of a DBA.

Sheldon

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Re: Legal Business Questions

Postby HunnyB » Fri May 16, 2008 4:55 am

ctimaging wrote:You do not need to incorporate, a simple LLC is really all you need.


This is exactly right.
My husband builds custom homes part-time (when he's not at the fire station)
and we set up a S-Corporation. You don't need this. We had to. Subs, workman's comp, etc., etc., etc.,

I could be wrong, but wouldn't a SIGNED contract saying you are not liable for damage to the clients photos be sufficient? You know, for stuff like a fire, tornado, etc.
I have a fire safe, and when I finish scanning pics, I immediately put them in the safe. Sure don't want to spill coffee on them either. :shock:

Just my two cents worth....
HunnyB
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ctimaging

Re: Legal Business Questions

Postby ctimaging » Fri May 16, 2008 3:54 pm

HunnyB wrote:wouldn't a SIGNED contract saying you are not liable for damage to the clients photos be sufficient?


You would think so BUT people sue over anything anymore even if you have a waiver or contract.

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Re: Legal Business Questions

Postby DickK » Fri May 16, 2008 7:05 pm

Thus the reason it is so important to separate the business you from the personal you so even if someone comes after you they only get to the business and not you personally.

By the way, insurance is another consideration for anyone who is running a business. Your homeowner's insurance and/or personal liability policy probably won't cover you or protect your equipment if they're part of a income generating business. Ask the company and if necessary get separate coverage--yep, another expense. Beginning to see why so many start-ups don't make it?

Dick
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