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LLC or soemthing else?

3K views 18 replies 10 participants last post by  binki 
I have a small scren printing biz, i make shirts in my basement on a 1 color press, i do about 600-1000 shirt per year. I want people to be able to write checks out to my company(primitiveshirts.com) and not my name. wha tis the easiest way to do this? get an LLC, i mso bad with paper work and tax stuff, can someone point me in the right direction, thanks

primitiveshirts.com
Would need more personal info, but from what I am hearing you just need to get a fictitious name or DBA...and a state tax id. This will allow you to purchase inventory/supplies tax free and charge tax properly. It will also allow you to open a business checking account.

LLC would be needed if you were putting yourself in a risky situation or if you have some large assets you would need to protect.

From what I hear from you I think you should just go the sole proprietor route... but if you have assets you should go talk to a lawyer/accountant.
 
The easiest way is to do a DBA. The best way may be different. Before you charge off and do an LLC consider a C Corp. There are many benefits to a C Corp that are not available to any other business form.
Also a big negative of Double Taxation. C Corp pays taxes on the money then when the money is taken out you have to pay taxes again.
 
Not true. The only event where this might happen is if you declare a dividend. At that time it is not an expense of the business so that money is still taxed. As far as your personal income tax, it may be taxable.

There are a large number of non-taxable cash benefits you can get from only a C-Corp, no other entity.
So do you never plan on pulling out you profit or do you plan on not making a profit?

"When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend."

You might think you are pulling a fast one on the IRS, but probably will not last long. You are taking a salary instead of a divided... HOWEVER the Gov watches that stuff and CAN turn your Salary into dividends.

Also:
Did the owners observe corporate formalities such as keeping minute books, passing resolutions, and holding board meetings?
Did the shareholders treat the corporation as a separate entity or as a simple artifice?
Did the corporation have any money to start with or in its infancy or was it merely a shell?

If you don't meet these criteria then you just wasted a lot of money cause you can still be personally sued.

Not saying you cannot pull things off short term... HOWEVER the IRS did not set up double taxation so that you can just walk around and never have to pay.
 
Never heard of that happening. Please cite your case.

Don't be so angry. You stated the problem with a C-Corp is double taxation and I pointed out that is only with dividends. Now you are changing your story to include meetings and forms and other stuff. I only stated that your statement of not having a C-Corp because of double taxation was bogus. This is the most mis-understood part of C-Corps. I just don't see it as a problem.

Why would the IRS force dividends over Salary? With a salary the government gets 15.3% on the first X amount for Social Security and there is another small percent above that which is unlimited. The IRS has actively been going after S-Corps for pulling dividends over salary because of the payroll tax issue. This would conflict with your statement of converting salary to dividends.

There are other ways to take money from a company. Health insurance, payments for non-covered health expenses, auto , phone , travel, housing , etc. These all have to be offered to everyone in the company but when you are small you can do these things without worrying about it if you don't have employees.

Addtionally a C-corp is the only non-person that is a recognized entity by the Federal Governement and as such is protected by the Constitution and Bill of Rights. Pretty cool huh?

Now, on the converting salary to dividends you really need to cite a case or two over this. Bank of America just paid their former CEO $200 Million in his last year before he retired. Are you saying they are going to convert that to dividends to get more taxes out of him?

Microsoft paid NO dividends until just recently and Bill Gates was worth $80 Billion at that time. The government didn't force dividends on him.
All I am saying is there is only two ways to get profit out of a C Corp... dividends and retained earnings. YES you can take out a salary of what every you want, but the IRS can decide that it is not a salary and that you are really just getting the dividend of the profit.

The other info was just to show that if you are not doing everything correctly then you really are not a corporation and can be sued like it (another negative of C corp).

Bill Gates was worth $80 billion mostly due to the of the stock that he owned not the cash in his wallet. So yeah you can give yourself stock in your company, but don't think it is going to be the same as Microsoft... if so I want in.

Just trying to show both sides of the C Corp... there are negatives and positives... nothing against you in anyway.
 
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