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Hello all. First and formost i would like to say that this site is one of the best sites that ive come across since ive been into t-shirts. i check it everyday, twice a day and i feel like i already know many of you.

I have a tax question and could use a little advice. Although I have been into graphic designs and t-shirts for a few years, i have not taken the steps to establish my designs or services as a business. I am finally in a position that im ready to introduce a t-shirt line and in doing so want to establish myself as a small proprietorship. Within the next few months, i anticipate many expenses: replacing my computer, trademark fees, copyright fees, t-shirt cost and printing cost. Because of these expenses and also introducing a new line, i am planing on taking a loss the first year. My question is....would it be a benefit to me to establish myself as a business before making any purchases so that i can take advantage of right offs, or does it initially matter?
also, does any one recommend becoming incorporated as apose to proprietorship for a startup t-shirt company, if so what are your reasons?

thanks in advance
 

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Yes, establish yourself as at least a sole-proprietorship. It's very easy to do. You may want to talk to a CPA though about the benefits of incorporating. Some say it's worth it, others say don't do it.

Talk to an expert.
 

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Just get a TAX-ID number, takes 2 minutes… and you’re good to go as far as writing off as a sole proprietor. You may also need to file a simple DBA (doing business as) with your state and town. Probably a $25 to $100 fee altogether.

A few months down the road you can figure out if you want to stay a SP or get into a LLC or Inc. arrangement.
 

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You can certainly still take the tax write offs as an individual, but you should consider setting up an entity for the long-run, whether a sole proprietorship or LLC (kinda expensive, depending on which state you're in - CA blows big time), etc. Find a good account to discuss the pros and cons...

Myself, I have an LLC that I'm doing my t-shirt site under. However, I don't suppose I'd recommend it. It's overkill and I only have it for my real-job (so it wasn't a big deal to roll my t-shirt site under it as a dba). LLCs are great in terms of liability exposure and avoiding the double-taxation of normal corporations. If you live in a state that has a low LLC annual tax, then you might consider it. Again, I'd see what your accountant has to say...
 
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