business model

[Holly Fortenberry]

Hi folks,

I've got a question I have not seen addressed yet. Which business model
(sole proprietorship, LLC, etc.) do you think works best for a small web
design firm? I'm planning to do my own design and basic development;
but, I will contract with experts when necessary for advanced
programming or graphic design needs.

Thank you,
Holly

[Terry Brown]

Personally, I can speak from experience by saying that if you intend on
having people working for you on whom you will be relying to deliver work
then you should definitely invest in some level of incorporation - whether
that be a C-corp, S-corp, LLC, etc. The reason for this is that you will
personally be held liable if (more like WHEN) they fail to produce something
for a client and there is an unhappy camper on the other end.

Ultimately, and obviously, you would like to avoid those situations
altogether. IF you are working by yourself and are confident in your
ability to deliver solid work then you can get by with a sole
proprietorship.

HOWEVER, and this is a big however, even when you DO deliver high quality
work that doesn't fully protect you from some deviant people out there who
will sue just because they know it is more costly to defend a suit than it
is to settle. If you find yourself in such a situation it would be good to
have the protections of a corporate structure.

You should bone up on running a company properly if you do so though.
Something as minor as paying for your dry cleaning or a personal dinner with
a debit card from your "company" account can pierce the corporate veil of
protection and expose you to personal liabilities you wouldn't have
otherwise.

Hope that helps!
Terry

[Holly Fortenberry]

Yes, Terry, this is the way I've been leaning as well. It's great to
hear your experience. Thank you!

[Art Thompson]

Hi Holly,

I've operated as an S-Corporation for nine years with a slew of subcontractors coming through my world during that time. I've found that clients have paid more quickly when invoiced via my corporation and FEIN (tax ID) than via me as a freelancer with a SSN since they don't usually have to deal with 1099s and other payroll paperwork with a corporation. You're a vendor just like UPS or any other company providing a product or service.

I do my own bookkeeping and payroll (just me!) using Quickbooks and their payroll service and file and pay all of my witholding, UI, and other taxes online directly from within Quickbooks as well. At the end of the year, I print out income and expense reports and hand those to my accountant who does the corporation and personal taxes. Couldn't be easier.

Hope this helps!

Art Thompson, Jr.
Logical Things - Design + Technology
917-609-1158 [m]
512-692-9865 [w]
www.logicalthings.com
linkedin.com/in/logicalthings
twitter.com/logicalthings

[Frank Duran]

I asked my tax guy the same question and if you are making over 60K a
year then go LLC. Other than that just do Sole Pro.

-Frank Duran-
www.durandigitalmedia.com

[Holly Fortenberry]

Thanks Frank and Art!  I'll definitely be making more than 60K so it sounds as if the corp. is necessary.  This is great feecback.  And Art, I really appreciate the extra tidbits you threw in about Quickbooks and tax ID numbers.  That is an excellent point that I had not considered.  I expect most of you all would agree with Frank and Art.  If not, please jump in.

[Lloyd Wells]

Thanks Terry... great insight!

I am actually at the point of deciding to move from a sole proprietorship to some form of corp., but am in the process of weighing tax ramifications. Can anyone offer any insight on that aspect?

Thanks!
Lloyd

Lloyd Wells
ll...@swellgraphics.net

www.swellgraphics.net
512-213-4818

On Thu, Aug 20, 2009 at 5:30 PM, Holly Fortenberry <ho...@hollyfortenberry.com> wrote:

[Keith Aric Hall]

So this is a good question to which there are many factors to consider. The two biggest are taxation and personal liability protection. 

On the taxation side Sole Proprietorships, S-Corps, LLCs and Partnerships are flow-thru entities which mean the entity is not taxed (federal income tax) but the taxable income flows thru to the individual owners. C-Coporations are subject to federal income tax. C-Corps are said to be double taxed as the entity pays taxes on any profits it makes and shareholders are taxed on dividends paid out by the corporation.

On the personal liability protection side, Sole Proprietorships have no personal liability protection (meaning people can come after your personal assets), though you can buy insurance for this. S-Corps, LLCs and Partnerships and C-Corps are generally only liable (at-risk) up to their investment in the entity. Hence the term, limited liability company in the case of an LLC.

Ultimately, you should consult a tax professional. If you are serious about starting a business tax and/or legal professional help, though seemingly expensive, will be worth the money in the long run. And I'm not just saying that because I used to be a tax accountant.

kah

--
Keith Aric Hall

http://www.keitharichall.com/
twitter: keitharichall

[ferodynamics]

The LLC is the more modern form of the corporation.

I think one big difference with LLCs, they don't have shares of
stock. If you read about corporate shares of stock you'll see there
are so many potential problems, I personally wouldn't touch that with
a 10-foot pole.

The IRS doesn't care if you're an LLC or a Corporation, they see no
distinction, so no advantage one way or the other--just one big
disadvantage for LLCs and corps: more paperwork. The "s-corp" is an
IRS-specific term that has nothing to do with filing your articles of
incorporation, in other words: more paperwork and probably more
scrutiny if there's really a tax savings.

I don't think there is much tax benefit to forming an LLC unless you
figure out all the "corporate lunch" loopholes that probably don't
apply to a small business anyway, good luck with that. As an LLC you
end up paying a higher "business rate" for everything, plus there is a
business tax you're going to pay to Texas every year, I forget the
name of it now--ask your accountant :-)

As far as liability protection, this is a myth, just look up the
lawsuits yourself. If you're a small business, it's obvious to the
court who is at fault: you! I believe you only get liability
protection with a large business where it is not as clear who is
liable, but even then, good luck!

I'm not a lawyer but I did just finish a business law class and spent
a fair amount of time on the IRS website, Secretary of State website,
reading books, etc. So my advice: as long as your business is small,
stay a Sole Proprietor and stay out of trouble and pay the self-
employment tax with a smile on your face. Texas State has a Small
Business Development Center and their advice is probably better than
mine, they have offices in Austin and RR - http://www.business.txstate.edu/sbdc/

[Terry Brown]

I respectfully disagree with everything you just said! :)

Sent from my iPhone

[Terry Brown]

Well, except that last part - advice of the SBDC.

Sent from my iPhone

On Aug 22, 2009, at 3:07 PM, ferodynamics <duc...@solve360.com> wrote:

>

[Keith Aric Hall]

I disagree as well. 

LLCs are not the same as C-Corps. Your point about tax benefit of LLC vs C-Corp is incorrect as well. The IRS does make a distinction. As I described earlier, S-Corps and LLCs are flow-thru entities. You do not pay a corporate income tax. Instead the tax is paid at the individual level only. 

As for the state of Texas. An LLC is subject to Corporate Franchise Tax as you alluded. 

Again, my advice is to consult with tax/legal professionals if you really want to know the best entity to choose for your situation. The tax code is vast and complex and it changes each and every year. Don't just rely on information you read in the group threads. Some of it, though written with good intentions, is just plain inaccurate.

kah

[Holly Fortenberry]

Ferodynamics,

So, I take it you decided on the SP as well? This is news to me about
the corporate veil not applying to very small businesses (although I
admit it sorta makes sense). This is bad news. Man, that veil was one
of the main reasons I wanted to go with some type of corp (even the
taxing practices were definitely not attractive). With regard to who is
at fault in the case of a lawsuit, it seems that even though I'm small,
since I would have contractors, that might mean there was still some
ambiguity about who was at fault, so the corporate veil SHOULD apply,
right? NO?

Shoot, I'm glad I'm getting your opinions! Will you all please tell me
if you have taken your own advice and tell me whether you yourself run a
SP or some form of corp. and if so, which type of corp? If that is
getting to personal, never mind.

Thanks!
Holly

[Holly Fortenberry]

LOL, now I'm a bit more (or less) confused.  :-)  So Terry, I take it you think the corp. veil DOES protect even a one-man show?  Would you mind expanding on your disagreement?  Also, I'm assuming you are not referring to the shares statement.  I also would not want to go public.  That's a bit too big for me.  I want to keep the business small (between 3 and 20 employees ultimately).  For now it's just me and a some contractors.

Thank you!
Holly

[Holly Fortenberry]

I've read several books on starting a small business (including two on starting web design businesses); but, I never know how trustworthy those books are, so it's great to hear real world advice.  I am planning to attend a series of short classes to get me up and running with all the basics (book-keeping, marketing, business plan, etc.) although this is my second business so I kinda already know a lot of this stuff.  I just don't know how it applies to this web design field.  My last business was an aquarium design, setup and maintenance company for residential and business clients, so it was pretty different...lots of physical liabilities. 

In addition to your advice, it would be great to know what type of business model you all actually chose to use?

This is a great discussion,
Thanks!
Holly

[Holly Fortenberry]

Yes Keith, I know you are right and I do indeed plan to find a good tax attorney.  And, you confirmed what I have read in several books that S-corps and LLCs are flow-through entities.  I just thought maybe there might be a trend among small business web developers as to which model they actually chose for their own businesses.

[ferodynamics]

I don't make this stuff up, I'm sure you can find plenty more
references as IRS.gov - http://www.irs.gov/faqs/faq/0,,id=199633,00.html

"If the LLC has: Only one owner, (see Publication 555, on
community property states), it will automatically be treated as if it
were a sole proprietorship (a disregarded entity), unless an election
is made for it to be treated as a corporation."

As I said, no distinction. You file as a sole proprietor, partnership
or corporation, you don't file as LLC.

On Aug 22, 4:13 pm, Keith Aric Hall <khall...@gmail.com> wrote:
> I disagree as well.
> LLCs are not the same as C-Corps. Your point about tax benefit of LLC vs
> C-Corp is incorrect as well. The IRS does make a distinction.

Good one. Now where's your proof?

[Keith Aric Hall]

Holly,

I think for small web businesses you will probably find that most choose either Sole Proprietor or LLC. This is merely speculation on my part. How each individual state treats LLCs varies. As stated, in Texas LLCs are subject to Franchise Tax. 

I would chose LLC over SP if you are serious about growing the business. The code allows for single member LLCs so number of owners is not an issue. Yes the filing requirements are more stringent and organizing is more costly, but the personal liability issue should not be taken lightly. Especially if you plan to have employees or work with subcontractors. The law says that if you are a sole proprietor, your personal assets are at risk. With S-Corp, LLC, Partnership and C-Corp that is not the case. It is very difficult to pierce the corporate veil and go after the owner's personal assets. Sure you are still at risk, but only to what you have invested in the company. They can't come after your home, etc. 

The law holds pretty firm on this and for good reason. It has to ensure investors/owners that their risk of loss is limited. Where the "corporate veil" has been challenged in recent years is when it comes to wholly owned subsidiaries and related entities (Partnerships that participate in other partnerships. Two corporations owned by the same parent corporation). One business may be owned by or be a sibling to another company and still be liable in some extreme cases. 

So, this is just my opinion, but I would choose an LLC for a number of reasons.

kah

[ferodynamics]

I wasn't talking about going public. When you incorporate you need to
decide how many shares of stock you will have.
"How to Incorporate" is a good book that explains many problems with
corporate stock - http://bit.ly/16To0Q

On Aug 22, 4:39 pm, Holly Fortenberry <ho...@hollyfortenberry.com>
wrote:

> LOL, now I'm a bit more (or less) confused.  :-)  So Terry, I take it
> you think the corp. veil DOES protect even a one-man show?  Would you
> mind expanding on your disagreement?  Also, I'm assuming you are not
> referring to the shares statement.  I also would not want to go public.  
> That's a bit too big for me.  I want to keep the business small (between
> 3 and 20 employees ultimately).  For now it's just me and a some
> contractors.
>
> Thank you!
> Holly
>
> Terry Brown wrote:
> > I respectfully disagree with everything you just said!  :)
>
> > Sent from my iPhone
>

[Keith Aric Hall]

Dude, please stop. Pub 555 is in regards to community property laws. It has nothing to do with your federal tax status or your federal tax return. LLCs file form 1065 same as a partnership. You may not be making it up, but you certainly do not know what you are talking about.

I got my degree in accounting and worked both Arthur Andresen, LLP and Ernst & Young, LLP as a tax accountant 10 yrs ago before i made the jump to web dev and graphic design. Information can be a dangerous thing. Please consult a tax professional.

[Holly Fortenberry]

Thanks for the book suggestion...it looks good.  I'll check it out.

[Keith Aric Hall]

Please let me apologize if the tone of my last email was a bit harsh. I'm not trying to be a jerk. I think this exchange really illustrates complex and confusing the tax code and business organization laws can be. Context is extremely important. It just reiterates my point regarding professional guidance in this area.

regards,

kah

[Terry Brown]

In terms of whether or not you should form as a S-Corp, C-Corp, or LLC, there are several considerations that would be most served by talking with an attorney.  The LLC has units instead of shares; however, they are basically the same thing at least in principle.  You have so many units that reflect the entire ownership of the company.  Each state's rules governing LLC's are different, so, again, you would be best served by investing in at least a discussion with a corporate attorney.  You only have to go public if you reach a certain level of owners within the organization, which most small businesses would never achieve.

 

The bottom line is that you should find an attorney who deals with small businesses and at the very least do a consultation to get their recommendations. 

 

 

 

 

 

---

[Holly Fortenberry]

Thanks Terry and all of you for trying to hash out this complex subject.  I am definitely planning to talk with a tax attorney.  I am still wondering though what you all have chosen personally for your own business.  I am after personal experience here more so than the theory from books that I can study for myself or get from an attorney.

Keith are you operating an LLC? 

Ferodynamics?  How about you?  A Sole Proprietorship?

What about you Terry?  An LLC?

Anybody else care to share the choice they made and if it has worked out well or if you would change your choice if you had it to do over again? 

Thanks!
Holly

Terry Brown wrote:

--~--~---------~--~----~------------~-------~--~----~
Our Web site: http://www.RefreshAustin.org/

You received this message because you are subscribed to the Google Groups "Refresh Austin" group.

[ Posting ]
To post to this group, send email to Refresh...@googlegroups.com
Job-related postings should follow http://tr.im/refreshaustinjobspolicy
We do not accept job posts from recruiters.

[ Unsubscribe ]
To unsubscribe from this group, send email to Refresh-Austi...@googlegroups.com

[ More Info ]
For more options, visit this group at http://groups.google.com/group/Refresh-Austin
-~----------~----~----~----~------~----~------~--~---

[Holly Fortenberry]

Also, anybody care to recommend a good corporate tax attorney (you know or have used or has been recommended to you) that has experience working with web designers/developers?  I'm in the market for one. ;-)

Cheers,
Holly

Terry Brown wrote:

--~--~---------~--~----~------------~-------~--~----~
Our Web site: http://www.RefreshAustin.org/

[Terry Brown]

Holly,

 

I'm willing to share my dirty laundry for the benefit of helping my fellow Austin developers.  Last year my partner and I had a thriving Drupal shop that brought in more than 20 international and domestic projects per month.  We had a staff of over ten developers and additional support staff in our Round Rock office.  The problem was that I didn't personally know Drupal.  My background is in .Net programming, and I had been developing business solutions for the Lodging Industry for over 20 years before co-founding GSD in 2007 after a pending acquisition of my software company was forced into litigation due to the greed of a former LLC Member who attempted to illegally hi-jack about 30% of the Units.  While that litigation was pending I was forced to work outside of the industry, so I turned to the most logical choice of web development.

 

We formed the LLC in Texas in 2007, and as I say we had a thriving business.  Then we started to get into trouble when our developers began to fail to deliver on a consistent basis.  This problem was fueled by the fact that, at the time, I did not know Drupal.  The sheer volume of contracts we had at the time made things really snow-ball quickly once things started to fall apart.  Then I got cancer, and my personal medical situation even exacerbated things further.  Long story - at least attempted to be - made short is that we faced several lawsuits.  The horror stories I can share would make every one of you cringe.  We had clients in remote areas of the country filing small claims court cases that would have been impossible to defend given the fact that we would have had to have representation in each location and would have had to appear personally in those local courts.  

 

Ultimately, we have been forced to take GSD into bankruptcy as a result of this, and had we NOT had the LLC in place we would have been held personally liable and would have been forced to file personal bankruptcy as well.  We even had several clients who DID sue us personally, and our defense in those situations were based solely on the fact that we were an LLC.  In each of those cases we were protected even the company was ultimately held liable.

 

The most frustrating thing to me personally about this situation was that we paid out literally hundreds of thousands of dollars to our employees in salary and ultimately the company was held liable when those employees failed to deliver.  Obviously, this is nothing more than a management issue that very much WOULD have been prevented had I known Drupal at the time and had a better ability to manage these resources. 

 

I have since become proficient in Drupal and now do 2-3 projects per month - only now I am in complete and total control of every facet of the operation (no longer under GSD).  Green Spider is pretty much in hibernation as we await the results of several of these lawsuits and move forward with the BK. 

 

Bottom line - every situation is unique and must be considered by a knowledgeable and professional legal or tax expert.  The ramifications of anything less can be personally devastating. 

 

I even have several local companies with whom I did business earlier this year with whom I am attempting to settle with outside of the technical BK proceedings.  Now that my cancer is under control I hope to work toward rebuilding these relationships back to where they were when things started falling apart.

 

Anyway - I'll stop rambling now.  Hope this helps on some level.

 

Terry

[Keith Aric Hall]

Holly,

Currently I am a sole proprietor because it is only me and I just take on small to medium jobs on the side. A few years ago I had an LLC in which I worked with a partner. We both had growing families and full time jobs and were not ready to commit fully to our own business, so we decided to dissolve the business. We are still very good friends today.

I do plan to give a go again in the future, at which time I will convert to an LLC, but right now I am working full-time and supporting my wife's efforts to open her own business. That being said, I will continue to take on small to mid-sized jobs on the side until we find out how things are going to shake out with her endeavor.

kah

[Holly Fortenberry]

Wow, Terry, thank you for sharing your story!  You and your family have been through a lot!  I'm glad to hear your cancer is under control.  I'll be putting out healing thoughts for you to beat it completely.  It certainly sounds as if the LLC was a big safety net for you.  I too have worried about taking on employees and contractors and then having them not deliver.  I'm such a perfectionist and figure I can usually do things better myself; but, then again, I know it's good to trust and allow and help other people to succeed and work as a team.  It is so important to have a good manager and I hope I can be a good enough manager.  This is probably the one thing that worries me most about growing a business...not being in total control and trusting others to do their part. 

Thank you for sharing your story.  It's so much easier to understand things when you can hear a personal experience.  And now I know who to call when I need to hire someone to work on some Drupal for me. ;-)

Take care!
Holly

Terry Brown wrote:

[Holly Fortenberry]

Ok, so now we've got two votes for LLC and a vote for SP.  I guess since you are in total control, you don't have to worry much about being sued.  Thank you for sharing your story!  And, good for you putting your growing family first Keith!  With that full time job and a growing business, I bet your family missed you.  My Dad did the exact same thing when I was in junior high school.  I was glad he and his partner dissolved the business and he focused on just his job and family.  It is nice to know that you and your old partner could start up that business again one day if you wanted to.  What is your wife's business?  Just  curious.

Cheers,
Holly

Keith Aric Hall wrote:

[Holly Fortenberry]

Keith,

When were you at Arthur Anderson?  The reason I ask is that I used to know a woman who worked there, Susy Pardillo.  That was in the early ninety's or maybe late 80's.  She said they were so strict about everything, what you could wear, how you cut your hair, etc.  Pretty wild!


Keith Aric Hall wrote:

[Holly Fortenberry]

Oops, sorry folks.  I meant to send this one off-list.  Sorry!!!

[Keith Aric Hall]

http://www.jumpygym.com/

Just signed the lease and the build out is starting soon.

kah

[Keith Aric Hall]

I was at Andersen in Houston from 97'-99'. Young kid, fresh out of college with no clue about work-life balance. Practically lived in that office for two years. About 6-8 mos out of the year, we were working 60+ hours per week. And many times it was 70+. After year two I started to re-evaluate my career goals.

Now, I work from home and get to see my kids off in the morning and I'm here when they get home in the afternoon. Admittedly, I have to set boundaries, but it is so great to be around and get to experience so much of their daily lives. Not just breakfast and dinner. :)

How about you? how did you get into the web world?

kah

[Terry Brown]

Yeah - nothing like REAL WORLD examples.  I laughingly remember Rodney Dangerfield in Back to School when he tells the professor how things would be handled in the real world compared to his text book examples. 

 

Oh, and I'm always ready for my next Drupal project!  :)  If you've never worked with Drupal you're missing something really special!

[ferodynamics]

www.irs.gov/pub/irs-pdf/p3402.pdf

"What Kind of Tax Return
Do I File?
1. Single member LLCs.
Generally, when an LLC has only one
member, the fact that it is an LLC is ignored
or “disregarded” for the purpose of filing a
federal tax return.1"

On Aug 22, 6:35 pm, Keith Aric Hall <khall...@gmail.com> wrote:
> Dude, please stop. Pub 555 is in regards to community property laws. It has
> nothing to do with your federal tax status or your federal tax return. LLCs
> file form 1065 same as a partnership. You may not be making it up, but you
> certainly do not know what you are talking about.
> I got my degree in accounting and worked both Arthur Andresen, LLP and Ernst
> & Young, LLP as a tax accountant 10 yrs ago before i made the jump to web
> dev and graphic design. Information can be a dangerous thing. Please consult
> a tax professional.
>
>
>
> On Sat, Aug 22, 2009 at 5:43 PM, ferodynamics <duch...@solve360.com> wrote:
>
> > I don't make this stuff up, I'm sure you can find plenty more

> > references as IRS.gov -http://www.irs.gov/faqs/faq/0,,id=199633,00.html

[Terry Brown]

Right - so you don't have one member. AND that is "for the purpose of
filing a federal tax return." There are many other reasons one should
consider a corporate structure other than just tax implications.

[Keith Aric Hall]

I'm not sure the point you are trying to make here. If you read on further you will see that it says...

"Remember, this is only a mechanism for 

tax purposes. It doesn’t change the fact that 

the business is legally a Limited Liability 

Company."

Which means the personal liability protection and other legal statuses still apply to single member LLCs. And if an LLC has more than one member it files form 1065. The form you file is only a mechanism for reporting income/loss to the tax authorities. It does not interfere with legal status. Nor does it change your "tax status."

We can go on and on ad nauseam. My point still stands. You need to consult a tax/legal professional. 

kah

[Terry Brown]

Agreed - I'm pretty ad nauseam at this point.  :)

 

 

 

---

From: refresh...@googlegroups.com [mailto:refresh...@googlegroups.com] On Behalf Of Keith Aric Hall

Sent: Sunday, August 23, 2009 6:00 PM
To: refresh...@googlegroups.com

[Holly Fortenberry]

Ferodynamics (what is your name?),

So, do you have a Sole Proprietorship?  I take it you do not have an LLC? :-)

Thanks,

Holly

Keith Aric Hall wrote:

[Holly Fortenberry]

Thanks guys.  See, this little experience has taught me and many of the lurkers the importance of using a tax professional.  So it was a very good thing. :-)

Cheers,
Holly

Terry Brown wrote:

--~--~---------~--~----~------------~-------~--~----~
Our Web site: http://www.RefreshAustin.org/

[Terry Brown]

I think the main reason this is stated this way in the tax code is that inherently a single member LLC has the tax impact flow through to the single member - so effectively there is no difference than filing as an individual.  Isn't that right?

 

But still - that has no bearing whatsoever on whether a business person should consider filing as an LLC.

 

I agree 100% - consult a professional.

 

 

 

---

From: refresh...@googlegroups.com [mailto:refresh...@googlegroups.com] On Behalf Of Keith Aric Hall
Sent: Sunday, August 23, 2009 6:00 PM
To: refresh...@googlegroups.com
Subject: [Refresh Austin: 4385] Re: business model

 

I'm not sure the point you are trying to make here. If you read on further you will see that it says...

[Keith Aric Hall]

That would seem to make sense. It's not an issue with a partnership because you can't have a single member partnership. Which is also one of the benefits of an LLC. It shares many of the same characteristics of a partnership. But I digress. I am not a tax professional. I left that arena 10 years ago and I know the code has changed plenty since then.

kah

[Mary Luketich]

Hi Holly,

I created an S-Corp last year, and I think I did it too soon. I am still getting my own sites completed and have to pay myself salary as an S-Corp. Since I don't have the work to cover the expense, I cannot pay the salary, so I'll have tax problems the next time I file. 

I highly recommend an S-Corp, but NOT until after you have steady income to cover salaries.

Mary Luketich

[Terry Brown]

Hi Mary,

 

I'm curious as to what made you choose an S-corp and why you highly recommend it. 

 

Thanks,

Terry

 

 

 

---

[Gregory Stewart]

Mary,

Are you simply not cashing your own paychecks or are you not paying yourself (w2) at all?

I also operate as an S-Corp, and in the beginning when money was irregular and I didn't have enough money to cover my paycheck, I still would write one to have a record of it for my taxes and so, I just didn't cash until later when I had the money. Of course you will have to pay the payroll taxes on an ongoing basis.

That might be something you want to do. Just collect the paychecks until you have the money, that way you are paying a salary and the IRS will be happy.

Greg

[Ryan Crumley]

I have had periods in the past where my s-corp wasn't bring in enough
to cover my salary and have not had tax problems so far (knock on
wood). As long as you are paying yourself a salary with any money the
company does take in (and not taking it as business
profit/distributions) you should be fine. You run into problems when
the company has profit coming in but instead of paying yourself a
market level salary you take distributions instead.

At the end of the day any of these structures will be fine.
Concentrate on building your business and the rest will follow. The
cost of setting up an LLC or s-corp is low and will protect you from
legal trouble, force you to separate your personal finances from that
of your company, and you will sound more serious/professional to
clients.

Ryan

On Mon, Aug 24, 2009 at 9:35 AM, Mary Luketich<ma...@hoawiki.com> wrote:

> Hi Holly,
>
> I created an S-Corp last year, and I think I did it too soon. I am still
> getting my own sites completed and have to pay myself salary as an S-Corp.
> Since I don't have the work to cover the expense, I cannot pay the salary,
> so I'll have tax problems the next time I file.
>
> I highly recommend an S-Corp, but NOT until after you have steady income to
> cover salaries.
>
> Mary Luketich
>
>
>
> On Sun, Aug 23, 2009 at 6:11 PM, Holly Fortenberry
> <ho...@hollyfortenberry.com> wrote:
>>
>> Thanks guys.  See, this little experience has taught me and many of the
>> lurkers the importance of using a tax professional.  So it was a very good
>> thing. :-)
>>
>> Cheers,
>> Holly
>>
>> Terry Brown wrote:
>>
>> Agreed - I'm pretty ad nauseam at this point.  :)
>>
>>
>>
>>
>>
>>
>>

[Mary Luketich]

An S-Corp is still considered personal taxes, so I don't have to file all the returns a regular corp would. It saves time and trouble. No minutes to file, much less structure over all.

I consider it the protection of a corp without so much fuss. I do my own taxes.

Mary Luketich

[Holly Fortenberry]

This is a good point Mary!  I had not considered this.  I may need to wait a few more months until all my ducks are in a row too.  Thanks for the advice!

Cheers,
Holly

Mary Luketich wrote:

[Holly Fortenberry]

Thanks Ryan.  And, yes, I am really looking forward to being able to present my business professionally as some type of Corp.  I've spent a lot of time on my branding and am still not settled on that either.  Anybody lurking here available to do logos?

Cheers,
Holly

[Frank Duran]

Holly,
I love doing logos.....send me an e-mail.

-Frank Duran-
fr...@durandigitalmedia.com

On Mon, Aug 24, 2009 at 6:15 PM, Holly