Side Business - LLC Set up

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GeauxBiz (website)

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I'm just here to say as an out of stater that I love the fact a state owned domain is GeauxBiz.

Would highly advise not to set up an scorp or file your LLC as one either. My CPA made me do it and I fired her arse after one tax season. It was an absolute nightmare for the little amount of business I was doing (sub $150k). Just do a regular old LLC and file it through your personal tax return each year. Screw all of that filing two returns, paying yourself a salary etc etc.

It sounds like you need a single owner LLC. My tax lady did mine for $150 + $30 extra to hold the LLC name.

I use quickbooks ($13 a month, deductible) that track expenses and income and spits out spreadsheets at the end of the year for your tax person.

Save receipts on everything. Open a separate bank account and get a business credit card for your LLC... Do not commingle. Keep everything separate in regard to expenses and income. This makes it much easier for tax purposes.

You'll be amazed at what you can deduct!! Hope it works out for you.

We had an attorney friend set up my wife's LLC and after seeing how easy it was, I did mine myself. It's been several years ago, but IIRC you also have to go on the IRS website to get EIN (employer id number).

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It was an absolute nightmare

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quite easy for me, not sure WTF you were doing,

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Just do a regular old LLC

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single member and pay SE tax? sure, IF he is not making much, if he starts making a nice amount he SHOULD want to get more deductions and save on taxes filing as an S-corp.

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Screw all of that filing two returns, paying yourself a salary etc etc.

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none of that is hard at all. pay yourself monthly. or whenever. it is quite flexible. the business returns are tax deductible the next year anyway. setting up a payroll company and having them issue you a W2 is not hard. My CPA does all the rest. well worth the cost of me not having to do it and saving a ton on not just FICA taxes but also income taxes.

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(sub $150k)

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if you could not see value in or near that amount you obviously did not know what you were doing. people can make way less that that and see value in a S-corp.

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depends what his salary was in the S-corp filing. also depends on what his above the line deductions were he had filed as a sole proprietor/single member LLC. thing is you pay ZERO fica on the dividend distribution side AND you have so many deductions that apply to the business side your actual income tax paid on that side is way down also. it really is a win-win if you know what you are doing. Then with a fat contribution to a QRP(solo401k, etc) his income taxes on even W2 side are greatly reduced as well.

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he SHOULD want to get more deductions and save on taxes filing as an S-corp.

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AND you have so many deductions that apply to the business side your actual income tax paid on that side is way down also

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I've seen you make this argument on a number of threads lately.

What deductions do you think you can take as an S corp... that you can't take as a Single Member LLC, filing on Schedule C?

The only thing I can think of is that S Corps are more complex and have higher admin fees (payroll fees, cost of S Corp return, etc) and yes you can deduct those.

But spending money simply to get a tax deduction is stupid. Spending $1 to save 35 cents in taxes is beyond idiotic.

If you really want to do that... I'll be glad to send you a bill for $10,000, you can pay it and then save $3,500 on your taxes. You will still be out $6,500 though.

S corps are a GREAT payroll / self-employed tax savings strategy. But for income taxes they are no improvement over a single member LLC / partnership.

S corps did have an income tax benefit before LLCs became a thing (and the other option was the C Corporation) ... but that was a LONG time ago.

For what it's worth, while llc probably should be created(which takes 5mins on your states SOS site) just to help organize and potentially give liability protection (though single member llcs is a thread for another day)....you don't HAVE to have a llc to do schedule C deductions. It's not a tax designation.

Plenty people out there who are just doing sole prop work with DBA(doing business as). Best advice is to have a separate bank account and credit card just to separate expenses from personal expenses and prevent co-mingling of money. But the same deductions are available to you whether you're a llc or not.