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Question about Starting a Business

Old 07-11-2020, 06:44 AM
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I know there are a lot of small business owners on this site. I'm considering setting up an LLC for several of the small business projects I do. I'm seeking advice on how expensive and complicated it is to maintain an LLC in NC? Is it a must to hire a lawyer for this or can I navigate it myself? How bad is it come tax time? How bad is the annual report submittal?
Old 07-11-2020, 07:07 AM
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It’s not necessary to hire a lawyer to set up an LLC or corporation but it can be helpful considering their knowledge and experience in handling them everyday. I would say you would have a couple of hundred in the attorney or CPA expense for their time and then another couple of hundred in the SOS.

The cost of a tax return will vary on how small or large your business is, 1099 contractors you pay, employees, assets, etc. If you have a small side business, you could do a disregarded entity LLC which would be filed similar to a sole proprietorship on your personal return so you would not have a separate corporate return. Again, a CPA or attorney could assist you based on your position.

At a minimum you could pay a few hundred a year to do the return and pay the SOS filing fee. The annual report is simple.
Old 07-11-2020, 08:06 AM
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Originally Posted by jhendric View Post
I know there are a lot of small business owners on this site. I'm considering setting up an LLC for several of the small business projects I do. I'm seeking advice on how expensive and complicated it is to maintain an LLC in NC? Is it a must to hire a lawyer for this or can I navigate it myself? How bad is it come tax time? How bad is the annual report submittal?

annual report is a simple document listing LLC’s address and that you were in business for the calendar year. The fee to file is $200 a year to NC Secretary of State. Most of the time a CPA will file it as part of your tax return.
Old 07-11-2020, 04:39 PM
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Default Need a CPA

All good advice above. A simple llc,pa or s corp portion will cost $6-800 depending on if you already have a CPA relationship. Annual State fees $150-$200ish. If you are dipping your toes in the water of a corporation, you need to have a CPA. This goes back to the original question of do you need a corporation and will you have any tax benefit from having one? Liability? etc.

While it may shield liability, financially banks will require you to personally cosign any debt until you have a long financial track record.

Your CPA will help you to decide the best path for your situation. I have owned and managed corporations big and small. Part of the deciding factor is if you income is considered "work" vs non work. Silly distinction. Renting property is not work for example. If it is work, then there are self employment taxes, FICA, unemployment and workers comp insurance. Yep, you have to pay into your own unemployment and worker's comp. Corporate tax laws changed a few years ago and the tax rate is better on year end profits than it used to be. That being said, most small business corps report zero income as if there were to be any income, it is bonused to yourself on December 31st.

I hope that helps.
Old 07-11-2020, 04:48 PM
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Originally Posted by lilsmokie View Post
It’s not necessary to hire a lawyer to set up an LLC or corporation but it can be helpful considering their knowledge and experience in handling them everyday. I would say you would have a couple of hundred in the attorney or CPA expense for their time and then another couple of hundred in the SOS.

The cost of a tax return will vary on how small or large your business is, 1099 contractors you pay, employees, assets, etc. If you have a small side business, you could do a disregarded entity LLC which would be filed similar to a sole proprietorship on your personal return so you would not have a separate corporate return. Again, a CPA or attorney could assist you based on your position.

At a minimum you could pay a few hundred a year to do the return and pay the SOS filing fee. The annual report is simple.
Yeah No , Just like hiring an expediter for permits , it all can be done with the proper forms. I've been a sole p and a Corporation, the later to me was unnessecary
Old 07-11-2020, 04:56 PM
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It’s been 25 years, but I set up an S Corp. Did it myself
Old 07-11-2020, 07:49 PM
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Set up an S corp. 12-13 years ago after operating as a sole proprietor. It was a good move for me. No estimating taxes. Less tax and social security owed. Don't know why I waited so long to do it. I don't have any issues with the corp. buying items without me co signing. Bought 3 trucks this way as well as several large credit lines in company only name. But, been in operation for 25 years so that helps. My accountant helped me set it up.

Last edited by Lrivenbark; 07-11-2020 at 07:54 PM.
Old 07-11-2020, 08:11 PM
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Thanks for the advice guys! Does it make sense to start out as a sole proprietorship for simplicity sake and go to a S-Corp or LLC...

PS. The business in question would be a handyman Business with an emphasis on carpentry.
Old 07-11-2020, 08:16 PM
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Originally Posted by jhendric View Post
Thanks for the advice guys! Does it make sense to start out as a sole proprietorship for simplicity sake and go to a S-Corp or LLC...

PS. The business in question would be a handyman Business with an emphasis on carpentry.
Sounds to be more geared for Sole proprietor.
Just set up bank accounts and possibly a credit card ( even if you have to cosign) in the company name and keep it away from you personnel stuff.
Makes things easier at the end of the year.
Old 07-12-2020, 06:04 AM
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I set up an LLC last year myself. Very simple. Do it your self and save a ton of money. I think the cost was $100, but your annual is $125. I started a trucking company.
Old 07-12-2020, 06:25 AM
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I don't know NC law.

But for the FEDS -
1. I have been told by attorneys that the LLC gives you slightly better liability protection over a Corp when the SHTF. But I think that is in extreme cases. Ask an attorney. Have insurance.
2. In FL an LLC is easy to set up with the Division of Corps. You can do it yourself.
3. Once you establish the LLC you should get an EIN from the IRS.
4. The LLC gives you Federal income tax options. By default if there is one owner you are a Disregarded Entity, sole proprietor, file a Schedule C with your income tax return. If there are 2 owners, including husband and wife, you are a Partnership and must file a Form 1065 Partnership Income Tax Return. The K-1 gets reported on your personal return.
4a. An LLC has the option of electing to be taxed as a Corporation, then you can elect to be an S Corporation. Talk to a tax person near you for what would be better in your situation. It is not one-size-fits-all.

Good luck.
Old 07-12-2020, 09:11 AM
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Form an LLC in NC

Get a federal EIN, even if you never intend to employ anyone else.
Old 07-13-2020, 10:11 AM
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Thanks again for the advice guys, I'll do my research from here!
Old 07-14-2020, 01:27 PM
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Originally Posted by raybark View Post
Form an LLC in NC

Get a federal EIN, even if you never intend to employ anyone else.
As I mentioned, I set up an S corp for my wife over 25 years ago. We both owned 50% of the corp. Even though we were both owners of the corp. we were also employees. The corporation paid us a salary and since we were also owners, we got an S corp distribution (dividend). We paid income tax on the distribution, but not social security. Saved tons of money on employment taxes. Every dollar we took as a distribution saved us 15% that we would have paid if it was salary.
I've heard that some people take all their income as a distribution. My accountant warned us that would be a big red flag. He suggested not to take any more than one half of our income as a distribution.
Old 07-15-2020, 03:11 AM
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Originally Posted by chuck34 View Post
As I mentioned, I set up an S corp for my wife over 25 years ago. We both owned 50% of the corp. Even though we were both owners of the corp. we were also employees. The corporation paid us a salary and since we were also owners, we got an S corp distribution (dividend). We paid income tax on the distribution, but not social security. Saved tons of money on employment taxes. Every dollar we took as a distribution saved us 15% that we would have paid if it was salary.
I've heard that some people take all their income as a distribution. My accountant warned us that would be a big red flag. He suggested not to take any more than one half of our income as a distribution.
^^^^^^^This. S Corp can save you lots of money. Pay yourself a reasonable salary that will pay your personal monthly bills and take distributions from the company when the money builds up. Downfall is paying for the separate Corporate tax return, but if you're making money, it's the way to go IMO. I file my own monthly witholding and sales taxes (easy with Quickbooks), and let the accountant file the end of the year stuff. Saves a little money.

Last edited by FatCat1; 07-15-2020 at 03:21 AM.

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