Can somebody tell me the benefits of making your business an LLC? If you don't, are there any effects if you don't do it for awhile? I know a benefit is there is no double taxation. The alternative to LLC is a corporation, but with a C or S corporation you need to have annual corporate meanings and document them. It's not really a problem, but I don't want to be forced to do it. Anyway, we're not having any investors and as of now we aren't making the sales that would induce large taxes. Is there a way to register your business without getting incorporation or LLC? Not that I have a problem with paying the $240, but I don't want to if I don't need to. I'd just like a very cheap or free way to officially register it. The main points: Can any problems arise if I don't have LLC? Cheap way to register my business? Can my business proceed as normal if it's not registered, or will there be problems (I know it's repetitive but I need to know badly!)
It is more taxation and corporate identity. Actually, you could go about being a sole proprietorship and just register with your local chamber of commerce as a DBA (Doing Business As). That would be the simpliest form of a business structure. However, unlike a LLC or a Corporation, you do not have limited liabilities. Then again, if you watch your pocket and do not start borrowing massive amounts of money from the banks or even spending more than what you can afford, you should be okay. http://entrepreneurs.about.com/od/businessstructure/a/doingbusinessas.htm
As a single member LLC you'll be taxed just as though you were a Sole Prop I believe. However, you'll have limited liability (you never know when you'll get sued in this biz!).
Anyone know of or have links to small time affiliate marketers being sued? I know people can sue for basically anything now a days but it seems if there is any fault if would fall back on the company the affiliate is promoting. Example: You promote a weight loss pill and a person buys it off your site. You get the commission and a few weeks later this person dies from the pill. The affiliate is only acting as a sales person and the company should be the one at fault.
This DBA sounds interesting. I actually sell airsoft guns so there could be legal problems, but we have a disclaimer and I hope that should be enough, at least for now. I just know that if I got hurt from the PB gun I bought off eBay I would not even THINK of suing the guy who sold it to me. I actually have a partnership, can you get a DBA if you have a partnership? So yes, in terms of LLC, there would be two members. For DBA, I believe it would be referred to as a partnership. Oh, also, can I upgrade to an LLC eventually if I get a DBA first?
If your a partnership you can still incorporate into LLC, C or S corp... or a limited partnership. Each of which has it's own advantages and drawbacks. You don't "upgrade"... simply put the current business (no matter how it is formed) would cease to exist and you would form the LLC and transfer (or sell) the assets to the LLC. Overall they offer liability protection and tax benefits beyond operating as a sole prop. -SS
Is there any way to register my business online, like, with an official government office? I have a partnership, and I want a cheap way to register the business. Liability protection and tax benefits are good but not necessary. Also, both me and my partner are 16. Does that present any problems?
I would think that being 16 can pose a problem because that is still considered the age of minors. And contracts with minors are non-enforceable. I believe that you can do the DBA thing online. Just type 'Maryland DBA' and you should find several websites which can do that for you for a fee.
Basicaly you use LLC in case you get sued or go bankrupt. Dba you can get one cheap. You do not even need a DBA you can use full real name as company name. Problem with that is your liable if company is sued. Dba is doing Business as. You use Dba if you use company name that is not your full or real name. Dba has buisness ID number. If you use real name you use social security number.
See, I do not want my business name to be my real name. That's weird, and it isn't efficient for branding. So I need something. I'm going to try to meet up with my partner so we can go to the local government office, or something, and sign up for one.
DBA is just for that. I am looking to do the same soon, I just hope it's not too complicated and expensive and hopefully it can actually be done online. Only thing I want to add in case you don't know is that you have 30 days to apply/obtain the DBA thing from starting your biz. That's quite a comfortable cushion. If you don't apply it could be fraud to use a different name from your own...
Almost, but not quite. A partnership is already it's own entity, usually a LLP. The best overall is to have a corporation as a 1% partner in the LLP and have it listed as the General Partner. Typically, the structure is this for smaller businesses: One or more individuals (business owners) are partners in the LP with either a single member LLC or regular S-corp as the General Partner. The S-Corp would act as a management company. The LP pays a management fee to the LLC (usually monthly). Basically, the LLC operates as a 'paymaster' type of business. Paychecks to the shareholders are written out of this entity. Only income should be the management fees. Usually the only expenses are related to payroll, and any legal, accounting, and bank fees. The operations of the 'true' business are done in the LP. Partners are not allowed to receive paychecks, but receive their income as a split of the annual profits of the business. So basically, by doing this, you are forcing the partners to earn a paycheck, have income tax withheld, establish Social Security wages and pay into the Social Security system. You are also reducing the partnership's net income by increasing the expenses with the management fees. Overall, this helps with the partners' individual tax situation since they are having taxes withheld. Increase the tax withheld to almost 100% of the net paycheck after SS and Medicare taxes for optimum benefit. This is a basic business organization - of course, every situation is unique.
Yes, this can be a problem! For this situation, I would recommend the following: Contact an attorney in Maryland to see if it is even possible for a minor to even form a partnership or corporation. I would think not, but I'm not a tax attorney, just an accountant. If not, just keep everything as a sole propreitorship with you and your partner splitting the income and expenses 50/50 on your Schedule C's. You probably won't be able to register a DBA because of your age. I would have an adult do this for you. You usually do this in your county for a minor amount ($10 - $25 or so). Now we come to sales tax issues! You probably can't register for a sales tax ID either. My best advice - contact an attorney. Perhaps your parents have a friend that is an attorney that can give some cheap (or free) advice on this.
I talked to an accountant and he says that I don't need to incorporate or register my business yet. I could probably hold off until I'm 18 before I need to do that. If somehow we strike it big and make more than $5,450 a year, then I suppose we'll have to register. I don't know where you are getting that 30 day DBA thing from, and I don't think it's true. Anyways, if we're going to wait, when it happens, we're getting an LLC.
Something you need to remember is that when you do DBA you also have to get a business license from the city otherwise you will be paying penalties.
It's nothing complicated. You basically declare that you are Doing Business As the name of your business instead of your own name. You can't avoid that without a risk of getting into trouble. In your case, you need and want to do it. Please look into it further, do some research online, that's where I got it from. If I'm wrong, let me know though, as someone I know is doing that prob the next month... Thanks!
My accountant friend says that if we get a DBA, we'll basically have to file forms because we're "in the system". We won't actually pay any taxes, but we still have to file the forms. I found a loophole, kind of. When I advertise my site, I say "mysite.com", so I'm actually just telling people where to go. I can't tell people to go to "myname.com", I tell them to go to "mysite.com". So, that's the loophole. Any problems with that?