Anyone here have any knowledge on the mechanics of starting a very small business? I'm considering some side work and want to make sure that I'm protected with liability insurance and the like. I've been doing some reading, but would love firsthand info.

Call me. I just set up a corporaction last week. Ill be off work by 3.

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What do you want to know? From your post it sounds like you want to incorporate mainly to protect yourself and your family, house, etc.

I own two businesses now, both LLC's, had another one in the past that was an S Corp.


J.E.

My company is an s corp as well. Around $700 to do.

Do it as a LLC it will protect you personally. I set mine up this way so if you get sued they can only touch company assets

I gotcha.

Just FYI for any newbies.....Legalzoom is a great service but they do charge an insane premium for it. I'm talking like 1000%+ over filing the paperwork yourself. Also, using their service does not affect corporate taxes in any way...all they do is file one simplistic form with the IRS for you. I think what Landshark means is that the choice to be taxed as an S corp (as opposed to a C corp etc.) saves a bit of tax work throughout the year.....NOT using the LegalZoom service to make that election for you.

Correct. S corp saves more money for a sole proprietor over the course of a year from what I remember (or you have more option) I just used legal zoom for the simplicity and at the time I was busy and I wanted everything to be complete and done.

I talked to an accountant and tax attorney and s corp fit my needs.

OK, so what's the difference between a S corp and a LLC?

One difference is how you "take" your money out of the company and how it is taxed. I don't know about protection, I have only owned S-corps.

In a single owner LLC, all profits are considered "earned income" & must have social security and medicare withheld. Since you are the employer as well as the employee, so to speak, you must match the normal 6.2%SS & 1.45%MC that is withheld from the employee's check. So you are paying about 15% SS & MC on all your profits.

In an S-Corp, you can pay yourself a "reasonable" salary for working at the company. You can take the rest of profits as an owner draw. You ony have to pay the MC & SS on your "reasonable" salary.

I just set up an S-corp earlier in the week, it cost $50 filling with the state, then you file an s-corp election form, free. You might need a Federal Employer ID# and maybe a State Unemployment ID#, if you are the only employee, but I've never been in that situation.

Get a good accountant, not a lawyer. If your accountant can't answer the questions regarding which #s you need, find a different accountant. My accountant set up my last corp for $150 w/the filing fees included, but she was too busy to do this one because of tax season. Legal Zoom wanted $150 for the corp and I think $85 for the S-corp filing. We figured how to do it in about 5 minutes of google-fu.

I agree with Gunni.. get a good accountant, mine has saved my life and will know exactly what you should do based what your intentions are. There is no way I could have dealt with running my business without mine, the fee is well worth it in the end knowing all the t's are crossed and i's dotted...

I found a bit of an old school one myself whos been in the same location and has a well established business, and knows his business. I didn't want a place that was into volume.

I don't think I'd use legal zoom. I've talked to several people here just recently that set something up within the last year and legal zoom started charging them a fee of some sorts that was hidden in the fine print. Any company that is owned by O.J.'s lawyers isn't something I'd necessarily trust.

But having a good accountant is priority #1 in my opinion as well.

Lots of good advice here, don't forget to check here before you "sign up" your business.


http://www.sos.state.co.us/biz/Business ... eriaExt.do





This is the Secretary of State for Colorado search - put in the name you want for your business and see if its available - if its already taken and still in use you can't really use it. Your also able to see the name if was previously used but not renewed. You need to renew every year with Colorado for $50 to keep in good standing, if not someone can come take your name and it's their name legally now.

This is important for your company name and here is my example: We owned a company, sold it, the new owners sold it and it closed. I waited for the name to NOT be renewed and then was able to get our old company name back! SO if a name is there but not being renewed, you can get it.






I would also check out a business incubator in the Denver area. Their job is help you get started and usually have cheap courses to answer beginner and basic questions. We have a good one in GJ.







I would avoid legal zoom...with the internet you can do all the same for lots less, and its easy, barely harder than signing up for facebook.





If you go corporation you might want to use a lawyer, or you might want to find a lawyer for when you might need them. We had a lawyer sitting on our corporate board.





It use to be also if you were a LLC, and as your company grows, you could "move up" to a S Corp, but not move down.
LLC's have changed now and it can work a little better so you probably don't need to be a S Corp or C Corp.




Also remember that YOU can be sued for negligence, so building a company doesn't protect you totally.




Here is an example that I saw happen: If you were a pilot and flew poorly and caused harm/death in a crash and you survived, YOU would get sued, the company that owns the aircraft gets sued, the company who books the tickets gets sued, the manufacturer of the aircraft get sued, it goes down the line, etc... The pilot who caused the crash does not just walk away.


A startup is a tough road, but I think totally worth it.
I hope you go for it!

Just remember if it was easy, EVERYONE would open and own a successful business!

J.E.