Small Business Types?

[JoshuaW]

I have a side hobby business that has grown quite quickly. I want to open a small business checking account, but like anything banking or small business related, it is confusing as can be. I dont have an LLC, so I guess I operate as a sole proprietor. As a sole proprietor, can I use a "business name"? That inevitably leads to another question, can I even operate my business under a "business name" without any additional licensing/paperwork? Looking at this I have started to wonder if Im already not doing something the way the government would like? Will there be more problems waiting for me when I go to file my taxes under my name without any sort of tax ID number or business license?

None of this is straightforward. I really wish it could be as simple as going about my business, at the end of the year say I made X dollars and if you dont believe me, look at my books. I still havent figured out what all of this licensing and bureaucratic BS accomplishes, what applies and how it applies, and whether or not I am going to screw myself at the end of the day by not doing something Im supposed to or by paying a lawyer to tell me that I really didnt have to do anything and just wasted what little money I make having him tell me that.

 

[Stschil]

My wife is a small business accountant, she may be able to help answer a few questions at a much lower cost than legal counsel.
Sending PM

 

[hoosierdoc]

Secretary of State : Business Division: An Entrepreneur's Guide to Starting A Business in Indiana

One of the bad things of a SP is lack of protection from lawsuits or bankruptcy. An LLC is still a pass trough for taxation and yet you can make use of the legal protections. I think we setup for $90. The tax filings and other required forms aren't that bad if you're small. That's my rec but thankfully IANAL

 

[the1kidd03]

Secretary of State : Business Division: An Entrepreneur's Guide to Starting A Business in Indiana

One of the bad things of a SP is lack of protection from lawsuits or bankruptcy. An LLC is still a pass trough for taxation and yet you can make use of the legal protections. I think we setup for $90. The tax filings and other required forms aren't that bad if you're small. That's my rec but thankfully IANAL

^^This. Register the name with the state as an LLC, file for a tax ID number, and you're off and running.

 

[kawtech87]

Others have already said it, but I will restate it. DO OPEN A SMALL BUSINESS AS A SOLE PROPRIETOR! At least form an LLC, if you want to get fancy trademark your logo, and copyright your business name.

I know a very good small business attorney. If you would like his contact info PM me and I will get it to you. He is not cheap though.

 

[rockhopper46038]

Yep, another vote to file your paperwork as an LLC. There will be time to decide if later on a "C" or an "S" corp is a better long term solution - but most likely an LLC will suit you indefinitely.

 

[JoshuaW]

So if I go LLC, things still flow through to me for tax purposes? So I would still just file the single tax return (for myself) or am I filing one for both? I know the LLC offers some legal protection, but my business is absurdly small, simple, and I dont have physical products or anything, so I doubt I would get sued. It still sounds like it is a good idea though, correct? Any additional costs to upkeep the LLC (including additional taxes and what not)?

 

[MCgrease08]

You can also file a DBA (Doing Business As) paperwork with the county. Essentially you are a sole proprietor and use your ssn as tax ID number. A bank will most likely require at least DBA paperwork to let you open a biz checking account.

I use a DBA for my freelance writing business, but I'm not worried about getting sued so I didn't need the extra legal protections of an llc. I filed the paperwork through Legal Zoom and they filed with the county and state. It cost me about $120.

 

[Stschil]

As an LLC, your business accounts are merely pass throughs to your personal. You are, however responsible for SS and FICA taxes on the money you make. One way my wife and I handle this is by having extra withheld from my regular job.
And yes, you only have to file ONE tax return.

 

[JoshuaW]

As an LLC, your business accounts are merely pass throughs to your personal. You are, however responsible for SS and FICA taxes on the money you make. One way my wife and I handle this is by having extra withheld from my regular job.
And yes, you only have to file ONE tax return.

That is similar to how I am planning on handling it next year. Im getting married in February, but I plan to maintain the same withholding as I have now, which should help cover part or all of the SS/FICA taxes. This year I am just making sure I have enough set aside to cover it.

 

[MCgrease08]

Make sure that you're paying estimated taxes quarterly too so you don't get slammed with a huge tax bill at the end of the year.

 

[hoosierdoc]

I heard you can take deferred compensation and run a debt to yourself for uncompensated time or salary. That way you can possibly avoid the business being profitable and thus owing taxes. The annoying thing is not taking money out of an LLC but still having to cough up the tax $$ to cover the profits the business had.

We will be looking at ways to maximize legitimate business expenses to help with that.

 

[JoshuaW]

Thanks everyone for the tips! I just filled out the LLC questionnaire on LegalZoom. It might not be the best option, but the price was right, and with the nature of my business, it is very unlikely that the LLC would ever end up in court. Im very excited, this is a HUGE step for my business!

 

[marv]

To answer your initial question, yes you can open a separate checking account. It will be a personal account but they will print whatever you want on the checks. No fee's to the State or anyone. IN.gov said to register the name with your county clerk. I went to the clerk and they didn't know what I was talking about.

 

[JoshuaW]

To answer your initial question, yes you can open a separate checking account. It will be a personal account but they will print whatever you want on the checks. No fee's to the State or anyone. IN.gov said to register the name with your county clerk. I went to the clerk and they didn't know what I was talking about.

I have a separate checking account for the business stuff, for the expenses I pay, but I wanted something where I could receive checks made to the business. The LLC turned out to be about the same price as the DBA, so that is the route I went.