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Posted: 2/14/2006 3:15:22 AM EDT
I'm looking into starting a part time business (custom woodworking) so far It's just been a hobby, but more and more people have been asking "If you don't mind I'd really like you to build me a....."

Aside from the NFA benefit what is the difference in incorporating and a sole proprietor as far as taxes are concerned and of course insurance. The only people I employ is myself, but sometimes the wife helps out when I need a hand. It's my understanding that I have to pay ints the WC anu UE system when I incorpotate, how does this work?

Now with the NFA stuff, I Think I need a EIN to get NFA items sans LEO signoff, but do I get this with a LLC or a sole proprietorship or both?

I'm doing this in Georga if any of you in Georgia have done this before, let me know how you did it and the costs involved. The websites I looked at are too confusing, too much legal BS to get a straight answer.

Thanks
Link Posted: 2/14/2006 2:49:48 PM EDT
anybody?
Link Posted: 2/14/2006 5:23:05 PM EDT
I'm studying how to a start a business also. From everything I've read a lawyer and an accountant should be your new best friends. You pay them to save you money. Each state is going to be different, so find a lawyer and acct in your state that has lots of experience setting up businesses.
Link Posted: 2/14/2006 5:25:44 PM EDT
Corporation gives you some legal protection, self employment doesn't. Red tape both ways. Also depends upon type of corp. Look at LLC too
Link Posted: 2/14/2006 5:33:12 PM EDT
What you want to do is an LLC. It will give you the "corporate shield" but tax you like a sole proprietor. It is easier to run than a corp, which means you have less paper work to deal with. But you still have some to do. LLC is designed for people who want corporate protection without forming an actual corporation and going through that huge hassel. Look on the sec. of state web site. They should let you know what you need to do to form an LLC.
Link Posted: 2/14/2006 5:34:26 PM EDT
[Last Edit: 2/14/2006 5:35:30 PM EDT by TacticalMan]
You should read something like Own Your Own Corporation by Garrett Sutton.

Your question is far too broad and the considerations of your unique situation are far too many to deal with in a paragraph or two.
Link Posted: 2/14/2006 9:19:48 PM EDT
[Last Edit: 2/15/2006 5:45:13 PM EDT by PeteCO]
The difference in paperwork between an entity like an LLC and a C-Corporation isn't that big of a deal, except for payroll. This reason alone makes the LLC a little more attractive for a single person small business or very small partnership. You can make "owner's draws" without any fancy accounting, where a C-Corp would require you to issue a paycheck to yourself or authorize dividends.

If you plan to grow to a large size, a C-Corporation has by far, the best tax advantages, but is only worth it if you will bring in enough money to take advantage of the specific tax advantages, and are willing to deal with employees (yourself, or others).

S-Corporations are a bit of a hybrid, and the IRS generally requires you to pay yourself a sensible wage. After doing so, any additional earnings "pass through" to you.

If you are a principal of the business, you can usually sign an affadavit exempting yourself from Worker's Comp. If you are using power tools such as table saws and jointers, trust me - you do not want to pay Worker's Comp.
Link Posted: 2/14/2006 10:56:57 PM EDT
BTDT,

do yourself a huge favor...

before you do anything else, get the tax forms needed to PAY your local/state/federal business taxes over a full year.

fill them out using your projected first year earnings.

take a hard look at how much tax you'll have to pay, it will surprise you.

Divide your net profit by the number of hours required to produce your product, market it, sell it, etc, etc. you may find you'll be earning less than $1 per hour. Don't you have more enjoyable things to do than earning chump change while paying lots of your hard earned $$ to tax agencies?

might be a lot happier not becoming an official business, and just selling to friends. Your profits will be substantially higher.

And I hope you have pretty lenient zoning codes in your residential area.

As for starting a woodworking business to also acquire NFA weapons, goooooood luck getting the IRS to approve that deduction. You'd best ask first. they may not call you on it for several years, but when they do, you'll also pay interest and penalties, and on a 10K refused deduction, your gonna get raped for probably 20K. I've wasted about a hundred hours dealing with IRS idiots. Common sense is never EVER used in place of an agent's best guess interpretation of incredibly confusing regulations. It is really a bizarre experience trying to communicate with these people.

Now, if you were to sell wooden replica guns, to be used as training aids for LE/military/etc, you might be able to justify buying the real weapons, because exact measurements and weights are needed to produce your product.
Link Posted: 2/15/2006 11:37:39 AM EDT
LLC almost definately, corp shield with the paperwork of a sole proprietorship.
You'll need a seperate bank account, and you want to keep them totally seperate from your personal life.
You might not "make any money" but you'll get a whole lot of tax free tools, etc.
the more revenue, the more you can "lose"
you have to make money in 2 out of 5 years. but you can make a little and lose a ton.
best tax writeoff left
You'll need insurance.
Link Posted: 2/15/2006 12:14:42 PM EDT

Originally Posted By Scagnettie:
What you want to do is an LLC. It will give you the "corporate shield" but tax you like a sole proprietor. It is easier to run than a corp, which means you have less paper work to deal with. But you still have some to do. LLC is designed for people who want corporate protection without forming an actual corporation and going through that huge hassel. Look on the sec. of state web site. They should let you know what you need to do to form an LLC.



What you really want to do is ignore people like this who don't have a clue what they're talking about.

Start by reading more at Nolo.com here

This will give you some basic info. Next, talk to your accountant and go from there.

Link Posted: 2/16/2006 12:07:41 PM EDT
I'm going through this process now. i went to see a lawyer and this is what he said. If i am a sole member company, no employees, go LLC. This protects my personnal assets from my company assets. He also suggested I do the paperwork myself and save his $300 fee. The paperwork is The Articles of Incorporation that must be filed.

The LLC paperwork for Minnesota is on the Seceratry of State (SOS) website under business. Fill out the form and mail it along with a check for $135 and wait until the SOS reviews and approves it.

Too easy. But if you have employees, he suggested paying a lawyer to file the paperwork as it is more encompassing and you need additional protections.
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