My business is just me with my wife helping out, so I’ve been a Sole Proprietor/ DBA. My CPA suggests I become an LLC, but is it really necessary without employees? The thought of paying absurd taxes is stressing me out.
I’m not new to WC, 23 years now. We simply tally up our yearly expenses and previously deducted those for tax reasons, but concerned an LLC will hike taxes like crazy.
Stop stressing !! Just keep the work coming in , an you’ll be fine.
Just research LLC , An SCorp figure out which is best for you an do it.
You’ll learn more by doing your own research.
Everyone let’s the little things stress
Them out. As ling as that phone is ringing … all is good. You figure out the rest as you go.
In case the unforeseen happens an LLC will protect you.
Advantages of LLC
Ask them about going with an S Corp. If you’re grossing more than 50k or 60k, it should save you money over Sole Proprietorship. At our income, it should save us $4k or $5k this year, and that’s including the added costs of the accounting, payroll, and legal fees. Next year, it should save us even more (since we’ll only pay the lawyer to get us incorporated once)
What did your CPA say when you asked him these questions ?
She’s suggesting an LLC but I haven’t broached the S-Corp idea yet. May be overkill.
Looks like I’ll be a Single Member LLC (SMLLC) from what I’ve read.
If/when your business grows and an LLC isn’t the best fit, you can change to what does. I’m not sure you can change back to an LLC if you grow to a partnership? Perhaps you can, your financial advisor can clear that up for sure.
Stuff
I’m an employee of the S-Corp for which I am the sole shareholder. I get a monthly wage which is handled by my online payroll company, Sure Payroll. Very user friendly system.
I was an SP the first 3 years of business. And it worked fine. I was disciplined enough to keep track of my expenses and save a percentage of my gross for taxes. I usually saved more than enough for taxes and the excess was the vacation fund. Then the forth year…
I not only owed more in taxes than I ever had, it wiped what I had set aside out and then some. Needless to say there was no vacation that year. And yes, that was after I had been paying in quarterly too.
My accountant sat me down and explained the benefits of an S Corp. I’d be lying if I said I understood it all at first but I trust him and he helped me get set up. I’m now my own employee and pay a payroll company to handle payroll for me. And I admit…he was right. This year I saved a ton in taxes.
I stressed too when he told me to become an S Corp. It made me mad that the whole system is set up against one guy simply doing his thing…but that’s the way it is.
I’ve been there, but trust me…your accountant is right…it makes sense and isn’t anything to stress about.
And one word of advice…I know paying someone to do payroll for you may be the last thing you want to pay for but trust me…it’s worth it.
I wish you success!
If you already use QBO, payroll is simple through it and also allows you to easily e-file your employment taxes
S-corp!!! I was LLC and there’s limitations in some areas that make s-corp more advantageous
you’ll never pay more taxes than as a sole proprietor
and every year you make more you’ll get even more behind, its as if you can never set enough aside as a sole prop and then if you owe for the previous year too, ugh, it never ends, pay the stupid $800 for a corp fee and change your life for the better lol
LLC is still able to file as a Sol prop from a tax aspect but the LLC will protect you personal assets
If you own a home and you get sued for killing someone in a company vehicle they can only go after business and not you personally is one reason for LLC.
I’ve grown by 150% last year. This year we formed an LLC and are changing until I need to become scorp think the c corp u end up double paying if not careful
