Author Topic: Need help setting up new business  (Read 596 times)

sisto

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Need help setting up new business
« on: October 07, 2017, 10:48:34 AM »
I come seeking the wisdom of my fellow MMMers here. I've been thinking for a while now about getting a business setup that I could use for side gigs and later on when I retire from my current FT job. Now recently my son is also wanting to setup his own business. He does IT consulting and has a couple of offers right now for some side work. I was considering us doing this together and wonder what the upsides/downsides are? I own a home and have a home office so I could claim that. I've been thinking that llc looks to be the best option and I like to here pros/cons from you guys already doing it. We live in CA is there anything special to consider there? Please tell all the wonderful ways I can get more money put away pre-tax with this new company.
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lexde

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Re: Need help setting up new business
« Reply #1 on: October 07, 2017, 10:55:05 AM »
This sounds like a prime situation for consultation with a transactional attorney. Advice is going to vary by state, asserts, and expected revenue. It'd be worth the few hundred bucks to talk to someone who is knowledgeable in your state to set up your business cost-efficiently.

sisto

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Re: Need help setting up new business
« Reply #2 on: October 07, 2017, 11:03:59 AM »
Thanks @lexde! I was hoping that someone here had already setup a small business in CA and would have some advice. I don't imagine this business ever being very big. I'm within 4 years of FIRE so for me it would just be to A. Help my son get started since this is really his dream. B. I'll have a business to help me be more tax efficient before FIRE and a business to do some light consulting after FIRE.
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SC93

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Re: Need help setting up new business
« Reply #3 on: October 07, 2017, 09:49:04 PM »
lexde is correct. I'm am sure millions have done this type of business up but those millions have nothing to do with YOU. What happens with you and your business will be your own structured plan. Do not copy what others have done because others are not YOU. And just so you know, I'd get 3 different opinions and NEVER tell what the previous person said. You go in there and let THEM do the talking. If you go in there and tell them, well, I saw Jo last week and he said to do blah blah blah.... all you've done is maybe make them 2nd guess themself and maybe give you wrong information. Good luck!

SeattleCPA

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Re: Need help setting up new business
« Reply #4 on: October 11, 2017, 06:58:36 AM »
You are really not going to be able to save more pre-tax money merely by using an LLC or an S corporation. Just fyi... (The type of entity you have doesn't affect the deductions you claim in almost all cases.)

Note that you can sometimes use an S corporation to dial down the self-employment or payroll taxes you pay... (That's sort of premature to talk about before you've even started your business though... it's a conversation to have with a tax accountant once you know what your first year or years will look like.)

BTW, in case you don't know this, California makes it really expensive for small businesses to operate as an LLC. The minimum LLC franchise tax if you're an LLC or S corporation is $800 a year. But it can make sense in some scenarios to start as an LLC... initially the LLC gets treated either as s sole proprietorship or partnership for tax purposes... and then later on, if things ramp up, you can make a Subchapter S election and have the entity treated as an S corporation (even though legally the entity will still be an S corporation) if the S corporation tax accounting will save you money.

P.S. In my opinion, paying for the advice of three attorneys to get multiple points of view would be a waste of money and time.
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sisto

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Re: Need help setting up new business
« Reply #5 on: October 11, 2017, 03:19:56 PM »
Thank you Seattle CPA! I did my homework and you are correct on all fronts. I've decided it's probably better for my son to start a business on his own and for now be a sole proprietor and I can also do the same for myself. I realize in my case I'll really just be able to have some additional write-offs, but I believe that's OK and will at least help some. I'll also have the benefit of having the business established for a bit before FIRE.
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SC93

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Re: Need help setting up new business
« Reply #6 on: October 11, 2017, 10:38:30 PM »
Correct, if you have to PAY for attorney advice I wouldn't do it. That's why it comes in handy to know a lot of different people that do a lot of different things as their career. Now all I need to do is befriend someone that works at the fried pie shop and I will RULE THE WORLD!! :)