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agaskill
post Jul 18 2006, 04:55 PM
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Hi everyone,

Great info everyone gives! I appriciate it. Here are my questions.

My Friend and I are starting a web and graphic design business. We want to be equal partners. Is an LLC Recommended?

Once we have everything set up (including bank accounts) and start making money...how do we pay ourselves?
also do we have to pay a separate tax on that money (as personal income)? or do we just pay the business tax on the money?

Thanks in advance.

-Aaron
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gemini
post Jul 18 2006, 05:49 PM
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I respect your ambition. You probably have a lot more questions, or will have soon. Have you tried the Small Business Accociation in your area. Or on the internet SCORE. These are great resources to answer your questions, especially the SBA. In my area, anyway, they have regular sessions for those who are interested in starting a business and these intro sessions will help answer a lot of questions you may have.

Good luck

gemini
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Aric
post Jul 20 2006, 09:35 PM
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QUOTE(agaskill @ Jul 18 2006, 05:56 PM) [snapback]112062[/snapback]

Hi everyone,

Great info everyone gives! I appriciate it. Here are my questions.

My Friend and I are starting a web and graphic design business. We want to be equal partners. Is an LLC Recommended?

Once we have everything set up (including bank accounts) and start making money...how do we pay ourselves?
also do we have to pay a separate tax on that money (as personal income)? or do we just pay the business tax on the money?

Thanks in advance.

-Aaron

We just started an LLC with an S option. That is the way to go. You pay yourself with an owner's draw. That is where you take money out of the business. A great way to get some cash out of the llc is to reimburse yourself for mileage. Remember to write off everything to do with your business like ads, mileage 44.5 cents per mile, bank fees, charitable contributions, furniture, supplies, membership dues, insurance (all types), Intrest, liscences, meals, office supplies, payroll expenses, postage, professional fees, rent.
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agaskill
post Jul 21 2006, 07:28 AM
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Thanks for the Info!!! Great Help
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incorporated
post Jul 21 2006, 04:24 PM
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QUOTE(agaskill @ Jul 18 2006, 03:56 PM) [snapback]112062[/snapback]

Hi everyone,

Great info everyone gives! I appriciate it. Here are my questions.

My Friend and I are starting a web and graphic design business. We want to be equal partners. Is an LLC Recommended?

Once we have everything set up (including bank accounts) and start making money...how do we pay ourselves?
also do we have to pay a separate tax on that money (as personal income)? or do we just pay the business tax on the money?

Thanks in advance.

-Aaron


AS a multi member LLC you would be treated as a general partnership. The LLC would file a 1065 tax return, and distribute the taxable event to you as individuals. By "taxable event" I mean any profit or loss. Each of you would include those numbers on your personal tax return and TRY to deduct the losses, or pay high personal tax rates on ALL the PROFITS.

All of that money will be subject to self employment taxes 15.3% along with your income taxes, both state and federal. You may have personal deductions to reduce the income taxes, but those do not reduce the self employment tax.

whether you take the money during the year as a draw, or as payroll, or at the end of the year as a distribution, the tax is all the same. Make sure that you have enough money at the end of the year to pay all the taxes on all the money that you take out of the business for your self.

Someone mentioned keep track of your deductions, which is good advise but deductions put no money in your pocket, If you go to the Post office to buy stamps with your $10 bill, and keep the receipt; when you turn that receipt you will only get your $10 bucks back. That is not any extra money.

This post has been edited by incorporated: Jul 21 2006, 04:25 PM
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agaskill
post Jul 21 2006, 05:18 PM
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So we would pay taxes as a "business"...then we would pay individual taxes?

I'm really new at this and I'm not quite sure what you are talking about.

-Aaron

This post has been edited by agaskill: Jul 21 2006, 05:19 PM
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incorporated
post Jul 24 2006, 02:46 PM
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QUOTE(agaskill @ Jul 21 2006, 04:19 PM) [snapback]112266[/snapback]

So we would pay taxes as a "business"...then we would pay individual taxes?

I'm really new at this and I'm not quite sure what you are talking about.

-Aaron

No, the business is a passthrough entity, It pays no tax, but is required to file tax a tax return.

The tax return will credit the tax liability to the individual owners, and the individual owners will payy the taxes on the entire business profit at ther personal tax rate.
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blue
post Aug 9 2006, 11:25 AM
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QUOTE(incorporated @ Jul 24 2006, 01:47 PM) [snapback]112321[/snapback]

QUOTE(agaskill @ Jul 21 2006, 04:19 PM) [snapback]112266[/snapback]

So we would pay taxes as a "business"...then we would pay individual taxes?

I'm really new at this and I'm not quite sure what you are talking about.

-Aaron

No, the business is a passthrough entity, It pays no tax, but is required to file tax a tax return.

The tax return will credit the tax liability to the individual owners, and the individual owners will payy the taxes on the entire business profit at ther personal tax rate.


just to add to incorporated:
any liability of the individual owners, as i understand it, will get a K-1 form, and use the
figures on this form, to include in their personal tax return.
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kathywilson
post Sep 13 2006, 10:51 AM
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Thanks for your info.......

It helped me a lotttt

This post has been edited by kathywilson: Sep 13 2006, 10:54 AM
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