Posts by Henry Edwards33

There’s a bit of everything in here regarding starting a business. If you're looking for more specifics, I'm pretty sure you'll find an answer somewhere in this thread. 😉

My experience with Hyp has been nothing but a headache...
If you run into issues with their online banking, good luck actually getting a human being on the phone. Even worse, if you have a lease set up via automatic withdrawal, they’ll happily hit you with late fees every single month without fail—and again, trying to reach someone to sort it out is a total dead end. When you finally make it to a branch, the teller usually has no clue what’s going on because "that’s not her department."

Their fees aren't even that high, which almost makes the terrible service feel more insulting.

Nicholas Gomez5 said:Beyond what you already mentioned, they were asking me for an additional three to five standardized forms based on specific locations. I actually asked them, "Wait, why do I need different paperwork for every single site?" and they just told me that every local administration sets its own rules. To make matters worse, they wouldn't even look at my documents without a formal lease agreement in place. They are obsessed with hitting the landlord with income tax if it’s an individual. Even if you claim the lease is for zero dollars, they’ll just calculate the tax based on whatever the standard market rate is for that specific area. You can verify that yourself with the Trešnjevka Police Department, Susedgrad, or Samobor.

I didn't get an answer from you—when and at which Police Department did you submit your founding documents?

I'm just a girl 😉

The company was founded back in November 2008 by the Pazin Police Department.

Nicholas Gomez5 said:I’m not sure when you started your business, but I think the new laws kicked in this year. I’ve opened several companies recently around Chicago and the surrounding areas, dealing with various tax offices, and everywhere I went, they required a Lease Contract.

"Once you're entered into the court registry and the U.S. Census Bureau, you need to register the company with the IRS office that has jurisdiction over your headquarters to get set up for corporate income tax and sales tax. You'll typically need to present the court registration, the classification notice, and the signature card.

After registering your company through the Commercial Court, if you intend to jump straight into hospitality, retail, tourism, or transportation, you have to obtain a decision on fulfillment of minimum technical and other conditions for conducting economic activity from the relevant local authorities."

Nobody ever asked me for a lease agreement; they only wanted exactly what's listed right there. The only difference was that we didn't opt into the sales tax system.

Nicholas Gomez5 said:Could you clarify what you mean by "profit in a sole proprietorship goes by progressive rates"? Can you give me an example, or are you talking about income tax?

Yeah, I was referring to income tax. I used the word "profit" just to make it easier to follow, since that’s how people usually talk about it when dealing with small businesses and filing their returns. Of course, there are exceptions for those high-earning outliers, but you generally have to hit certain milestones in revenue, headcount, and total asset value before you even get close to that level.

Nicholas Gomez5 said:Quincy:

Let’s look at a quick example—imagine we have a brand-new sole proprietorship and a newly formed LLC side-by-side. Here is the scenario: they perform a service for a client and bill $10 $0.00. Let's keep the numbers simple for the math. How much money actually disappears into taxes and overhead for the small business owner versus the LLC? And what is the actual take-home pay for both?

1. It all depends on which type of business entity you've registered.
2. Income tax, sales tax, and payroll costs end up being pretty much the same whether you're running a sole proprietorship or an LLC.

Actually, profit for a sole proprietor follows progressive tax brackets, whereas an LLC stays at a flat 21% corporate rate.
Sales tax works differently too—sole proprietors deal with it based on what’s actually collected, while an LLC tracks it based on invoices issued.
As for self-employment taxes for a sole owner who isn't working elsewhere, if you follow the Police Department order, you're looking at roughly $577 this year.

And just a heads-up: if you pull your initial capital from a loan rather than equity, you'll be hit with interest.

If you’re taking out a loan, you’ve got to factor in the interest. And just a heads-up: if you pull an advance on your profits, Uncle Sam is going to take his 20% cut right off the top. Travel expenses? No extra taxes there...
As for sales tax, you’ll need to charge that on your invoices, provided you're actually registered for it.

There are plenty of ways to pull cash out of the business. You can issue a loan to yourself as the director, take an advance against future profits if you’re actually making money, or just run it through travel reimbursements if you have employees on the payroll. It's all just different ways of moving the pieces around.
The main thing is getting registered with the IRS right away. You can't be out there issuing outgoing invoices before that paperwork is settled, and you need to officially register yourself as the director the second you get started. 😉

Honestly, your easiest bet is just going through Uber; they walk you through the whole process step-by-step.
For anything else, you’re better off finding a solid CPA who can actually look at your books and advise you on the best way to handle your cash flow... There are plenty of ways to move money around, but it's impossible to give you a straight answer without seeing the full picture—your specific setup, your business model, all that stuff. Otherwise, anyone giving advice is just throwing darts in the dark.

I don't know about you, but I’ve reached that stage of life where I stop looking for "perfect" and start looking for "functional." Everything feels like a bit of a scam lately, doesn't it? You go looking for a straightforward solution to a problem, and instead, you get hit with a dozen different layers of bureaucracy, hidden fees, or just plain old incompetence. It’s exhausting. It reminds me of those times when you think you've finally found a reliable service—something like TaskRabbit—only to realize the system is rigged to favor the big players or the ones willing to cut corners. It’s all just noise. We spend half our lives navigating these complicated webs, hoping we don't get tripped up by someone else's mess. Honestly, sometimes it feels like the whole thing is designed to be intentionally difficult. Just my two cents. kaže:
= $1313 Setting up an LLC involves three things: paperwork, gas money, and way too many phone calls.

My startup costs ended up being... $1557 + $6667 Universal Basic Income. It’s one of those ideas that sounds like a dream when you're staring at an empty bank account, but starts looking like a nightmare once you actually run the math on how anyone is supposed to pay for it.

Setting up an LLC really comes down to how good you are at playing the game and who you know in high places—it's just the way things work here in America.😉

Notaries will charge you whatever they feel like for the exact same service; it basically depends on whether they like you or not, even if they're technically following some official 😂price list

If you want to get a vehicle from a spouse into your LLC, you've basically got two options: either buy it directly through the business or have them gift it to the company via a formal decision...
The vehicle itself gets written off through depreciation, which sits at 20% this year
You can deduct 70% of the vehicle's operating expenses as business costs.
Alternatively, if you're using your personal car for work stuff, you can just claim the mileage $0.67 per mile.
At the end of the day, you really need to crunch the numbers to see which route makes more sense for your specific bottom line.
If you don't actually *need* a dedicated company car, the IRS won't blink an eye as long as you can prove every single mile driven was strictly for business—meaning no running errands for the family in a company vehicle. You’ll just need to keep a meticulous mileage log documenting those business trips exclusively. 😉

According to the IRS, you register for taxes the moment you start up, using the date on your official articles of incorporation as the starting point.
Once the business is live, you're expected to file your quarterly reports right after each quarter ends.

Terms like "grace periods" or "minimal operations"—honestly, I’ve never heard anyone actually use those terms, so they still sound like total gibberish to me. And then there's the whole debate about whether the CEO has to be an actual employee; people have written so much about it that I've just completely checked out.

You're right, though. Ignorance isn't an excuse.

We’re both on the board, and honestly, nobody—not the notary, not IBM, not even our bank—ever asked us to appoint a single director. It was simply recorded that we both have independent signing authority, and the bank has copies of both our IDs on file...

I’d love an explanation for this phrase "with actual work," because I’ve certainly never encountered it before in any professional setting. 🤷
Our business operations are running smoothly and we aren't behind on any taxes or payroll, and under US law, a founder is perfectly entitled to volunteer their time at their own company.

Henry Edwards33 said:In your situation, is this person who isn't actually working paying any payroll taxes? If so, how much?
I'm asking because you don't have a director or any employees on the books. Thanks!😉

Zero taxes are being paid. And honestly, we aren't an outlier here; I could probably name ten different companies operating under this exact same setup.

I’m curious—assuming Aurora is right, what happens if a company simply doesn't have the cash flow to hire a director or cover their salary?

The founder, who also sits on the administration, is the one ultimately pulling the strings for the business. At the end of the day, a company can function just fine without a formal director or even a single employee on the payroll.

You don't strictly have to hang onto those receipts since you're choosing to record these assets at whatever value you decide they're worth. That said, I think having the paper trail to back up your numbers is a smart move—if you’ve got them, just attach them. Just so we're on the same page and there's no confusion later, you can still count these as business expenses, but you won't be able to claim any sales tax credits on them. I know you mentioned you aren't planning on registering for sales tax, but I just want to make sure everything stays crystal clear.

Any gear you picked up before officially launching your small business can be rolled into the company via a small business owner decision. You can just use your old receipts as backup to prove exactly what that equipment is worth.

Robert Hall7 said:So, if you aren't registered for sales tax, what’s the plan when a client actually asks for an invoice? Look, I know a locksmith who runs a small shop and isn't in the tax system. He gives me receipts for his work, but there’s no way for me to claim any tax credits. For my business, that’s just bad math. Plus, the guy always pushes for cash, which makes the receipt pretty much useless to me. I usually just end up looking for a different locksmith. If I were in your shoes, I’d join the tax system. There are actual benefits to it. Think about it.

Get stuck in. Don't be lazy. If you price yourself lower than everyone else, the work will never stop coming. My business includes service work, and my crew makes great money because of it. On average, our rates are about 30% lower than the competition. In this economy, people care about every single dollar. Remember that.

Regarding sales tax: if you don't collect it, you can't ask for a credit.
But I don't quite follow why you think staying out of the system isn't worth it. In theory, it’s the same thing. 🤷 You pay a technician who isn't registered for sales tax $333. That's just your cost. But if you hire a pro who is in the system, you pay for the service at $333 + $73 sales tax. This means you have to cough up $73 more upfront, which doesn't count toward your immediate expenses, and then you have to wait for the IRS or state authorities to actually process your $73 refund next month—and if you're lucky, they might not cut you a check for those credits until two months after the expense even hit your books.

An independent contractor who isn't in the sales tax system doesn't need to use specific exemption codes on an invoice, as those are strictly for different types of registered entities. You just have to clearly state under which section of the tax code you're exempt from collecting it.

Joining the sales tax system, especially for service-based businesses, really only makes sense if you plan on making significant capital investments in equipment, allowing you to claim credits on the materials and gear you buy.

As for the vehicle—whether to write it off through the business or not—keep in mind that typically only 70% of costs (gas, repairs, etc.) are recognized, and the car itself is handled through depreciation. On the flip side, if you use your personal vehicle for business, you can claim a mileage reimbursement $0.67 per mile. It really comes down to how many miles you can justify monthly and how much of a deduction you can squeeze out of it. Since you're doing field work, you'll likely be putting in a lot of miles every month.

If you’ve got a laptop or other gear you were already using before launching your business, you can roll those items into the company by filing a declaration stating their value. Just be smart about it—make sure the amount reflects what the gear is actually worth today. You don't want to list an old five-year-old MacBook at $3333 😉
prices.
If you're planning on heavy equipment investments, joining the VAT system makes sense because you can claim those tax credits back. But if you aren't planning big buys, staying out might be the wiser move initially. Like brisktinker15 pointed out, if your clients are just regular people, you'll actually be more competitive since you won't be tacking on that extra 22% sales tax to every bill.

And if you're using your own car for work, you're entitled to a standard mileage deduction of $0.67 per mile.

Bookkeeping itself isn't rocket science; with a little guidance and someone checking in on you occasionally, you could probably handle it yourself. Personally, though, I wouldn't recommend it. A solid accountant does way more than just track numbers—they'll steer you toward tax breaks and government incentives that most of us don't even know exist.

Good luck navigating the waters of small business ownership. Hope you stay afloat. 👍