Posts by Kimberly Harris6

David Mitchell4 said:What are all the actual fees an entrepreneur has to shell out? Where can I find a full list—things like rent, membership dues, etc.—excluding taxes?

Edit: A follow-up regarding the quarterly estimated tax system.
If I’m understanding this correctly, I just pay them a set amount every three months. As long as my total revenue stays under $85,000, am I covered? Does that mean there’s nothing else to settle at the end of the year?

When registering with the IRS, there's a field for "expected annual income." For those on the simplified tax method, what figure is actually recommended to put down?

Thanks!

"Requirements for simplified quarterly taxation:
• The business cannot be registered for Sales Tax collection.
• The business cannot be a partnership.
• The business cannot have separate branches or satellite locations.
• The business CANNOT engage in retail trade and/or restaurant services.
If you qualify for this simplified method, it is assumed that you will generate $4250 in profit—meaning the difference between $28 total receipts and expenses, calculated as 85% of that amount ($24).
Tax on that profit is paid at a flat rate of 12%, plus any local municipal surcharges based on where you live. Essentially, if we assume you live in an area with a local surcharge, you would be required to pay slightly more than $127 to the Treasury at the end of every quarter.
The main advantage of this setup is that you aren't required to maintain full commercial accounting books, since you accepted these conditions when applying for the simplified status.
The downside is that you must pay that specified tax amount regardless of how your business actually performs during the year—even if you end up operating at a loss.
Since running a business at a loss isn't illegal, in our opinion, this might not be the smartest business move for everyone. For a small operation like this, you could pay about $133 per month for a professional accountant—which, of course, counts as a deductible business expense, and then you would only pay tax based on your actual realized profit. If there's no profit, there's no tax. Furthermore, losses can be carried forward for five years to offset income in future years.
Note: Even those on the simplified plan must maintain the following records:
• A record of sales/receipts for cash transactions.
• You must issue invoices/receipts just like any other business owner.
• If you employ staff, you must maintain all required payroll and HR documentation.
How do you become a 'simplified taxpayer'?
1. If you are a brand-new business, you indicate this request on the registration forms submitted to the IRS.
2. If you were previously paying taxes based on full accounting books but now meet the requirements for simplified taxation, you must submit your request to the IRS by January 15th of the tax year. You will also need to include: the standard application forms; a summary of receipts and expenses from the previous year; and a summary of the total amount of money owed (an extract from your Accounts Receivable);
Note: If your business is located in a designated rural area, a remote island territory, or a specific mountainous region (such as somewhere like San Francisco), your simplified tax may be reduced by 25–75%.

A simplified taxpayer does not file a standard tax return, provided they have no other types of income that require one."

Regarding the other fees, I believe things like local occupancy taxes or various turnover-based levies aren't paid because no formal tax return is filed, but it's definitely best to double-check that with the IRS or your local tax office.

Hannah Harris6 said:Happy Easter, everyone! I really want to send a huge thank you to Underhood, Vitasica, and Lili P. for all the hard work and the helpful answers they've provided. Hopefully, I won't be bothering you all again until late autumn.

Thanks... and Happy Easter to everyone, even if I'm a little late to the party. That last sentence actually reminds me of one of my colleagues. You won't hear from her for ages and ages, but then suddenly, when it's time for certain statistics or end-of-year reports, there she is🙂. But whatever, I'm just happy to help out whenever I can...

restlessnomad19 said:Should I go with a Sole Proprietorship or an LLC? I've been reading a million different things online, and honestly, I've talked to ten people in the last two days and they all give me totally different advice.
So here's the deal—setting up a sole proprietorship seems way cheaper, easier to manage, the bookkeeping is basically a breeze, and if things tank, you can just walk away without much fuss... but apparently, the IRS can absolutely screw you over. Like, they decide your revenue wasn't actually what you claimed and then hit you with these massive tax bills out of nowhere, plus you're personally on the hook for everything with your own assets and stuff. On the flip side, starting an LLC or a corporation sounds like a total headache, way more paperwork, more red tape, and if the business goes belly up, you’re looking at bankruptcy courts and legal fees which are a nightmare... but at least you aren't personally liable, you only lose what's in the $6667 business capital and you can just move on to the next venture... does any of this actually hold water or is it all just noise? If anyone here has actually lived through this or gotten burned by one or the other, please, I need some real talk...

It’s pretty much exactly as you described. In the last year alone, I've known three people who started out as sole proprietors because it seemed cheaper at first. Their businesses didn't take off like they expected, they fell behind on their self-employment taxes (around $567 a month), and they ended up just shutting everything down. Personally, I would always opt for an LLC, but that's just my take. Then again, with a sole proprietorship, you aren't legally required to hire a CPA, though honestly, unless you actually know what you're doing, you shouldn't try to handle the books yourself. You'll just have to weigh the pros and cons for yourself and make a call. You clearly already know the facts.

gentlescout30 said:I’m planning to start a business in a different city rather than here in Washington, D.C., where I currently live and work.
Since it seems like the official online filing portals aren't fully functional right now—and getting any time off work is pretty much out of the question for me 🙄—can I just handle everything through a local notary here in Washington, D.C.? Could they simply mail the documents and the application to the court in the other city? Or is mail-in filing not an option, meaning I'd have to physically show up at the courthouse or hire a lawyer or notary out there to handle it on my behalf? 😳
Thanks in advance for any help you can provide. 🙏

As far as I'm aware, that online filing system is working fine... at least in NYC. I actually called them a few days ago to double-check something, and I haven't heard anything about it being down for any reason.

rowdygull90 said:Thanks a lot, but how exactly did you land on that number?

Everything is listed right there in the IRS filings, covering both corporations and sole proprietorships. Just check the January 2011 issue of the magazine.

rowdygull90 said:Need some advice here. A colleague and I are looking at starting a small business together as partners. My question is: do we both have to shell out roughly $500 each in taxes/contributions, or is there some other way to handle things when you're running a partnership?

You both have to pay them. And it’s not just "around" $500 per person—it's exactly $1,766.86 each.

Ryan Walker3 said:Hi everyone,
I don't want to clutter things up by starting a brand new thread, and I'm honestly not even sure if this is the right place to ask, but I'll give it a shot here..

I'm trying to track down some annual financial reports for small businesses from 2010 onwards. I attempted to pull them directly from the IRS website http://www.irs.gov/ but for some reason, I just can't get the Excel files to download properly..

Does anyone know a workaround for downloading these? Or, if you happen to have them handy, would you mind emailing them to me? My computer isn't recognizing the file format at all.. 🤷

I have zero issues downloading those straight from the IRS site and opening them without any trouble.

Aaron Miller5 said:I've decided to take the plunge and start my own small business. Does anyone here have any firsthand experience or practical advice regarding running an arts-based sole proprietorship? I'd love to hear your thoughts. Thanks in advance for the help!

You weren't exactly specific with your question, but if you're just starting out, I’d suggest looking into whether you qualify for the simplified tax filing system for small businesses. If you go that route, you pay slightly lower payroll taxes and a monthly flat income tax of roughly $53 plus surcharges. You won't be required to hire an accountant to manage full books—just a simple ledger of sales—but there's a catch: you can't file for deductions, which means you lose the ability to get a refund on the taxes you pay. If you want to dig into the details, check out this link; it isn't the most recent update, but most of it (aside from certain tax rates) is still relevant: http://www.irs.gov/business-tax-info/simplified-filing_096.pdf . Look, I'm just trying to help you get off the ground without unnecessary pain. Honestly, most small business owners I know these days open up shop, work for a few months, get absolutely crushed by the overhead and taxes, shut down, and then spend years paying off debt. I'm not trying to scare you, but you really need to make sure your finances are solid before jumping in.

Morgan Alvarez26 I'm still waiting to see what you have to say. Go ahead.
I run a seasonal business that operates from May through October, and I’m trying to figure out if I’m actually eligible for maternity leave. I have no idea where to find a straight answer on this, and honestly, Google isn't giving me anything helpful at all. Why is it so hard to get a clear response? 🤷

I’d suggest getting in touch with the Department of State or the Department of Commerce directly. Honestly, they’re the ones who should have all the answers you're looking for.

Ethan Sanders said:I've got another question for you guys. I was looking into notary fees around the Annapolis and Savannah areas, and they seem to be running anywhere from $3,000 to $1267. Does anyone know what the deal is like in Washington, D.C.? I'm wondering if there’s anything a bit more budget-friendly out there, and if anyone has a specific notary they'd recommend... because, honestly, if I can find someone even $167 cheaper, I might just make the drive down to Washington, D.C.

It's pretty much the same story in Washington, D.C.

Ethan Sanders said:Yeah, I get what you mean, but I was thinking about just pulling it out without making a whole thing of it—like, maybe claiming I lent it to the company when we first started? Is there some kind of loophole there?

"LLCs - Concepts and Formation
...
Repayment of initial capital. Distribution of profits

Members of an LLC cannot demand that the company return their initial capital contributions if doing so would result in a reduction of the company's total capital. As long as the LLC remains in operation, members have the right to request a distribution of annual profits, provided that such distributions aren't specifically prohibited by the operating agreement or a vote from the members.
Unless the operating agreement states otherwise, these profits are distributed to members in proportion to their initial capital contributions. "

analogpanther41 said:Hey guys, quick question—when I’m setting up my LLC today, can I just list assets for the startup capital, or does it actually have to be cash in the bank? Thanks in advance

Sure, you can input whatever data you want, but don't think for a second that the court isn't going to demand a formal valuation from you.
Considering the sheer cost of hiring a court-appointed expert, does it actually make sense to go down this road if you're working with a small amount of seed capital? I can't help but wonder if the math even adds up. Plus, from what I understand, at least half of that amount has to be paid upfront in cash. Is it really worth chasing the legal route when the fees might eat up your entire budget before you even get started?

From the ZTD.

Article 390.
The minimum wage can't be anything less than... $67The base share must be expressed as an integer that is a multiple of one hundred. Furthermore, the sum of all base shares has to equal the company's total capital. Is it really that complicated? It should be straightforward.
Before any founder can officially register their company with the Secretary of State, they’re required to shell out at least twenty-five percent of their initial cash contribution. Of course, there's a catch: the total sum of all those cash injections combined can't fall below a certain minimum threshold. Why does the bureaucracy always need these extra hoops to jump through? $3333.
Unless we’re looking at those specific exceptions mentioned in section 7 of this article, at least half of the initial capital has to be paid up in cash. Is that really clear enough?
When it comes to setting up a company, you can satisfy the initial capital requirement by contributing assets and specific rights. However, there’s a catch: everything you intend to put into the business must be fully transferred before the company is officially registered with the Secretary of State. What happens if the value of those assets falls short at the moment of filing? If the market value of what you've contributed is less than the stated capital amount required by your articles of incorporation, you can't just leave it at that. You have to bridge that gap by paying the difference in cash. It’s a simple enough rule, but it ensures the company actually has the capital it claims to possess from day one. Why would anyone want to start a business with "phantom" equity?
When it comes to investing assets and rights, we have to follow the specific rules laid out in Sections 176, 179 (specifically that second sentence of subsection 5), 181 through 185, Section 187 (subsection 2, points 2 and 3, plus subsection 4), and finally Sections 191 through 193 of this Act. Why can't these legal frameworks ever be simplified? It seems like every single investment procedure requires navigating a dense thicket of cross-referenced statutes just to stay compliant.
The core capital needs to be paid up in full so the company actually has the freedom to use those funds as intended.
Cash contributions are deposited directly into the company's account at a financial institution here in the States. Once the business is officially recorded in the court registry, that institution issues a formal confirmation stating that the company has full, unrestricted access to those funds.
When you’re setting up a corporation specifically to take over an existing business—one that’s already been running for at least two years—whether you're doing it solo or alongside your immediate family, there's a specific rule regarding capital. If you're folding that business into the new entity, or if this is part of a bankruptcy reorganization plan, the requirement to have at least half of the capital paid up in cash only applies to the portion of the capital that isn't being covered by the transferred assets. This same logic holds up even if you're merging multiple businesses into one single corporation at once. Does that make sense? It seems like a straightforward way to handle the math when you aren't just injecting raw cash, but rather moving existing value from one pocket to another.
The distinction between establishing rights and actually taking possession of them. One is about setting the legal groundwork; the other is about the physical reality of control. Why does the law make such a massive distinction here? Is it enough to simply have a claim on paper, or does the right only truly exist once you've physically seized it?
Article 176.
If shareholders decide to pay their stakes using assets or rights instead of cold, hard cash—or if the company is taking over existing or future property and rights—the bylaws have to be crystal clear. You can't just leave it vague. The articles of incorporation must explicitly define exactly what asset or right is being contributed, who is actually handing it over to the company, and the total nominal value of the shares being issued in exchange. Why would anyone want to leave those details to chance? It’s basic accountability.
When we talk about investments, we have to be clear about the specifics: whether we’re looking at individual nominal amounts or simply the number of shares without a set face value required for an investment. It also applies to any compensation paid to acquire assets or rights. If a company is taking over an asset or a specific legal right that requires payment, that compensation must be factored into the shareholder's contribution. It is essentially treated as an investment in kind—an infusion of property or rights rather than just cash. Is it really that complicated? It’s straightforward math once you define what exactly is being brought to the table.
You can only invest in or acquire assets or property rights that actually hold measurable economic value. It’s pretty straightforward: you can't package up a mere obligation to provide services and try to pass it off as an investable asset or a transferable right. Why would anyone attempt to value a promise of service as if it were tangible property? If it doesn't have a clear, quantifiable market value, it doesn't qualify.
(3) For a corporation, investment agreements and any transfers of assets, rights, or legal actions used to execute them won't be binding on the company unless they are explicitly laid out in the corporate bylaws as required by paragraph 1 of this section. If the company is officially registered with the Secretary of State, any contracts or actions that fail to meet these standards
will not invalidate the bylaws themselves. However, if an agreement to invest assets or rights turns out to be invalid, the shareholder is legally obligated to pay the cash equivalent of the share's value.
(4) Once a company is registered with the state, you can't simply fix an invalid contract or legal action from paragraph 3 by amending the corporate bylaws.
(5) Any changes made to the bylaws regarding the investment or transfer of assets and rights must follow the procedures outlined in Section 175, paragraph 4 of this Act.

To put it simply, you can use both cash and assets in a 50-50 split, provided the total value of those assets doesn't exceed 50% of the authorized capital stock. You’ll need to get a formal appraisal of everything being contributed—your best bet is to hire a reputable accounting firm to handle that for you.

Carol Perez4 said:THANKS... 😁 I had no idea about the streamlined options available. I'll definitely look into that and see what my options are.🙂

Just double-check which specific branches they actually have. I’m pretty sure there's one over at the IRS office on Main Street. If you happen to be out that way, give them a call first.

Carol Perez4 said:I have a few questions. I am planning to launch an event planning agency specializing in weddings and other celebrations—essentially coordinating with catering companies, invitation designers, venues, and all the necessary vendors. With that in mind:

1. I’ve done some initial research and heard this could be run as a sole proprietorship. I am wondering if this qualifies as a general independent contractor setup, or if there are specific licensing requirements. If it is regulated, what kind of professional credentials would I or my employees need to hold?

2. Beyond the standard $167 fees, what are the actual startup costs? Specifically, what else do I need to pay for before I can officially open for business? I’ve heard mentions of things like filing fees, official seals, and various administrative costs. Does anyone have a rough estimate of what that looks like?

3. Regarding ongoing expenses, which costs are expected during the first year, and which ones will continue indefinitely?

My advice? If you’re serious about starting this, just head down to a local branch of the Department of Commerce or check their online portal via Google. You can get all the answers there without running around aimlessly, and they can tell you exactly which type of business structure fits best. In my opinion, a standard sole proprietorship should do the trick.

2. Total setup costs will run you about $333
. 3. Ongoing costs include owner contributions, chamber of commerce dues, plus whatever operational overhead you decide on—like payroll if you hire staff, rent for an office, etc., depending on your setup. Most of these are recurring, and the actual amount will depend entirely on your revenue, turnover, and overall volume.

Jason Castillo52 said:I registered my LLC, but I haven't officially started operations yet. I was hoping to lease some servers, transfer my cell phone bill over to the business, and maybe claim a few other items as startup expenses. Is it actually possible to do this before I set an official start date for the business? I called a woman at the IRS, and her answer was pretty vague, though it sounded more like a "no" than a "yes." If there is a way to make this work, how would one even go about it?

If you don't have an official start date on file, I don't think that's going to fly according to the rules.

Timothy Morgan38 said:Look, this isn't meant to be an attack or anything... I have NEVER charged anyone anything extra...

Let's look at an example...

A sole proprietorship pays $333 (including tax) per month for bookkeeping services, and that covers the tax filings, all the forms, everything—reconciliations, payroll onboarding, terminations, filing with the IRS, Social Security, etc. (total annual cost $4.00)

A corporation pays $667 monthly, which includes everything similar to the sole proprietor, plus additional state filings, tax returns, reconciliations, and so on. Total annual cost—$8000

Some clients can't even be bothered to bring their own files, so I just throw that in as a courtesy too...

Maybe I'm an idiot for doing it this way—probably am...😕
Maybe I'll change my modus operandi eventually...
🤷
I should also mention that I handle all the federal forms, state filings, IP, ID-1, IP, all the payroll paperwork, termination notices, and all the filings for Medicare and so on.

Am I a moron?????

At the start, I sit down with my clients and hammer out the deal: do they want monthly invoices without separate quarterly or annual reports, or should we just bake those costs into the monthly fee so it's spread out over 12 months? Everyone wants the latter—they want it all included upfront so there are no surprises, and I'm fine with that. As for preparing final statements based on a prepared balance sheet, my take is that while I *can* do it, I refuse to take the fall for it. I will only put my signature on something if I have personally audited every single entry and confirmed that the balance sheet is accurate—which basically means I'm auditing the entire year's worth of work. Alternatively, I can charge a fee just to assemble the forms based on the existing balance sheet without any audit or questioning; I'll explain to the owner what I entered and why, and once that's done, the owner takes full responsibility for everything. At that point, it's as if I was never even involved. It's that simple.☕

Henry Edwards33 said:It’s honestly kind of strange that we’re still sitting here getting worked up and frustrated... ☕

I know I personally lose my cool more often than I’d like to admit. 🤦

Tell me about it. If we aren't supposed to be upset, what does that leave us? Just supposed to act like we have no clue what's going on? 🙄

Nothing surprising about that here...☕

Kate Hernandez said:Who said that? 🙄

I was literally just asking for a quote on year-end tax prep... You accountants always jump to the negative the second I ask a question 🤷

Look, I’m sorry if that sounded like an attack—it really wasn't my intention. But when people ask these kinds of questions every single day, it starts to feel like they think finalizing a fiscal year is as simple as brewing a cup of coffee. 😉

Kate Hernandez said:Quick question: what’s the going rate just for putting together a year-end financial statement? I mean, strictly the closing statement itself 🙂

Oh, it’s just wonderful when someone walks up to me and claims they’ll handle all the bookkeeping and all I have to do is "just double-check" everything. They act like filing sales tax is just two clicks of a mouse, or that pulling a profit and loss statement from the software is some effortless magic trick. Honestly, if everything could be done without an accountant, why would the profession even exist? Forgive my bluntness, but preparing year-end statements isn't just about data entry. The person signing off on those documents actually needs to understand the balance sheet and take full responsibility for what those numbers represent. You can't just ignore the underlying bookkeeping and expect a perfect result.