Starting an LLC: Where to begin?

Charles Ramos7 said:Section 254 actually applies to corporations, not LLCs.

Fine. Honestly, I already thought my heart had stopped. 🙏

I’m still having a hard time wrapping my head around why an LLC would be any better than a sole proprietorship, especially when you look at this table below🤷

So, here’s the situation: I have a Master’s degree, and my goal is to launch a service-based business where I hire employees rather than doing all the heavy lifting myself. Based on these figures above, it actually looks like a sole proprietorship might be the smarter play for getting things off the ground
. Granted, I’d need the proper credentials for a sole proprietorship, but since I have someone on my team who has already passed their professional certification for the specific industry we're entering, what's the catch? Is it just those progressive tax brackets🙂?

I’ve been scrolling through all the threads, and I keep seeing people mention that with an LLC, you don't have to register for sales tax until your annual revenue hits $28, whereas with a sole proprietorship, you're hit with it immediately regardless of how much you make. Also, if you go the sole proprietor route, you’re essentially required to be an employee of your own business, while an LLC gives you more flexibility there
. Did I get that right, or does someone need to sit me down and draw me a map to explain this clearly😁

Larry Cruz51 said:I’m still having a hard time wrapping my head around why an LLC would be any better than a sole proprietorship, especially when you look at this table below🤷

So, here’s the situation: I have a Master’s degree, and my goal is to launch a service-based business where I hire employees rather than doing all the heavy lifting myself. Based on these figures above, it actually looks like a sole proprietorship might be the smarter play for getting things off the ground
. Granted, I’d need the proper credentials for a sole proprietorship, but since I have someone on my team who has already passed their professional certification for the specific industry we're entering, what's the catch? Is it just those progressive tax brackets🙂?

I’ve been scrolling through all the threads, and I keep seeing people mention that with an LLC, you don't have to register for sales tax until your annual revenue hits $28, whereas with a sole proprietorship, you're hit with it immediately regardless of how much you make. Also, if you go the sole proprietor route, you’re essentially required to be an employee of your own business, while an LLC gives you more flexibility there
. Did I get that right, or does someone need to sit me down and draw me a map to explain this clearly😁

As I understand it, a small business owner is permitted to operate within a single specific field of activity.
If you're operating as an LLC, you have the flexibility to amend your business activities whenever necessary, which essentially means you can simply re-register a new line of business under your existing structure.

People often assume they should just stick to their primary business and wait until they feel ready to expand later on. In reality, when you set up an LLC here in the States, it’s much more efficient to simply register several different business activities right from the start—registering three, five, or even six different lines of business upfront gives you much more peace of mind.
Once again, I am simply sharing my own perspective, and I certainly don't feel the need to be proven right.

Regarding that famous $85,000 figure, I was recently listening to an American news broadcast where they mentioned that if a company manages to pull in those kinds of profits within just six months... $16667 The system is automatically transitioning into the sales tax framework because the current projections suggest that revenue levels will remain steady. 😁.

I just can't seem to find any documents on The Washington Post's website regarding the specific requirements a commercial space needs to meet before I can officially open a business.😢 (you know, things like what a cafe, a standard retail shop, an e-commerce site, or even a hair salon actually needs to have in place...)
I've been scouring Google for ages and honestly, I'm just completely exhausted from searching...😁

http://www.cnn.com/business/index.html

A small business is tied directly to the owner—someone with specific credentials. I’m not sure how you expect them to just walk away from that. 🤷

Larry Cruz51 said:I just can't seem to find any documents on The Washington Post's website regarding the specific requirements a commercial space needs to meet before I can officially open a business.😢 (you know, things like what a cafe, a standard retail shop, an e-commerce site, or even a hair salon actually needs to have in place...)
I've been scouring Google for ages and honestly, I'm just completely exhausted from searching...😁

For those bare minimum requirements, you really need to contact your local Department of Commerce—no one else is going to give you the definitive word on meeting technical standards. It’s essentially about getting a certificate of occupancy, and if you're looking at service-based businesses—like setting up an LLC—it gets a bit more tangled, depending entirely on what you actually plan to do.🙂 Plus, there's the whole issue of tax rates being different between an LLC and a sole proprietorship—not to mention the mountain of monthly paperwork you'll be drowning in for the government. Think long and hard about your niche first, then just head down to the nearest CNN office; the staff there are usually quite helpful. There you go.

So, according to the regulations, do you actually need your own degree to start a small business, or just proof that you're hiring someone with the right credentials to run things?

Actually, never mind... now that I've sat down and crunched all the numbers, it looks like I'll need at least $117😁😢
to get this venture off the ground.

Me? I don't get it... what's the issue if the business plan is actually realistic enough?

George Phillips said:Me? I don't get it... what's the issue if the business plan is actually realistic enough?

😁😁😁

On another note, has anyone else caught wind of a shift regarding the required paid-in capital, or am I perhaps misinformed?

Larry Cruz51 said:I’m still having a hard time wrapping my head around why an LLC would be any better than a sole proprietorship, especially when you look at this table below🤷

So, here’s the situation: I have a Master’s degree, and my goal is to launch a service-based business where I hire employees rather than doing all the heavy lifting myself. Based on these figures above, it actually looks like a sole proprietorship might be the smarter play for getting things off the ground
. Granted, I’d need the proper credentials for a sole proprietorship, but since I have someone on my team who has already passed their professional certification for the specific industry we're entering, what's the catch? Is it just those progressive tax brackets🙂?

I’ve been scrolling through all the threads, and I keep seeing people mention that with an LLC, you don't have to register for sales tax until your annual revenue hits $28, whereas with a sole proprietorship, you're hit with it immediately regardless of how much you make. Also, if you go the sole proprietor route, you’re essentially required to be an employee of your own business, while an LLC gives you more flexibility there
. Did I get that right, or does someone need to sit me down and draw me a map to explain this clearly😁

Sole proprietorships usually have lower startup costs, and the bookkeeping is cheaper and way simpler. On the flip side, setting up an LLC means you deal with fewer taxes once you start making real money, plus you aren't constantly at the mercy of local city hall bureaucrats.

One thing to watch out for is if you already have a full-time job somewhere else while trying to run a small business. In that case, they basically skin you alive on health insurance and Social Security. You end up paying twice—once through your employer and again through your own business—and with the business side, they calculate it based on your total profit rather than a flat rate. I might be overcomplicating things, but let's just say Franjo Tahi was a little kid compared to how tough the IRS can be.

As for office space, if you're providing services like programming, marketing, or massage (okay, maybe not the last one 😉), most people don't really care about or check your specific zoning requirements.

I have a hypothetical question for you all: can a minor actually form an LLC?

hiddenhound43 said:I have a hypothetical question for you all: can a minor actually form an LLC?

Yes, they can.

Sorry if I'm repeating stuff that's already been asked somewhere else...

1) Regarding the initial capital—is that just a "pro forma" thing on paper? Like, can I actually deposit that $25k and then just use it for something totally unrelated to my business?

2) Can an LLC operate in marketing or graphic design without hiring any employees? Also, is it possible to do wholesale or reselling (like, say, heavy machinery) without having staff on the payroll?

3) If the company doesn't have any employees, am I still on the hook for paying any kind of payroll taxes or contributions?

wanderingmason20 said:Sorry if I'm repeating stuff that's already been asked somewhere else...

1) Regarding the initial capital—is that just a "pro forma" thing on paper? Like, can I actually deposit that $25k and then just use it for something totally unrelated to my business?

2) Can an LLC operate in marketing or graphic design without hiring any employees? Also, is it possible to do wholesale or reselling (like, say, heavy machinery) without having staff on the payroll?

3) If the company doesn't have any employees, am I still on the hook for paying any kind of payroll taxes or contributions?

1) You can use the money immediately, but since it’s all hitting your business account, it has to be used for business purposes and backed up by legitimate invoices. Otherwise, it’s just profit, and you'll get hit with taxes on it at the end of the year.

2) You can push it for a bit, but eventually, the IRS is going to ask who is actually doing the work. If you really want to stay solo, just sign a contract with another firm to handle those tasks. Honestly, why not just hire one part-time employee? It makes it way easier to write off travel expenses and commuting costs so the whole thing doesn't end up being a money pit.

3) You'll just deal with standard chamber fees and some minor annual filings...

Once you start pulling in some decent cash through an LLC, getting that money out of the business gets a little tricky if you don't have employees on the payroll. I run a firm and also have my own side hustle, and you aren't paying double Social Security or Medicare taxes. You might just end up owing a difference at the end of the year if your earnings fall below roughly $1500 after everything is calculated.
My advice, based on what I've dealt with? A killer accountant is worth their weight in gold. Getting someone solid early on can really save your skin by giving you advice tailored specifically to your situation.

I heard somewhere that every new entrepreneur is entitled to some kind of laptop grant up to $1667... is that actually a thing, or just some urban legend floating around?

Hi everyone, I have a quick question. I’m planning to launch a website, and since my goal is to monetize through sponsorships, I know I’ll need to handle taxes and business filings. Every site I look at seems to be owned by an LLC rather than a sole proprietorship. I'm trying to decide if I should go the route of forming an LLC or if staying as a freelancer would be a better move. Any advice or insights would be greatly appreciated. Thanks!

Andrew Stewart3 said:1) You can use the money immediately, but since it’s all hitting your business account, it has to be used for business purposes and backed up by legitimate invoices. Otherwise, it’s just profit, and you'll get hit with taxes on it at the end of the year.

2) You can push it for a bit, but eventually, the IRS is going to ask who is actually doing the work. If you really want to stay solo, just sign a contract with another firm to handle those tasks. Honestly, why not just hire one part-time employee? It makes it way easier to write off travel expenses and commuting costs so the whole thing doesn't end up being a money pit.

3) You'll just deal with standard chamber fees and some minor annual filings...

The only real issue might arise if that part-time staffer works a standard shift from 8:00 AM to 4:00 PM...(??)

Larry Cruz51 said:So, according to the regulations, do you actually need your own degree to start a small business, or just proof that you're hiring someone with the right credentials to run things?

Actually, never mind... now that I've sat down and crunched all the numbers, it looks like I'll need at least $117😁😢
to get this venture off the ground.

Barbara, is that you? 😁

And no, you don't know me, so asking a counter-question like that doesn't really make much sense, does it? 😁

Now I'm honestly curious, though—what kind of job are you actually aiming for? 🙂

Hey everyone;
I have a quick question for the group. I’m in the process of launching a new business that will focus on professional services—think everything from psychological counseling and adult education to language courses and tourism. Since I’ll be working a full-time job myself, my plan is to bring on some specialists to handle the core work through independent contractor agreements. First off, is it legally feasible to hire a foreign national as an independent contractor—for instance, a psychologist? And more importantly, can I operate a business providing these types of intellectual services under a general corporate umbrella, or am I required to establish a specific medical clinic or private practice to offer psychological services? It feels a bit like trying to decide if you can run a boutique consulting firm out of a home office or if you need a dedicated storefront first—there are just so many layers to peel back here!
Thanks much