???? Wouldn't it just be easier to Incorporate??
thedutymon
Posts: 4,323 ✭
Morning,
Been thinking about the new Paypal rules with the IRS going into affect next year. I did way way over the 20K and the 200 transactions this year which will trigger reporting for next year. Started my recordkeeping and in just three weeks have a Manila folder over 2 inches thick, by end of year will have a File cabinet drawer full. So that is a given, I will be getting 1099'd by Paypal.
So my question is because my Tax situation is so complicated already, I have Rental Properties and with my current recordkeeping/reporting requirements it literally takes me an entire weekend to do my taxes every year. Turbo Tax has made it somewhat easier, but it still takes hours just to go through the process. I don't want to complicate this with a bunch more forms!
So anyway when I was heavy into the Comic business in the 80's and 90's I incorporated in the State of Colo. I don't remember what it cost, I'll have to check, but to become an LLC was less than a hundred and then their were a few other costs such as registering your Business name with the State. I did this then because when myself and some of the other big dealers at shows in Denver got involved with the Church/Mile High collection, the moneys exploded and after I did 100K one year which was all cash, I got paranoid. So I Inc.'d to keep that part of my life seperate from my personal life, because I had Rentals then as well.
Would it make sense to Inc. up again? Its been so long I don't remember the down sides. Anybody got an ideas?
Thanks
Neil
Been thinking about the new Paypal rules with the IRS going into affect next year. I did way way over the 20K and the 200 transactions this year which will trigger reporting for next year. Started my recordkeeping and in just three weeks have a Manila folder over 2 inches thick, by end of year will have a File cabinet drawer full. So that is a given, I will be getting 1099'd by Paypal.
So my question is because my Tax situation is so complicated already, I have Rental Properties and with my current recordkeeping/reporting requirements it literally takes me an entire weekend to do my taxes every year. Turbo Tax has made it somewhat easier, but it still takes hours just to go through the process. I don't want to complicate this with a bunch more forms!
So anyway when I was heavy into the Comic business in the 80's and 90's I incorporated in the State of Colo. I don't remember what it cost, I'll have to check, but to become an LLC was less than a hundred and then their were a few other costs such as registering your Business name with the State. I did this then because when myself and some of the other big dealers at shows in Denver got involved with the Church/Mile High collection, the moneys exploded and after I did 100K one year which was all cash, I got paranoid. So I Inc.'d to keep that part of my life seperate from my personal life, because I had Rentals then as well.
Would it make sense to Inc. up again? Its been so long I don't remember the down sides. Anybody got an ideas?
Thanks
Neil
Actually Collect Non Sport, but am just so full of myself I post all over the place !!!!!!!
0
Comments
<< <i>Incorporating would not eliminate the need to keep records. If you don't want to keep records then simply enter the 1099 amount as 100% profit. >>
No, that's not what I was saying, I understand about keeping records, I am obssive about that already. I am just wondering if for Tax purposes, if the IRS and Paypal are going to treat my Hobby/Side endeavor as a Business, if I shouldn't as well. And want to understand the ins/outs of Incorporating.
Neil
Incorporation vs. Sole Proprietorship
Deciding to incorporate can have a huge impact on your business. Sole proprietorships and corporations each have advantages and disadvantages. You may start as a sole proprietor, and later decide it's best to form a corporation instead. Conduct research, and consult with professionals who can help you determine which business classification best fits your situation.
Ease of Formation
A sole proprietorship is the easiest business entity to form. In most cases, forming a sole proprietorship is as easy as going to your state or county regulating agency. You'll be required to complete a simple form regarding your business.
Corporation paperwork is usually a little more involved. In some cases, you may want to hire an attorney to complete the incorporation process for you.
In addition, the cost of forming a sole proprietorship is a lot cheaper than forming a corporation
Time Frame
When you choose to form a sole proprietorship your business has limited life. In other words if you die, your business dies with you.
Corporations, on the other hand, experience unlimited life. If a stockholder dies, those shares are passed on to heirs or sold to other third-party investors.
Size
Sole proprietorships are usually much smaller than corporations. For the most part, a sole proprietorship consists of one owner responsible for making all decisions for the business.
A corporation may have hundreds of shareholders, employees, directors, and managers. Decisions are made by many. In addition, corporations are required to hold annual meetings, keep track of meeting minutes, and prepare annual reports.
Corporations are able to raise capital much easier than a sole proprietor. Corporations have the advantage of being able to sell stock, or issue new kinds of stock, in order to raise capital.
As a sole proprietor, you may have to invest your own money, or get a personal loan to finance your business operations.
Tax Implications
If you decide to become a sole proprietor, you'll be able to file your profits and losses on your individual tax return. Your profits and losses are taxed at your applicable tax bracket.
If you incorporate your business, you may be subject to double taxation. Your corporate profits are taxed. You pay tax again, if you receive dividends from your corporation. Your dividends are taxed on your individual tax return.
Incorporating your business may provide you with more favorable retirement plans, and health insurance deductions.
Liability
As a sole proprietor, you'll be held personally liable for anything that occurs in your business. This means your personal assets will be at risk. Your risk factor may be reduced depending on your business type.
Corporations enjoy limited liability. In most cases, if someone files a lawsuit against your business, your personal assets will not be at risk if you form a corporation.
.
Read more: Incorporation vs. Sole Proprietorship | eHow.com http://www.ehow.com/about_5377941_incorporation-vs-sole-proprietorship.html#ixzz1BhJwljiz
unless you intend to become an eBayhemoth, i think a sole proprietorship would work for you......IMO.
If you incorporate than you will have to file that part of your life separately.
So instead of filling out 1 tax return you will be filling out 2.
At least that is what I think will happen.
IMO you should be consulting a tax attorney or a CPA.
Good luck.
Steve
<< <i>If you incorporate your business, you may be subject to double taxation. Your corporate profits are taxed. You pay tax again, if you receive dividends from your corporation. Your dividends are taxed on your individual tax return. >>
Oh beautiful, for spacious skies!!! I love living in a "free" country!
PM sent.
Doug
Liquidating my collection for the 3rd and final time. Time for others to enjoy what I have enjoyed over the last several decades. Money could be put to better use.
let's say, hypothetically, that you accidently slash some guy's throat with a Card Saver I and he requires hospitilization and due compensation under the law for time missed at work, etc.....
as a sole proprietor, you are looking at the potential for losing your home or some other valuables which are at the mercy of an attorney or judges decision.
as a corporation, you could probably get away with paying the medical bills and supplying the poor fella with a lifetime supply of Card Saver I's.
<< <i>the advantage of incorporating, of course, is that your company becomes associated with any liabilities and your personal ass-ets are protected.
let's say, hypothetically, that you accidently slash some guy's throat with a Card Saver I and he requires hospitilization and due compensation under the law for time missed at work, etc.....
as a sole proprietor, you are looking at the potential for losing your home or some other valuables which are at the mercy of an attorney or judges decision.
as a corporation, you could probably get away with paying the medical bills and supplying the poor fella with a lifetime supply of Card Saver I's.
Not completely true, thus the LLC was created...
"If I ever decided to do a book, I've already got the title-The Bases Were Loaded and So Was I"-Jim Fregosi
<< <i>Google is your friend.
Incorporation vs. Sole Proprietorship
Deciding to incorporate can have a huge impact on your business. Sole proprietorships and corporations each have advantages and disadvantages. You may start as a sole proprietor, and later decide it's best to form a corporation instead. Conduct research, and consult with professionals who can help you determine which business classification best fits your situation.
Ease of Formation
A sole proprietorship is the easiest business entity to form. In most cases, forming a sole proprietorship is as easy as going to your state or county regulating agency. You'll be required to complete a simple form regarding your business.
Corporation paperwork is usually a little more involved. In some cases, you may want to hire an attorney to complete the incorporation process for you.
In addition, the cost of forming a sole proprietorship is a lot cheaper than forming a corporation
Time Frame
When you choose to form a sole proprietorship your business has limited life. In other words if you die, your business dies with you.
Corporations, on the other hand, experience unlimited life. If a stockholder dies, those shares are passed on to heirs or sold to other third-party investors.
Size
Sole proprietorships are usually much smaller than corporations. For the most part, a sole proprietorship consists of one owner responsible for making all decisions for the business.
A corporation may have hundreds of shareholders, employees, directors, and managers. Decisions are made by many. In addition, corporations are required to hold annual meetings, keep track of meeting minutes, and prepare annual reports.
Corporations are able to raise capital much easier than a sole proprietor. Corporations have the advantage of being able to sell stock, or issue new kinds of stock, in order to raise capital.
As a sole proprietor, you may have to invest your own money, or get a personal loan to finance your business operations.
Tax Implications
If you decide to become a sole proprietor, you'll be able to file your profits and losses on your individual tax return. Your profits and losses are taxed at your applicable tax bracket.
If you incorporate your business, you may be subject to double taxation. Your corporate profits are taxed. You pay tax again, if you receive dividends from your corporation. Your dividends are taxed on your individual tax return.
Incorporating your business may provide you with more favorable retirement plans, and health insurance deductions.
Liability
As a sole proprietor, you'll be held personally liable for anything that occurs in your business. This means your personal assets will be at risk. Your risk factor may be reduced depending on your business type.
Corporations enjoy limited liability. In most cases, if someone files a lawsuit against your business, your personal assets will not be at risk if you form a corporation.
.
Read more: Incorporation vs. Sole Proprietorship | eHow.com http://www.ehow.com/about_5377941_incorporation-vs-sole-proprietorship.html#ixzz1BhJwljiz
unless you intend to become an eBayhemoth, i think a sole proprietorship would work for you......IMO.
Thanks for the info, I think Sole Proprietorship would be the way to go for me.
In my situation with my Comics, I went the LLC way because (And the Story is very very very complicated) simple version, we were dealing with Chuck Rozanski, and as well as making oodles and oodles of money with and for him, we were also very scared of him because he was such a shylock and out and out crook, one wanted to make sure when you were doing 20-40K cash deals that you weren't somehow exposing your family's financial well being to this Crook! So all my dealings with him were through my Incorporated business: The Comic Broker!!
Was a fun time, let me tell ya!!!!!!!!
YeeHah
Neil
at least that's what Robert Shapiro ad says on TV ... and we know how reliable that is ...
<< <i>
<< <i>the advantage of incorporating, of course, is that your company becomes associated with any liabilities and your personal ass-ets are protected.
let's say, hypothetically, that you accidently slash some guy's throat with a Card Saver I and he requires hospitilization and due compensation under the law for time missed at work, etc.....
as a sole proprietor, you are looking at the potential for losing your home or some other valuables which are at the mercy of an attorney or judges decision.
as a corporation, you could probably get away with paying the medical bills and supplying the poor fella with a lifetime supply of Card Saver I's.
Not completely true, thus the LLC was created... >>
you are correct, i did not cover the middle ground of legal protection.....a bit more murky, but useful just the same.
<< <i>Watching the tv i have seen commercials for these scanners that you scan your receipts into and you can designate where they belong, off hand i cant remember the name of it but it sounds like you would eliminate the 2 inch folder of receipts,,, just a thought,, bj >>
On the topic of receipts, there are some that do not age well, the ink starts to go away fairly quickly. I got into the habit of making copies of all receipts needed for tax purposes, also keeps everything one uniform size.
<< <i>
<< <i>Watching the tv i have seen commercials for these scanners that you scan your receipts into and you can designate where they belong, off hand i cant remember the name of it but it sounds like you would eliminate the 2 inch folder of receipts,,, just a thought,, bj >>
On the topic of receipts, there are some that do not age well, the ink starts to go away fairly quickly. I got into the habit of making copies of all receipts needed for tax purposes, also keeps everything one uniform size. >>
I think those commercials are for the Neat scanner, but the scanning software you use for cards can support foldering which is about all you really need.
And yes, just about any thermal-printer generated receipt, like the corner gas station pumps use, plus those old purple ink ones, will fade before the year is out.
Working on the following: 1970 Baseball PSA, 1970-1976 Raw, World Series Subsets PSA, 1969 Expansion Teams PSA, Fleer World Series Sets, Texas Rangers Topps Run 1972-1989
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I agree as a seller MO are my friends.
Steve
<< <i>If they file together how does that help?
I agree as a seller MO are my friends.
Steve >>
Won't meet PigPal thresholds of 200 transactions/$20K in sales.
I was also thinking that this may open a bad can of worms for the gov't. How easy it is to show more money spent than income when it comes to sports collectibles. So they will be mixing business with personal, does that mean we can also? Just because I buy it for my "collection" doesnt mean I cant consider it as inventory to just sell at a later date.
<< <i>So when we do "gifts" on PP, will that count as a transaction? Is google checkout doing this as well?
I was also thinking that this may open a bad can of worms for the gov't. How easy it is to show more money spent than income when it comes to sports collectibles. So they will be mixing business with personal, does that mean we can also? Just because I buy it for my "collection" doesnt mean I cant consider it as inventory to just sell at a later date.
Actually, that is one of the reasons I insist on doing as many of my transactions Off E-Bay as I can, Paypal Gift or send me a Money Order. In the first three week of this year I have sold about $1200, and I have spent $2K, so I want this trend to continue!
YeeHah
Neil
<< <i>are you Married? have your wife open a paypal account/bank account and get her started on ebay. Im sure you pay plenty of taxes and I dont think your getting rich on your transactions. I would also encourage any and all customers to pay with money orders. Screw Feebay and Pigpal. >>
Kind of hard to do on feebay when you're not allowed to list MO as an option of payment.
Ya have to file a corporate, personal and franchise tax form.
I really think one is gonna need a CPA to file the corporate and franchise taxes.
Since personal liability doesn't seem to be a big issue with selling on ebay - I would stay as a proprietorship.
When I sell my practice - the PC is retiring too!
One can state that they take other forms of payment including PP.
They can also state in the invoice that they do as well.
I agree it isn't the easiest way to get that point across but it has worked
at times for me.
Steve
Agreed with Ted that you need a cpa, not turbo tax. They more than pay for themselves.
Always looking for Topps Salesman Samples, pre '51 unopened packs, E90-2, E91a, N690 Kalamazoo Bats, and T204 Square Frame Ramly's