Questions About Sole Proprietorship and doing business without an LLC

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charliebne

Mash Morph
May 27, 2008
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Miami, FL
Hey all,

I have a question, Is it illegal in the United States to recieve payments from a CPA company without being an LLC, just you as a person?

I applied at a few CPA companies but I have doubts about starting on it because I do not own a company.

I know I have to fill out a W9 form or something after I recieve 600 dollars from a company, and pay my income taxes, but what about incorporating?

Anyone?

Thanks
 


No you don't. It would be in your best interest though because you could write off some expenses. If you just want to do it as a little side project and don't want to bother with it you will be fine. Issues only arise when you start reeling in big cheques.
 
It would be in your best interest though because you could write off some expenses. If you just want to do it as a little side project and don't want to bother with it you will be fine. Issues only arise when you start reeling in big cheques.
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Wrong. Anything you can write off as an LLC, you can write off as an individual.

Alright, So I should just set apart 20 percent of it for my taxes and report the income and send the money to the IRS in march.
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Unfortunately it's a bit more complicated than that. You need to make estimated quarterly payments.
 
Whoa....

Ok. So I have to send the IRS a payment every 3 months if I'm receiving money from a CPA company. Meaning, If during these past 3 months I made 10 grand, I will have to pay them a portion of those 10 grand, correct?

What is the deal? Im confused.
 
If you incorporate an LLC, you pay taxes once a year and have the choice to file as a S Corp if you want to. If you incorporate as an S Corp, then you will have to pay quarterly taxes. Setting up an LLC is a good plan imo. Mainly because if for some reason someone decides to go after your company in legal matters none of your personal assets can be touched. There are 3 types of corporations as far as I know

1. LLC
2. S-Corp
3. C-Corp

Research those....

If you have a sole prop and someone decides to take you to court, your personal assets will get attacked as well as your business assets. Mainly an LLC just offers more protection. You don't have to setup any one certain entity to recieve monies from the cpa networks, you could fill out the w-9 with your personal information and social security #, just like any day job if you really wanted to. I started off as a sole prop and then when I started to make some money, I incorporated. From what I understand when you make the real big monies, its a good idea to setup an S Corp. Also keep your business finances seperate from your personal finances i.e. different bank accounts, credit cards etc. I would suggest also finding an attorney and an accountant that you can consult with, that is if you start to bank. Also, you will have to pay the irs a portion of ANY money you make above $600, whether it be every 3 months or once a year. I generally put about 30% of my earnings into my business savings account. I don't have to pay a state tax in the state that I live in, so include that too if your state has a state tax.

http://www.morebusiness.com/getting_started/incorporating/d934832501.brc

charliebne said:
Whoa....

Ok. So I have to send the IRS a payment every 3 months if I'm receiving money from a CPA company. Meaning, If during these past 3 months I made 10 grand, I will have to pay them a portion of those 10 grand, correct?

What is the deal? Im confused.
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charliebne said:
Whoa....

Ok. So I have to send the IRS a payment every 3 months if I'm receiving money from a CPA company. Meaning, If during these past 3 months I made 10 grand, I will have to pay them a portion of those 10 grand, correct?

What is the deal? Im confused.
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It is called Estimated Tax
 
BrynYoungblut said:
haha same, i'm 21 now and they won't do shit.
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I've had my PayPal account since I was 13, and I was processing well over $100k (in and out of the account, including a PayPal debit card) per year with it before I was 18. The days of 1.5% cash back with no limit on that debit card was awesome. The debit account was flagged often for high activity, but I was never asked for proof of age or anything.

And to the OP, no you don't need any organized business form to receive payments. Just mark "sole proprietor" on the W9.
 
Spend some money on an accountant to avoid getting raped by the IRS, it sounds like you could really use the info.

And don't listen to this:

If you incorporate an LLC, you pay taxes once a year and have the choice to file as a S Corp if you want to. If you incorporate as an S Corp, then you will have to pay quarterly taxes. Setting up an LLC is a good plan imo.
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It doesn't matter if you form any entity at all, you're responsible for quarterlies if you make over x amount, and if you're not paying enough there will be fees a-plenty.

This is also untrue:

Also, you will have to pay the irs a portion of ANY money you make above $600, whether it be every 3 months or once a year.
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If you make over $600 from any single entity they are required to file a W2. Your first, I believe the number is $11k, is actually tax free, federally and at least in MN. Then it's a sliding scale up from there.

My CPA passed the CPA test as one of the top 5 in the entire country and costs under $200/year. The best money you will ever spend.
 
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