And you have the option of having the IRS tax you as an S-Corp.
On 2016-12-08 11:37, Rusty Ramser wrote:
Also... "My accountant says it is legitimate to form an LLC and be a one man band and to have only one client. He say that is a legit business." The number of employees you have and the number of clients you have is irrelevant. If you form an LLC, you have a legitimate business, whether you have 100 clients or zero. If you go the LLC route, there are a few things you should do in order to keep your tax situation clear and to make accounting a lot easier. Once your LLC is approved and created by the ACC, you'll want to apply for an Employer Identification Number (EIN) with the IRS. If you're a one-man shop, you'll want to classify your company as a single member disregarded entity with the IRS as part of that EIN application. That "disregarded entity" part is important, because it means the IRS (and also the state of AZ) treats your company's expenses and income as solely applying to you, the individual. So there are no additional/complicated tax forms that have to be filled out as a result of doing business under your LLC. To keep expenses and income through the LLC very clear, however, you'll want to do things like establish a separate business bank account with your preferred bank, get a credit/debit card strictly for business purposes, etc. Keeping all business-related income and expenses completely separate from personal ones is key to avoiding raising the IRS's interest. You can lend personal money to your LLC to help with its start-up costs, repay the loan to yourself when money comes into the LLC, and then pay yourself a salary from the LLC when you start having income, but keeping the bank accounts separate and performing transactions this way keeps everything transparent and easily understandable. Cheers. -----Original Message----- From: PLUG-discuss [mailto:[email protected]] On Behalf Of Rusty Ramser Sent: Friday, 9 December 2016 06:27 To: 'Main PLUG discussion list' Subject: RE: Sec. 1706 of the Tax Code "Forming an LLC in AZ is simple ... and takes 3 or 4 hours (for a beginner) over about 6 weeks." It's even easier than you realise. It should take about 1 hour (2 at the absolute most) over the course of a single Saturday afternoon. If you want to hand-carry your forms into the government office in downtown Phoenix that processes them, that will add a few hours during the work week. But barring that, it's absurdly easy to set up an LLC. There are plenty of lawyers, CPAs, etc. that are happy to charge you a hefty fee to handle the paperwork of establishing an LLC -- don't fall for that rubbish. Cheers. -----Original Message----- From: PLUG-discuss [mailto:[email protected]] On Behalf Of Keith Smith Sent: Friday, 9 December 2016 04:01 To: Main PLUG discussion list Subject: Sec. 1706 of the Tax Code David, you have brought up Sec. 1706 of the Tax Code several times over the years. I am not familiar, however from what you describe it sounds like it prohibits a programmer from becoming a sole proprietor, however it sounds like it does not stop agencies from doing contract work. What is an agency? I'll read Sec. 1706 of the Tax Code when I get done with my current project and have more time. Sounds like the solution is to form an Limited Liability Company (LLC). My accountant says it is legitimate to form an LLC and be a one man band and to have only one client. He say that is a legit business. Forming an LLC in AZ is simple. Fill out the forms the state provides pay your fee with the filing and publish. I think it costs about $85 and takes 3 or 4 hours (for a beginner) over about 6 weeks. Anyone have any thoughts? -- Keith Smith --------------------------------------------------- PLUG-discuss mailing list - [email protected] To subscribe, unsubscribe, or to change your mail settings: http://lists.phxlinux.org/mailman/listinfo/plug-discuss --------------------------------------------------- PLUG-discuss mailing list - [email protected] To subscribe, unsubscribe, or to change your mail settings: http://lists.phxlinux.org/mailman/listinfo/plug-discuss --------------------------------------------------- PLUG-discuss mailing list - [email protected] To subscribe, unsubscribe, or to change your mail settings: http://lists.phxlinux.org/mailman/listinfo/plug-discuss
-- Keith Smith --------------------------------------------------- PLUG-discuss mailing list - [email protected] To subscribe, unsubscribe, or to change your mail settings: http://lists.phxlinux.org/mailman/listinfo/plug-discuss
