At what point does one need to "become a business"

I guess I mean how many of you are "incorporated" or whatever its called (don't laugh)...at what point did you decide that you needed to do this, or at what point does one NEED to do this.

thanks (i'm clueless)

My accountant advised me when I started to bill clients just about every month that it would help me financially if I incorporated. My business is an S-corp which covers my computer consulting and my photography business.

Advantage that I can think of right now:

- it separates my personal assets from my business

- I have depreciation on equipment I buy

- every mile I take is tax deductible ( i have a magnetic ad on our vehicles )

- my business pays for workshops I go to

- restaurant meals where you talk about business is tax deductible (must keep receipt)

- house bills like phone (part of it), internet is paid by the business (i have a second line for business calls)

- I have my own business credit card (useful for cash flow)

And other advantages that I can't think of right now. It would be a good idea to talk to an accountant. You can either pay or do a trade of services.

Good luck!

You usually end up getting taxed twice when you are incorporated,,, and it stings... You probably need to take a look at what you have, as an individual to lose... If you have a big house and a boat etc. then being a corporation protects you because the business can be sued but you typically can't. If you rent your house and own very little, sometimes it's worth it take more risk to enjoy more profits. For a lot of people the increased paperwork, double taxation, and added expenses aren't worth it to become corp..

I owned a Gym for 5 years... With the high liabilities of the business it was necessary to become a corp. but a pain in the ass... If I owned a small photography business I would probably go Sole-Proprietor or LLC,,, again depending on my current net worth.

majs wrote in post #10255604
My accountant advised me when I started to bill clients just about every month that it would help me financially if I incorporated. My business is an S-corp which covers my computer consulting and my photography business.

Advantage that I can think of right now:

- it separates my personal assets from my business (No genuine need for this)

- I have depreciation on equipment I buy (but you have to report income to uncle sam and pay taxes)

- every mile I take is tax deductible ( i have a magnetic ad on our vehicles ) (but you have to report income to uncle sam and pay taxes)

- my business pays for workshops I go to (but you have to report income to uncle sam and pay taxes)

- restaurant meals where you talk about business is tax deductible (must keep receipt) (but you have to report income to uncle sam and pay taxes)

- house bills like phone (part of it), internet is paid by the business (i have a second line for business calls) (but you have to report income to uncle sam and pay taxes)

- I have my own business credit card (useful for cash flow) If you say so.

And other advantages that I can't think of right now. It would be a good idea to talk to an accountant. You can either pay or do a trade of services.

Good luck!

I know I'll get slammed for this one... but I work my "day job" as a technical writer, then I come home and make candles (for sale) in my shop, or I do portraits for clients. Those are my 2 side jobs. I work my a$$ off and "I" keep the money. To hell with OBAMA and the government.

I know people that sit on her butts all day, every day, waiting on government checks! And they've been sitting on their butts for 30 years! And still receiving FREE MONEY from the government. Their groceries are free (they get an EBT card worth $490 per month), insurance is free (Medicaid), most of them have 3 kids that they claim are "disable" and they get over $2000/month in SSI and welfare checks.

Yea, go ahead and raise your hand and say "Hey, Uncle Sam! Over here! I'd like to pay more taxes!"

I'm not. I'll take my chances. In the meantime....my money is in my pocket. I don't need an "INC"....or "LLC"...or an accountant.

Take it all with a grain o' salt......it's just MY two cents.....but those two cents are in MY pocket.......and not a democrat's.

snyper77 wrote in post #10259870
I know I'll get slammed for this one... but I work my "day job" as a technical writer, then I come home and make candles (for sale) in my shop, or I do portraits for clients. Those are my 2 side jobs. I work my a$$ off and "I" keep the money. To hell with OBAMA and the government.

I know people that sit on her butts all day, every day, waiting on government checks! And they've been sitting on their butts for 30 years! And still receiving FREE MONEY from the government. Their groceries are free (they get an EBT card worth $490 per month), insurance is free (Medicaid), most of them have 3 kids that they claim are "disable" and they get over $2000/month in SSI and welfare checks.

Yea, go ahead and raise your hand and say "Hey, Uncle Sam! Over here! I'd like to pay more taxes!"

I'm not. I'll take my chances. In the meantime....my money is in my pocket. I don't need an "INC"....or "LLC"...or an accountant.

Take it all with a grain o' salt......it's just MY two cents.....but those two cents are in MY pocket.......and not a democrat's.

Thats all good until you move up the scale and clients start reporting the expenses to the IRS. If your "business" is listed as one of their expenses, you risk being audited.

I formed an LLC, mainly because I work with a partner. If I was just by myself I would just be a sole prop. There are advantages of having a legit business. First off is credibility. Tax deductions are good if you have the income to justify that. Otherwise its a PITA.

Technically, as soon as you start excepting money for business, you are a business. If you are not Incorporated you are "supposed" to report that income on your personal tax form.

It all really depends on how serious you are about it. If you are just making a few bucks on the side, then I dont see a point and the IRS would probably declare you as a hobby anyways. No if you are pulling in $3-5K a month, you better be friendly with the IRS or you asking for trouble.

I do know, especially in Florida, that the FDOR is cracking down on the photog business, mainly weddings, but overall photography. They want their money and if you are claiming deductions with no income, that is a red flag.

majs wrote in post #10255604
My accountant advised me when I started to bill clients just about every month that it would help me financially if I incorporated. My business is an S-corp which covers my computer consulting and my photography business.

Advantage that I can think of right now:

- it separates my personal assets from my business

- I have depreciation on equipment I buy

- every mile I take is tax deductible ( i have a magnetic ad on our vehicles )

- my business pays for workshops I go to

- restaurant meals where you talk about business is tax deductible (must keep receipt)

- house bills like phone (part of it), internet is paid by the business (i have a second line for business calls)

- I have my own business credit card (useful for cash flow)

And other advantages that I can't think of right now. It would be a good idea to talk to an accountant. You can either pay or do a trade of services.

Good luck!

A few questions for you... I am an LLC, similar to SCorp...

On your advantages...

Mileage - Does the sign make your deductions 100% of the time? Is it a personal vehicle with a business sign slapped on it? Its my understanding mileage is ONLY deductible if being used for a business purpose. i.e. Meeting a client, driving to a wedding you are shooting, location scouting, etc... Driving to Walmart to get groceries would not count. With a sign, would that trip to Walmart count? I have been considering a business window decal and wondering if that would change the mileage deduction for me.

snyper77 wrote in post #10259870
I know I'll get slammed for this one... but I work my "day job" as a technical writer, then I come home and make candles (for sale) in my shop, or I do portraits for clients. Those are my 2 side jobs. I work my a$$ off and "I" keep the money. To hell with OBAMA and the government.

I know people that sit on her butts all day, every day, waiting on government checks! And they've been sitting on their butts for 30 years! And still receiving FREE MONEY from the government. Their groceries are free (they get an EBT card worth $490 per month), insurance is free (Medicaid), most of them have 3 kids that they claim are "disable" and they get over $2000/month in SSI and welfare checks.

Yea, go ahead and raise your hand and say "Hey, Uncle Sam! Over here! I'd like to pay more taxes!"

I'm not. I'll take my chances. In the meantime....my money is in my pocket. I don't need an "INC"....or "LLC"...or an accountant.

Take it all with a grain o' salt......it's just MY two cents.....but those two cents are in MY pocket.......and not a democrat's.

It can work to your advantage too... If you have a startup business that actually loses money (You invest more in camera gear than you make) you get to subtract that from your overall income meaning you pay less taxes... Kind of handy if you are really in to photography.

majs wrote in post #10255604
- every mile I take is tax deductible ( i have a magnetic ad on our vehicles )

According to my accountant, I cant even write off the miles to my studio since its an established place of business. But if I go to the library instead of the studio to meet the person I can. go figure.

And ive heard that a photography advertisement on a car is screaming VALUABLE CAMERA STUFF INSIDE, PLEASE BREAK IN AND TAKE IT. Thats why im a bit hesitant to put that decal on our car.

snyper77 wrote in post #10259870
I know I'll get slammed for this one... but I work my "day job" as a technical writer, then I come home and make candles (for sale) in my shop, or I do portraits for clients. Those are my 2 side jobs. I work my a$$ off and "I" keep the money. To hell with OBAMA and the government.

I know people that sit on her butts all day, every day, waiting on government checks! And they've been sitting on their butts for 30 years! And still receiving FREE MONEY from the government. Their groceries are free (they get an EBT card worth $490 per month), insurance is free (Medicaid), most of them have 3 kids that they claim are "disable" and they get over $2000/month in SSI and welfare checks.

Yea, go ahead and raise your hand and say "Hey, Uncle Sam! Over here! I'd like to pay more taxes!"

I'm not. I'll take my chances. In the meantime....my money is in my pocket. I don't need an "INC"....or "LLC"...or an accountant.

Take it all with a grain o' salt......it's just MY two cents.....but those two cents are in MY pocket.......and not a democrat's.

You seem to be operating under some misconceptions here. Not that I necessarily disagree with the opinions expressed, but existing as an s-corp vs operating as a private person doesn't change anything about your tax situation. You are still supposed to report the income and you are bearing the same risk of the IRS takes an interest in you. But if you do it right you can deduct your expenses and pay less tax than before.

Sure there is a need. If your company gets sued, they can only take the photography equipment and not your house.

When you are selling something on a regular basis you are a business and need to jump thru all the hoops(minus garage sales)
Many people are obviously cheating business regulations with Smug and Shutterfly type accounts etc however sooner or later the tax man will catch up.

I think snyper77 is implying that his other income is a cash based business so he's not going to acknowledge it for the government to start taxing it. If true, then I would think twice before posting such information on the internet where the tax man can see your intentions and statements of attempting to defraud the government and come tracking you down via your ISP number.

There is nothing illegal about reducing your tax liability but to avoid (or refuse) paying taxes, well, that is illegal.

As for the OP question. When you start taking money you are a business. Then its time to talk to a CPA to see what records you should keep and how much he will charge you, getting a business IRS number and to make arrangements to submit taxes each quarter.

After the accountant you'll want to talk to a lawyer to see how best to structure your business for your particular conditions, business model and other needs. Here is where you will learn whether or not to go as a sole-proprietor, LLC, S Corp, partnership, etc.

I wish you well on your adventure.

tkbslc wrote in post #10262416
Sure there is a need. If your company gets sued, they can only take the photography equipment and not your house.

Maybe, maybe not. If you were sued, the court will look very closely at how separated your business really is from your personal assets, and you could get a rude surprise. The court's hand is not bound by your incorporation status.

This is something that must be discussed on a case-by-case basis with a smart CPA (from the aspect of whether it's financially sound) and a business lawyer (from the aspect of whether it's legally sound) to incorporate or go LLC.

Naturalist wrote in post #10262494
I would think twice before posting such information on the internet where the tax man can see your intentions and statements of attempting to defraud the government and come tracking you down via your ISP number.

No kidding....

snyper77 wrote in post #10259870
I know I'll get slammed for this one...
Take it all with a grain o' salt......it's just MY two cents.....but those two cents are in MY pocket.......and not a democrat's.

Since you expected it....
Joe the plumber, is that you?
Keep in mind that the govt is pretty good to your state. Your state is 2nd in the nation in receiving tax dollars/tax payments. It receives almost TWICE as much fed money as it pays out. I'm willing to bet that you received a tax CUT this last year. Am I correct?

Anyway, my take on the TC's question is if you've making more than a couple hundred dollars on events, I'd be reporting that information.