Self Employment

[Kimball Larsen]

On Jul 15, 2005, at 5:17 PM, Doran Barton wrote:

> Not long ago, Hans Fugal proclaimed...
>
>> I tried the archives because I could swear we discussed this  
>> recently,
>> but to no avail. I blame the plug sysadmin.
>>
>> I'm going to start doing some contract work. I always hear these
>> jargon-filled statements about setting up some sort of corporation or
>> LLC or something, but I have no clue what that all means yet. But  
>> I set
>> up my own DNS and mail servers so maybe this is for me. ;-) Where  
>> do you
>> find the manpages about this stuff?
>>
>> We discussed getting yourself an accountant, that much I did find. Is
>> that still good advice for part-time consulting work? Will any old  
>> (or
>> young) accountant do, or do they have to specialize in self  
>> employment
>> stuff?
>>
>
> Well, talking to a good tax accountant will be the best way to get  
> an idea
> of which business type is best for the amount of income you plan to  
> bring
> in. If you're only making a couple thousand dollars a year from your
> business, an accountant may tell you to not even bother - just do
> everything under your SSN and file it as "extra income."
>

I would like to chime in here as well - I've set up an S-Corp mainly  
to avoid the double taxation that I was beginning to feel with my  
side jobs.  When I set it up, the corp only did about $3-4k/year.  At  
the time we set it up, we talked to an accountant who suggested 2  
things:

     First, if the corp is only making $3-4k/year, it's probably a  
bit early to be going through the hassle of setting one up.  He  
suggested I wait until the corp was making at least $10k/year to make  
it worth the time.

     Second, for our purposes an S-Corp was a better plan than an  
LLC.  I don't recall the exact reasons, but our situation is that we  
don't have any other employees, my wife and I are the only officers,  
but we had the potential to grow significantly.

Then he billed me $150. :-(

We have always done all our own paperwork for taxes and accounting.   
Filing taxes for an S-Corp sounds daunting, but it is really not all  
that complicated in the end.  My wife does the books, and she just  
uses Quickbooks (I know, I know.. ) which actually makes the tasks  
you have to do pretty easy.

Let me know if you have other questions - but it sounds like the  
other responses on this list have lots of good suggestions as well.

-- Kimball

> My accountant advised me and my partners to set up S-Corporations  
> which in
> turn own shares of Iodynamics LLC. This apparently has nice tax  
> benefits -
> something called pass-through taxation. The LLC pays no taxes. The  
> S-Corps
> can write off a percentage of their income - a higher percentage  
> than if
> they were not S-Corps, so less taxable income there too. I'm no  
> accountant
> or lawyer, but it sounded good to me. :)
>
> -=Fozz
>
> -- 
> fozz at iodynamics.com is Doran L. Barton, president, Iodynamics LLC
> Iodynamics: Linux solutions - Web development - Business connectivity
>  "Go soothingly on the grease road as there lurks the skid demon."
>     -- Seen in a Tokyo traffic handbook
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