I started my first business as a DBA because I wasn't sure if I was ready for any of the bigger structured platforms. I'm in the process of starting a second business (STEM Academy for young scholars) and trying to decide on which way is best to formulate the structure. I initially thought that we would start a more formal structure as an LLC, but after attending EBV and other programs learning more about the formal structures; I'm thinking of forming an S/C Corp. My thoughts are to form one of the Corps and maybe create the academy as either a Partnership or LLC and move both businesses under the Corp. If you have knowledge in this area please advise me on which way is better. I'm very much appreciative of any assistance in this area.
Answers
Hi there- sounds like neat work you are doing! I have done a lot of 'corporate structure work' in my career and can help you with this.
Firstly, the way your company is taxed is a different matter from how it is legally organized. Bottom line, you are best off starting this business as an LLC and electing to be taxed as an S-corporation. In the future, you might consider changing your tax election (to C corp, or partnership), but S-corp is the simplest. S-corp taxation will NOT result in double-taxation. And in any case, you can always change the structure or taxation in the future, for whatever reason, it's pretty easily actually.
That should be enough to get you started. If I were you, I'd use an online service to create the LLC (you do not need a lawyer). Be careful they will try to sell you all sorts of extra services - maybe you want them, maybe not, but do not feel obligated to sign up for whatever they suggest to you. The final step is to register for an EIN (like SSN for a business) - the IRS website makes this very easy.
Once you have set up the business and have actual income you should consult with at least a bookkeeper, if not a CPA. You will need to reserve money to pay future taxes and may need to make quarterly estimated payments. A good bookkeeper can help you with all that - solid accounting practices are always worth the money.
Sounds like you are serious, and that is good. Telephone the local Bar Association in your area. Find it on the Web. Ask for references to local lawyers who practice in your business segment. They usually will provide two or three suggestions. Telephone each one and ask if you can visit FREE for a few minutes to introduce yourself and your plans. Most Lawyers will agree. Some Lawyers may even provide PRO BONO assistance.
When visiting ask for their experience, fees etc etc. Than make your choice. Starting a business is serious - use a professional for serious advice.
Francis J. Tepedino
Attorney at Law
San Diego, CA.
Thank you Richard Filippi for your response. I will be contacting my local SCORE office.
I would suggest SCORE.org and the Small Business Administration to understand the best way to approach this. Also develop a business plan, including several scenarios of what you will do if the business does not perform to excitations. Try and find out what others have done and issues they overcame to be successful. Insure you have enough Capital & Funding as these are the main reasons small businesses fail. Consider Crowd Funding or the new online lending entities, such as Click First Financial, Inc.
Sorry, there is no magic bullet, but the more research and planning the better the outcome.
Best of luck
Hi Richard,
Thank you for pointing in that direction and providing details on how to get there. I also appreciate the websites that you provided.
Uguanda
Hello Rick,
Thanks for your response. From my understanding, from a tax perspective I would pay higher taxes as an LLC. That's the reason I'm trying to make sure that I take the best route in establishing multiple businesses. I want to eventually have the businesses under or maybe I should say aligned with a Corporation. With already having a DBA, could I create a partnership with the current business and add it under the LLC? I don't know if I'm asking this question correctly.
Uguanda
Hi Uguanda,
I am not an attorney or tax accountant.
I have been through this process a couple times, however and don't understand why an LLC with an aligned DBA wouldn't meet your needs. As a small business, the LLC provides individual Limited Liability and eliminates Corporate taxes (double taxation - corporate and individual).
From the ACP webpage:
Click on the ACP Advisor-net tab, & select the "Community" icon.
Under the "Advisors" tab, select "Legal" from the "Refine by" pull down box.
(Other pertinent selections include: Business, Small Business ... ),
Look for the "Show More" box at the bottom of the page.
Examine the advisor profiles, & use the ACP message feature for advice.
Alternately:
I've added links to information & videos under thee sections of my EE webpage that might be useful to you:
ttp://eehot.com/ee.html#mentoring
http://eehot.com/ee.html#vosb - Veteran Owned Small Business
http://eehot.com/ee.html#sba - Small Bus. Admin
http://eehot.com/ee.html#funding - see Chisolm Law Firm:
https://chisholmfirm.com/
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