registering to be a company

Hi guys,

I've been lucky recently and have been getting a lot of work. I'm starting to worry that the checks coming in are a bit too big to just shuffle under the rug and not pay taxes on. Also, it'd be nice to be a company to maintain a more professional air with clients. Can you tell me the process I need to go through in order to register to be a legal company? What forms are involved? Who do I need to call? What are some of the set up things? A step-by-step would be much appreciated. Thanks a lot.

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Originally posted by pheck
Hi guys,

I've been lucky recently and have been getting a lot of work. I'm starting to worry that the checks coming in are a bit too big to just shuffle under the rug and not pay taxes on. Also, it'd be nice to be a company to maintain a more professional air with clients. Can you tell me the process I need to go through in order to register to be a legal company? What forms are involved? Who do I need to call? What are some of the set up things? A step-by-step would be much appreciated. Thanks a lot.

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I hate to point this out, but you've just admitted to tax fraud.

Here's the deal, depending on the state you're in, the Government will not tax you on a job unless you've made more than $400 from the same person in one year. Check with your state tax laws.

As for registering to be a company, I assume you're talking about incorporating. First, you're going to need to read up on it to see if its really right for you. A great book that covers this topic very well is The Complete Idiot's Guide to Starting a Home-Based Business. Don't be fooled by the name, because its actually a great book.

As for the actual incorporating, it costs money. One of the things you'll need to do is set up a business account with the bank which typically runs around $1000.00. Then to incorporate yourself, you'll need to check in your particular state for prices. In Pennsylvania, a Corporation costs: $250 plus package fee. Price includes all state and local filing fees, correspondent fees, and publishing fees where required; but it doesn't include any PA taxes. A package fee runs between $169 and $375 depending on which package you get.

You can find out about your state's prices at The Corporation Company.

Good luck.

-scott
http://www.scottmanning.com/

thanks scott.

being naive in these matters is no fun. but your link was great. also, i haven't committed any tax fraud, since I have made less than the CA minimum per person, and it's all fully reportable to the state in next year's tax return (under "other" income).

appreciate your advice.

Actually...

FIRST thing you need to do (after determining whether it's right for you of course) is file Articles of Incorporation under the laws of your state of residence. Any attorney and many accountants should be able to provide with you with the necessary document for that. If you don't want to spend the money for it, you can find them online, you just have to customize it yourself. You'll need to sign it in triplicate before a notary of public and send all the copies to your secretary of state. Two will come back with his seal, and you'll take one of those to the city, county, or local presiding government. Filing fee in KY is only $40, and issuing up to 1000 shares of stock is $10, total $50 unless you need more shares.

You must file Articles whether you decide on being a Corporation or a Limited Liability Company (LLC). An LLC is basically "corporation-lite" and I'd recommend it if you're not looking to go big (have a location, etc). Less paperwork, less tax, easier to set up, and has most of the protection benefits you need to be offering work in other than your name (only the company can be sued, your assets are protected).

The SECOND thing you need to do is get an EMPLOYER ID NUMBER (EIN) - you have to do this regardless of whether you have other employees or not, for two reasons: 1. you're an employee, and 2. you must have an EIN to open a business checking account. This involves faxing or telephoning the IRS, easy enough to do. It's more time consuming to call but you get your ID number immediately.

Once you have an EIN, then you open up a business bank account. I don't know where you bank, Scott ;) but I've never seen it be more than $250-500 to open an account, and REMEMBER THAT'S YOUR MONEY YOU'RE PUTTING INTO THE ACCOUNT, NOT MONEY YOU'RE PAYING THE BANK. There's usually no or minimal fee to start the account, and most banks charge a service fee less than $8/month if your total balance drops below X amount any day that month. Shop around to find the best deal.

Now, you're ready to start paying people! You'll need to write checks to the city government for a license to do business, and probably one or two other small fees to the city or county or whatever while you're at it. Permit to occupy building, registration to pay state and local taxes, etc. I HIGHLY RECOMMEND writing a check to the local Chamber of Commerce, that's an investment in your community that will pay off big for you in the short run. It's an automatic ticket to a lot of fancy-pants events in town that big important people will be at, an in to every respectable business in town, and an immediate signal to others that you are to be respected as well. If your Chamber has a lapel pin, I'd urge you to stick it in the lapel hole of your suit and wear it whenever conducting business or out doing things related to the business. You'd be surprised how helpful it will be for others to recognize it. The Chamber will also assist you in making sure all of your city and county forms have been filled out and done properly.

Times are good, you just gotta have the business sense most "freelancers" lack!

What recession? :)

do not do all this stuff yourself. Pay a specialist to help you. This consultancy will save you money in the long run.

scott,

i'm probably going to incorporate on corporate.com tomorrow. I'd like to get you a referral $40. Follow this link if you're interested.

http://www.corporate.com/affiliate_index.cfm

Then let me know what I need to do to say you referred me.

Thanks again.

Quote:

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Originally posted by pheck
scott,

i'm probably going to incorporate on corporate.com tomorrow. I'd like to get you a referral $40. Follow this link if you're interested.

http://www.corporate.com/affiliate_index.cfm

Then let me know what I need to do to say you referred me.

Thanks again.

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Wow. That's not why I told you about that site, but thanks pheck. I'll get credit if you sign up through this link.

Thanks again.

-scott
http://scottmanning.com/

no prob scott,

least i can do for all the good advice/help you've given me. i am waiting on the first installment of this big account i just got, and once that's here i'll be able to afford to incorporate. so it actually might take a bit. but once i do, i'll do it by following the link. thanks.

You're getting ripped off. :) That company is charging you for Registered Agent services, which is where they can incorporate you in any state, despite your location. This is popular to do because you can incorporate in a state without sales tax, or a state with less taxes for businesses. However, since you plan to incorporate in your state of residence anyhow, you can save yourself a few hundred bucks by getting all the paperwork filled out by an attorney, accountant, or even yourself. It's relatively straightforward, doesn't take much time, and doesn't cost any more than the filing fees themselves. Filing fees $50-100, that company's charging $284-490, and that's just to file Articles of Incorporation (you still have a lot of work left to do after that).

i disagree. the company offers a solid package. files your tax forms, files you out of state, etc. i am thinking of going deleware corp or nevada, as i am not staying in CA for long. And the best part of the package is the net based prog that keeps you on track of your business duties. it's worth it to me just in this alone to have someone keeping me up to code. but one bad thing: i e-mailed them 2 days ago and still haven't heard back. hmmmmmm....