DBA, S corp, C corp?

Question

I am launching my own website and I expect an annual sale of $ 50,000. What type of business is enough for me?

Answer 1

If you go Sole Proprietorship you are responsible for any and all debts incurrred by the company. Every asset covers your liability (your home, cars, computers, shoes, etc.) If you are absolutely sure that there can and will be no debt incurred then this is a safe way to go. There are no special taxes here, profits are taxed as personal income. The Sole Proprietorship does not pay the state and federal taxes that Corporations pay.

The problem with a C-corp is that you are subject to double taxation by the IRS. Basically you're taxed out the *ss. C-corp profits are taxed twice - once as corporate income and again as personal income. But the advantages are limited liability (personal assets are not taken to cover company debt), ease of transfer of ownership, perpetual life (the business may exist for decades beyond the creator's life), and specialized management. A disadvantage is that this type is an "open corporation" meaning that you are required to submit detailed reports to government agencies and stockholders.

Going S-corp is if your company will be relatively small with ideally little to no employees. The company can only be domestic (in your own state). You don't suffer double taxation with this. But you are not allowed more than 100 stockholders (if it applies).

Corporations (s & c) are required to file Corporate Charters with the Secretary of State, which is like a DBA, it is a contract between the corp and the state acknowledging the existence of the artificial entity (business).

Now an LLC (Limited Liability Company) is what more and more businesses are going with such as AT&T, Cingular, etc. This is close to an S-corp but they are more flexible. They are not subject to the same governmental tax regulations and rules of the IRS. They are not limited to 100 stockholders. But they must file Articles of Organization with the state's Secretary of State. So there may be more paperwork to file during start-up. They also are not subject to double taxation. LLC's with two members are taxed like a Partnership (they pay no income tax but are taxed on their share of the profit the same way the Sole Proprietor is). LLC's with only one member are also taxed like a Sole Proprietor - as personal income.

Answer 2

All the IRS requires to be a sole proprietor is to operate a business with a profit-making intent.  This means that you are in business as a sole proprietor as soon as you begin to be in business - there are no formal requirements as long as you use your own name.  If you have losses, you can deduct them on your 1040 on Sched C.  Profit is also reported on your 1040, and income tax and social security tax is paid on the profit.  One of the main advantages of a sole proprietorship is simplicity. There are no additional tax returns to file. There are disadvantages also, especially in liability protection.  However, some businesses inherently have less need for liability protection.

As a corporation you will have to file and pay for an Form 1120. You may also have to pay considerable fees to set up a corporation or an LLC, so it may not be worth the expense until you find that the business is viable.  S Corp profit or loss flows to your personal, much as a sole proprietor.  C Corp profit or loss stays inside the corp and does not affect your personal taxes.  Generally, a start-up business that may have losses would be better off as a sole proprietor or S Corp.

This is a huge question and cannot be answered completely in this forum. As always, consult with a tax professional for specific answers.  CPAGreg

Answer 3

actually neither of those two unless you are planning on offering stock or having investors. the cheapest is sole prioprietorship and a LLC is the same but offers a bit more protection. entrepreneurs and experts give business advice and information http://www.businessempiremag.com/toolkit... you may find that site helpful