What do I need to start this thing? LLC? INC? DBA?
I have a name, corporate identity, product and plan in order and in fact I've already made money on the side but I want to make my small business in to an actual company that can be marketed properly.
This business will be owned and operated mostly in person in the state of Oregon but it's not unlikely that some projects will be online. The goal is to form a business/company with little to no maintenance because I'm providing a lot of freelance work on the side of my day job. This foundation will hopefully become the starting point for a larger project with more people involved but for now it's just me and it's not very lucrative.
Long story short, I don't want to dump piles of money on something that might not move for another four or five months. I barely made enough cash on the side last year to claim and it's possible that I just hit a lucky pocket of business.
What best suits this framework? LLC? INC? DBA?
I hope I wasn’t too vague, let me know what other information might help.
Thanks a ton for reading my dibble!!!
Why don't you run your business as a sole proprietorship and use a "doing business as" or DBA for marketing purposes and taxes?
The savings from this approach come from tax preparation mostly as you will be able to report the income or loss on your 1020 form, and there is no need to file a partnership report or corporate return. You would need to file the DBA with the State. The downside is that you do not get the liability protection of a different entity.
On the other hand, filing organization papers for an LLC is very simple and in most states it costs less than a hundred dollars. If you know a little about numbers, you can do the taxes yourself with a program like Turbotax for business . Heck if you are the only owner of the LLC, you get to file the LLC taxes on your own 1040.
Bottom line, there is little difference in overall cost and the LLC will give you some liability protection in case of legal troubles. This is just a very superficial look at the choice. Things get more complicated because even LLCs and Corporations can loose their protective abilities if you are not careful. You need to read up more and find out if it makes sense in your case.
Thanks for the info. I like the idea of an LLC for more than just having some liability protection, I think it will help maintain a content flow if/when I bring on more people. I have a tendency to bring on specialists to help complete projects but it’s usually in a “freelance” type capacity and none of them have hung around long enough to make a partner.
Originally Posted by loanuniverse
Thanks again! Time to read up on some local law haha.
As you have already started marketing and have made money, you should register your business. Since you are starting small without any investors, a corporation is not necessary.
LLCs provide several benefits that DBAs do not, such as liability protection. LLCs also provide better protection of the business name, as another business can register with the same name of your DBA, whereas that cannot happen if you have an LLC. LLCs can provide more opportunities for tax write-offs and allow you to be taxed in a variety of ways including as a sole-proprietor, S-corp, partnership, etc. As a drawback, you will need to file an additional tax form for your LLC, that you would not need to file if you have a DBA. An LLC will also give your business more credibility than a DBA.
The costs of registering a DBA versus an LLC vary in each state. The costs of filing the DBA is often cheaper, but overall can be substantially more expensive after you meet the requirement of publishing notice of your DBA in legal newspapers. These requirements vary by state and in cost, but can range from $100-200.
You will also need to factor in maintenance costs. Different states have different annual reporting requirements and fees. These are often small (around $25) but are costly in certain states.
For more information on DBAs and LLCs, or starting a business in Pennsylvania, please visit our website.
Tags for this Thread