Freedom Countdown

I’ve put this particular task off for months.  I knew I needed to determine whether I wanted to operate my business as a sole proprietorship, an S Corporation, a C Corporation, or an LLC.  Main main goal has been to minimize my AGI since so many things are means tested these days, along with minimizing my taxes.

I immediately threw out a sole proprietorship because it offers no protection from various unknown liabilities.  I also threw out an LLC, but frankly I don’t remember why.  Now I’m down to a Corporation of some type.  I know C Corps offer significant advantages on minimizing AGI and paying for health benefits and S Corps offer advantages on reduced withholding taxes.

I think I’m out of my league, there are too many variables and I’m just NOT a tax accountant.  So I’m going to take all of my questions to a local CPA and pay for an hour of their time to pick their brains.

In the mean time, I have hired a local high school student and must issue my first payroll check this week.  I don’t want to file multiple payroll tax reports for multiple companies so there has been pressure to get the structure set up and a bank account opened before the first check is written.

I’ve gone ahead and established a new corporation and have a little bit of time before I have to make the formal election for an S  Corp, if that’s the way I decide to go.  Setting it up was incredibly easy.  Everything with my state’s Secretary of State was online and done within 24 hours with a few simple questions.  The hardest part was picking a name.

Next, creating the corporate bylaws, holding the first Board of Director’s meeting (with myself), and issuing a resolution to use a local bank were all very simple due to a book I checked out from the library about forming a corporation in my state that included a CD with fill-in-the-blank forms for the official documents for all of this.

Finally, I visited www.irs.gov to get my Employer Identification Number (EIN) online in a matter of minutes for my newly formed Corporation.

Two days, $300 in filing fees later, and I have a real company and I should never have put it off so long.  It was painless.