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  #1  
Old 04-10-2002, 01:18 AM
WebmastTroy WebmastTroy is offline
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***Running a Business the LEGAL way...


I'm going to try this and see how this work.

My idea is to get someone (or several people) from each state that knows that particular state's laws and regulations for running a "web" business. If you are a lawyer or have the knowledge of a lawyer, PLEASE post. NOTE: please don't consider below to be legal advice. It's just ment to be a starting point in what you should do in your appropriate state.

In your post, please provide:

1) Your state that your referring to
2) All (if any) licenses that are needed to run a business
3) All (if any) papers that were filed to create your business.
4) What you are filed as
5) Optional (and helpful): a link to your state's web site that "backs up" what your saying
6) Anything else you feel relevant.

I'll edit this first post with information that's posted throughout the replies.

(I hope this works).

I'll start:

Indiana
- No specific license (unless needed for specialty purposes [I'm guessing REALLY specialty purposes...probably not web services])
- Will submit DBA form (provided on web site) to county recorders office.
- Filing as a General Partnership (in a couple days).
- http://www.in.gov/sos/business/corps/guide.html
- http://www.state.in.us/sic/owners/ia.html
- Notes: I have not filed for this yet, but I will within the next few days. I'll update and change my post as necessary if things change (I don't expect them to).

Contributed by: WebmastTroy

--------------------------------------------

Washington
Licenses: DBA. (business license in SOME cities, ask city hall)
Papers filed: Just the DBA form and business license form
Filed as: Sole Proprietor
State website: Not sure.
Other: It's a good thing to ask other people who own their own business of the steps they took, it can shave alot of time off what it takes to go everywhere to get what you need.

Contributed by: SmartPenguin

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Last edited by WebmastTroy; 04-15-2002 at 10:13 PM.


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  #2  
Old 04-10-2002, 02:04 AM
Chysical Chysical is offline
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Anyone from Missouri or familiar with the process in MO please do the same. Ty.

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  #3  
Old 04-10-2002, 04:04 PM
MadSkilage MadSkilage is offline
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Here's some things you should probably do:

1) Go to the library. It's free and they have tons of books on incorporation and business structuring. I'd also recommend any books published by Nolo.

2) Talk to your local SBA office. You can setup a free consultation.

3) Talk w/ an accountant or lawyer. Everyone knows at least one accountant or lawyer so you can probably get some pro bono advice.

What I've found is that doing this yourself is very possible, but you don't get the same security or at least piece of mind that you would get from obtaining profession services. Above all, do your research, don't try to cut corners, and plan very well.

I live in VA, but for Missouri you'll want to go to
http://www.sos.state.mo.us/business/...ns/Default.asp

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  #4  
Old 04-10-2002, 09:56 PM
Chysical Chysical is offline
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Tnx MadSkilage.

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  #5  
Old 04-11-2002, 08:51 AM
goodness0001 goodness0001 is offline
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I have preached this before, but what gain are you going to get by having your business in your own state? Unless you live in delaware there are really not any bonus's to having your business in your own state. Its like picking a web host just because they are located in your home town....

You should open a business in a state with the best tax advantage. In most states you need to pay a business income tax, and then a personal income tax. If you incorporate in a state with no business income tax, then you would only being paying personal income tax (if you state has one) on the state level.

  #6  
Old 04-11-2002, 11:03 AM
MadSkilage MadSkilage is offline
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Quote:
Originally posted by goodness0001
Its like picking a web host just because they are located in your home town....
I'm going to have to respectfully disagree with you there. It is often more advantageous to incorporate in one's home state to avoid paying state taxes on foreign corporations. It all depends on which state you live in, and how much money you're making. Again, things an accountant could help you with.

  #7  
Old 04-11-2002, 12:15 PM
JayC JayC is offline
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Quote:
Originally posted by MadSkilage
I'm going to have to respectfully disagree with you there. It is often more advantageous to incorporate in one's home state to avoid paying state taxes on foreign corporations
Agreed. If I, living in New York, were to incorporate in another state I'd have to pay -- in addition to the incorporation fee I'd pay that other state -- $225 to NY to register as a "foreign corporation." If I just incorporated in New York, that fee would be $125. And I'd have to pay a registered agent in the state in which I incorporated; I wouldn't need an agent if I incorporated locally.

As for taxes, my foreign corporation would still have to pay taxes in New York on any profits it makes on operations conducted in New York. Of course being a small, privately-held corporation there's not a lot of benefit in my corporation making and retaining a taxable profit anyway -- I'd rather have that money myself, so I'm going to find ways to transfer profit from the corporation to myself in the form of salary, consulting fees, dividends, or other distributions. In which case I'll have to pay individual taxes on it regardless of where the corporation is located.

The biggest benefit of the often-recommended Delaware corporation, and the reason many large corporations are located there, is a history in the state legislature and courts of protecting corporations from such things as hostile takeovers. Tax benefits for small corporations owned by one or two people are negligible; the relatively small amount of state income tax that might be saved is offset both by other expenses and by the introduction of more complications.

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  #8  
Old 04-11-2002, 12:27 PM
4solutions 4solutions is offline
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Re: ***Running a Business the LEGAL way...

Quote:
Originally posted by WebmastTroy
- Filing as a General Partnership (in a couple days).
Oh NO!

Please reconsider filing as a general partnership! Please! Please!

In my years as an accountant, I never saw a general partnership that did not end badly. One partner always seem to obligate the other partner to more obligations than were originally intended. Not always intentionally, either. And, unfortunately, with a general partnership there is unlimited liability for both partners.

For example, say your partner is going to the post office to mail out partnership related letters. He accidently hits a lady with a baby carriage, killing the baby. The police officer will most likely ask him where he was going to before the accident occured (standard question). He will answer, in his daze, that he was travelling to the post office to mail out letters for kytroweb.com. And so that is entered into the police report. Before you know it, when the lawsuit comes, both you partner AND you will be named. Whatever judgement is handed down will be paid from both your partner's AND your's business and PERSONAL assets... there goes the kid's college fund.

Much better to start out as an Limited Liability Company and that way, not only do you have limited liability, but you will find that your bank will take you much more seriously.

Either way, please, at least enter into some kind of written partnership agreement. Nolo press has some excellent materials, for example: http://www.nolo.com/lawstore/product...827B910E1B3426

Best of Luck,


Keith

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  #9  
Old 04-11-2002, 12:43 PM
MadSkilage MadSkilage is offline
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LLC's can also choose to be taxed as a partnership so they basically get taxed the same as a general partnership (although I'm not sure about the rules regarding self-employment taxes for partnerships). Also, as stated before, the members have decreased liability.

Partnerships require way too much trust and business can quickly turn friends into enemies very quickly.

  #10  
Old 04-11-2002, 02:45 PM
WebmastTroy WebmastTroy is offline
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Quote:
Originally posted by MadSkilage
Partnerships require way too much trust and business can quickly turn friends into enemies very quickly.
Well, I'm not sure how much "trust" is going to be an issue in this, as my partner is a relative of mine (brother).

I have considered doing the LLC route (or something similiar), but have run into WAY too many documents that have to be filed, and I've heard about the quarter projected income papers you have to file, and all that good stuff. I figured instead of going through the pain of paying those taxes and having to do all those papers and pay the fees, that I would be better off just doing a General Partnership for now. If I understand it correctly, all thats needed of me is to fill out a D.B.A. application with the county recorder's office and I'm done. I REALLY like that idea of how simple that is. I don't have the income (I voted 'NO' on the 'Are you paying taxes this year' poll I posted in this forum) or savings to pay an accountant to do all the book work and the legal things that would be required of an LLC.

Maybe I'm wrong, but it just seems like too much of a headache to have to worry about everything that's involved as an LLC.

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  #11  
Old 04-11-2002, 02:59 PM
4solutions 4solutions is offline
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Troy,

I don't know about your state tax law, but whether you go LLC or GP, you will still need to file an annual 1065 Partnership Tax Return with the IRS.

Just an FYI... But I'm sure that you knew that.

BTW, I'm in business with two of my brothers and, wow, while the trust is implicit, there sure can be disagreements. BIG ONES! Luckily, we have a pretty good business agreement which spells out what to do in cases where we disagree.


Kind Regards,

Keith

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  #12  
Old 04-11-2002, 03:18 PM
MadSkilage MadSkilage is offline
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Filling out all of those forms does stink. If you think you are going to expand in the future though, it might be a good idea to check out your options. Switching from different structures in the future can get a little tricky, but for the setup you have right now, it sounds like you are taking the right steps.

  #13  
Old 04-11-2002, 06:45 PM
FocusOn718 FocusOn718 is offline
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Just remember one thing... If operating as a sole propiertor... BE CAREFUL!!!

  #14  
Old 04-11-2002, 07:32 PM
goodness0001 goodness0001 is offline
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Operating a corporation in another state does not cost anything more than the normal registration fee for the state of choice. Sure you can expense everything out but eventually your company is going to have to make money or your are going to get a knock from the IRS in terms of a audit. You can form an S corp. and pass the revenues down to your personal level any way while at the same time showing a profit and also not being taxed on the corporate level.

The costs are only 150-200 dollars certainly most people will be paying that much in tax if they are making any money...

Certainly not a must for startups but something to think about.

  #15  
Old 04-11-2002, 07:52 PM
MadSkilage MadSkilage is offline
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Quote:
Originally posted by goodness0001
Operating a corporation in another state does not cost anything more than the normal registration fee for the state of choice.
Actually in many cases, it does.

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