Message from discussion OT questions about starting part time bus.

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From: Ignoramus906 <ignoramus...@NOSPAM.906.invalid>
Newsgroups: rec.crafts.metalworking
Subject: Re: OT questions about starting part time bus.
Date: Wed, 4 Oct 2006 04:14:14 +0000 (UTC)
Organization: Altopia Corp. - Usenet Access - www.altopia.com
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References: <1159843414.120438.302570@c28g2000cwb.googlegroups.com> <4522C7C4.3060405@artsci.wustl.edu> <MPG.1f8cfe00434accb989d19@news.suscom-maine.net>
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On Wed, 4 Oct 2006 00:09:23 -0400, Ned Simmons <n...@nedsim.com> wrote:
> In article <4522C7C4.3060...@artsci.wustl.edu>, jmel...@artsci.wustl.edu 
> says...
>> 
>> 
>> monkers wrote:
>> 
>> >I was wondering if anyone could tell me how to go about starting a part
>> >time shop up? I would not be doing a lot of work, but would like to do
>> >this proper, and legal so as not to worry about the IRS or anything
>> >like that. Im a machinist full time but get request for machine work
>> >and welding on occassion. I know a lot of people say "just take cash"
>> >but that doesnt seem like the best solution.
>> >         What are the correct steps? I do not have an accountant yet,
>> >and I dont know anything about running a buisness. Any help would be
>> >great,
>> >  
>> >
>> Hmm, so many questions!  I don't use any outside accountants, lawyers, etc.
>> anymore.  They just cost too much.  I did use a lawyer and an accountant to
>> set up everything, but have been winging it for about the past 18 years.
>> 
>> You may want to get a ficticious name registration to allow you to operate
>> under a company name.  Corporations are a LOT of paperwork hassle for
>> very little benefit to a one-man shop.  My lawyer told me that was a waste
>> of time, if you are really just one guy then a corporation gives no immunity
>> to suit, etc.
>
> There is at least one advantage to incorporating a one-man operation, 
> and that is the ability to make profit distributions to shareholders 
> (you being the sole shareholder) that are not subject to SS taxes. Of 
> course you have to be making a profit to do this, and you can't get away 
> with taking no wages and all distribution, but I've been advised that as 
> long as the distribution is not more than 20-25% of wages the IRS is 
> generally happy.
>
> To decide whether this makes sense you need to weigh the expected tax 
> savings against the additional expense and hassle of maintaining a 
> corporation. For me it amounts to a yearly filing with the Secretary of 
> State that costs $65 and perhaps another $100 to my tax preparer for a 
> somewhat more complicated tax return. I figure a distribution a bit over 
> $1000 is my break-even point. I've heard the fees to maintain a 
> corporation are considerably higher in some states, which would of 
> course shift the balance.
>
> This is for an S corp, I can't imagine a situation where a C corp makes 
> sense for a one-man shop.

For me, being a corporation is highly worth it. The tax deductions
(all legal) are great. The expenses are not huge, just $100 per year
for filings. If I was not incorporated, I would still have to do my
taxes on my business income. 

i