do i need a LLC for a online buisness? On Fri, 27 Jan 2012 08:52:00 GMT starting ladybugs and fi8rflies. a

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      Retail Trade   with 0 employees in Marlow, OK  , 73055, Lawton Stephens County I do not want to pay excessive taxes because I am self employed and I am subject to self employment taxes. Is there a way to avoid paying it.       I want my clients and other business I deal with to respect me and my business.   My business consists in dealing with real person to person encounters.

To begin, you need a sales tax id number because you sell taxable items.  Taxable merchandise is anything you lease or sell and it is touchable. Second, a business tax registration is required. That registration is different than sales tax, income tax, or employement tax.  It is also called a home occupation permit or business permit license.  Finally, you need to register a ficitious business name, but, better, instead, you could register an S  or C corporation or set up an LLC.

If you create an S corporation you will not pay excessive self employment taxes because instead of salary you can pay yourself in dividents. Keep in mind that you still need to pay yourself a reasonable salary as defined by the IRS.     Set up a corporate business entity such as an LLC or corporation in order to be respected as a business.   Protect your personal assets and avoid suits that might ensue from business consists in dealing with real person to person encounters.

As mentioned above, partnership need a federal IRS business tax ID and because you have partners, you need to get one. If you did business with just your surname, you would not need to file a DBA but because your business name has words that reveal additional owners, you need to file a dba. Suffixes such as "& Sons" or & Associates require a filing of a trade fictitious business name. Remember that if you lease personal property, leasing it is taxable on the amount of the lease and you need to obtain a sales tax resale number to collect and pay taxes. All corporation at formation are C corporations unless they elect to be S corporations. An LLC can be a C corporation and taxed as one if it decides so. Keep in mind that even if you are just a service man, you still need to get a sales tax id number if your service includes the installation or building of parts. How much capital do I need to set up my LLC? If you will qualify as an independent contractor, you will be as any other business and you will need to register your business and get all required tax IDs.

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Frequently Asked Questions:

Q: I started a business as a partnership but never really took off. Do I still need to file an IRS return?
A: If you filed for a a partnership but never started a business, you need to file a tax return anyway and just fill out the gross business income as zero. Otherwise the IRS will charge you with a penalty for non filing the return.

Q: What if the independent contractor is an LLC or corporation, do I still need to send them a 1099 form?
A: To be safe, yes, send everyone that does any work for you for more than $600 a 1099 form.

Q: I hired someone for business consultation last year and it turned out my business was her only client. Do I treat her as an employee or as an independent contractor?
A: The test is not whether he has only one client but whether she acts as an independent contractor. That is whether she works without supervision and uses her own tools or equipement.

Q: What is an EIN?
A: An EIN is an IRS employer as well as business tax ID number.