RE: Sec. 1706 of the Tax Code

And you have the option of having the IRS tax you as an S-Corp.

On 2016-12-08 11:37, Rusty Ramser wrote:
> Also...
> "My accountant says it is legitimate to form an LLC and be a one man
> band and to have only one client. He say that is a legit business."
> The number of employees you have and the number of clients you have is
> irrelevant. If you form an LLC, you have a legitimate business,
> whether you have 100 clients or zero.
>
> If you go the LLC route, there are a few things you should do in order
> to keep your tax situation clear and to make accounting a lot easier.
> Once your LLC is approved and created by the ACC, you'll want to apply
> for an Employer Identification Number (EIN) with the IRS. If you're a
> one-man shop, you'll want to classify your company as a single member
> disregarded entity with the IRS as part of that EIN application. That
> "disregarded entity" part is important, because it means the IRS (and
> also the state of AZ) treats your company's expenses and income as
> solely applying to you, the individual. So there are no
> additional/complicated tax forms that have to be filled out as a
> result of doing business under your LLC. To keep expenses and income
> through the LLC very clear, however, you'll want to do things like
> establish a separate business bank account with your preferred bank,
> get a credit/debit card strictly for business purposes, etc. Keeping
> all business-related income and expenses completely separate from
> personal ones is key to avoiding raising the IRS's interest. You can
> lend personal money to your LLC to help with its start-up costs, repay
> the loan to yourself when money comes into the LLC, and then pay
> yourself a salary from the LLC when you start having income, but
> keeping the bank accounts separate and performing transactions this
> way keeps everything transparent and easily understandable.
>
> Cheers.
>
>
> -----Original Message-----
> From: PLUG-discuss [mailto:plug-discuss-bounces@lists.phxlinux.org] On
> Behalf Of Rusty Ramser
> Sent: Friday, 9 December 2016 06:27
> To: 'Main PLUG discussion list'
> Subject: RE: Sec. 1706 of the Tax Code
>
> "Forming an LLC in AZ is simple ... and takes 3 or 4 hours (for a
> beginner) over about 6 weeks."
> It's even easier than you realise. It should take about 1 hour (2 at
> the absolute most) over the course of a single Saturday afternoon. If
> you want to hand-carry your forms into the government office in
> downtown Phoenix that processes them, that will add a few hours during
> the work week. But barring that, it's absurdly easy to set up an LLC.
> There are plenty of lawyers, CPAs, etc. that are happy to charge you
> a hefty fee to handle the paperwork of establishing an LLC -- don't
> fall for that rubbish.
>
> Cheers.
>
>
> -----Original Message-----
> From: PLUG-discuss [mailto:plug-discuss-bounces@lists.phxlinux.org] On
> Behalf Of Keith Smith
> Sent: Friday, 9 December 2016 04:01
> To: Main PLUG discussion list
> Subject: Sec. 1706 of the Tax Code
>
>
> David, you have brought up Sec. 1706 of the Tax Code several times
> over the years. I am not familiar, however from what you describe it
> sounds like it prohibits a programmer from becoming a sole proprietor,
> however it sounds like it does not stop agencies from doing contract
> work.
>
> What is an agency?
>
> I'll read Sec. 1706 of the Tax Code when I get done with my current
> project and have more time.
>
> Sounds like the solution is to form an Limited Liability Company (LLC).
> My accountant says it is legitimate to form an LLC and be a one man
> band and to have only one client. He say that is a legit business.
>
> Forming an LLC in AZ is simple. Fill out the forms the state provides
> pay your fee with the filing and publish. I think it costs about $85
> and takes 3 or 4 hours (for a beginner) over about 6 weeks.
>
> Anyone have any thoughts?
>
> --
> Keith Smith
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--
Keith Smith
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