Comments on: Going into Business? Keep your Personal Finances Safe http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/ personal finance that makes cents Fri, 04 Jul 2008 20:37:55 +0000 http://wordpress.org/?v=2.5.1 By: Emergency Fund Details | PersonalDollars.com http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-130660 Emergency Fund Details | PersonalDollars.com Sun, 04 May 2008 14:40:37 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-130660 [...] has been one of my favorite personal finance blogs for quite some time. In fact, I have written a guest post for the blog in the past, and hope to do so again in the near future. One of my favorite posts at [...] [...] has been one of my favorite personal finance blogs for quite some time. In fact, I have written a guest post for the blog in the past, and hope to do so again in the near future. One of my favorite posts at [...]

]]> By: The Simple Dollar » The Simple Dollar Weekly Roundup: Crunch Edition http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120866 The Simple Dollar » The Simple Dollar Weekly Roundup: Crunch Edition Wed, 05 Mar 2008 14:01:18 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120866 [...] Going into Business? Keep your Personal Finances Safe I keep my business income in separate accounts from my personal money, making all business purchases out of those accounts as well. (@ get rich slowly) [...] [...] Going into Business? Keep your Personal Finances Safe I keep my business income in separate accounts from my personal money, making all business purchases out of those accounts as well. (@ get rich slowly) [...]

]]> By: Art of the Firebird » Blog Archive » Best of the Week ending 3/2/2008 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120749 Art of the Firebird » Blog Archive » Best of the Week ending 3/2/2008 Tue, 04 Mar 2008 19:01:26 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120749 [...] some good business about keeping personal and business finances separate from Get Rich [...] [...] some good business about keeping personal and business finances separate from Get Rich [...]

]]> By: ChrisBlogging.com http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120562 ChrisBlogging.com Mon, 03 Mar 2008 19:28:20 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120562 If you dont mind paying, hire a CPA or other tax professional to help you set up an LLC. They can take care of all the forms, etc. All you have to do is supply them with the proper info; and of course pay for the service! If you dont mind paying, hire a CPA or other tax professional to help you set up an LLC. They can take care of all the forms, etc. All you have to do is supply them with the proper info; and of course pay for the service!

]]> By: Fox Cutter http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120549 Fox Cutter Mon, 03 Mar 2008 18:49:45 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120549 My small business is run as an LLC, and it was pretty easy to start up. I also used it to get a federal Tax ID for the business (which was more then I needed to do). In Washington state starting the LLC was easy, though cost about 150 dollars. I was able to do everything online and once it was done I was able to get my business license, which is $80 a year. Over all it was a pretty low expense for starting up, and it allowed me to get the bank account, which is a double bonus. I did all of this is the dark. If you want to start an LLC or the like I would suggest picking up a How To book. There is a 'for dummies' book on the subject. Funny, I was talking with someone about this just yesterday... My small business is run as an LLC, and it was pretty easy to start up. I also used it to get a federal Tax ID for the business (which was more then I needed to do).

In Washington state starting the LLC was easy, though cost about 150 dollars. I was able to do everything online and once it was done I was able to get my business license, which is $80 a year. Over all it was a pretty low expense for starting up, and it allowed me to get the bank account, which is a double bonus.

I did all of this is the dark. If you want to start an LLC or the like I would suggest picking up a How To book. There is a ‘for dummies’ book on the subject.

Funny, I was talking with someone about this just yesterday…

]]> By: emilyg http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120547 emilyg Mon, 03 Mar 2008 18:43:11 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120547 Those are great tips. I had a small business (a multi-level marketing thing - bad news) for a while last year, and I made the mistake of mixing personal and business expenses from time to time. I had a home office and only one computer, so even with a separate checking account, I messed things up. I used my personal credit card instead of business card, which was a mistake. I was still in college and didn't know enough about finances to make good decisions. At least I'm done with it now, and know better for the future! Those are great tips. I had a small business (a multi-level marketing thing - bad news) for a while last year, and I made the mistake of mixing personal and business expenses from time to time. I had a home office and only one computer, so even with a separate checking account, I messed things up. I used my personal credit card instead of business card, which was a mistake. I was still in college and didn’t know enough about finances to make good decisions. At least I’m done with it now, and know better for the future!

]]> By: Aaron Davidson http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120532 Aaron Davidson Mon, 03 Mar 2008 17:09:23 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120532 I race on a decent level, and have thought about forming an LLC that would be a small reseller of products that I use and then sponsor myself so that the business could buy product, 'donate' it to sponsored athletes (me), and take a deduction. Havent sat down with an accountant yet. I race on a decent level, and have thought about forming an LLC that would be a small reseller of products that I use and then sponsor myself so that the business could buy product, ‘donate’ it to sponsored athletes (me), and take a deduction. Havent sat down with an accountant yet.

]]> By: DebtKid http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120437 DebtKid Mon, 03 Mar 2008 07:09:28 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120437 My best tip on keeping things separate: Beyond having separate accounts for your business vs. personal checking, HAVE THEM AT DIFFERENT BANKS. It makes it much more difficult to transfer funds when you really shouldn't be transferring funds. My best tip on keeping things separate:

Beyond having separate accounts for your business vs. personal checking, HAVE THEM AT DIFFERENT BANKS. It makes it much more difficult to transfer funds when you really shouldn’t be transferring funds.

]]> By: Chad Middleton http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120422 Chad Middleton Mon, 03 Mar 2008 05:25:32 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120422 Angie: Good posts all around and I do believe you should put the rental property in an llc. It's true though that we live in a litigous city, and any lawyer whose pockets are laced with money will try to see an LLC and the persons behind it. But its sort of like soldiers who are praying in a foxhole during war. Although, they may not believe in God, it doesn't hurt. Just be smart about keeping personal things personal and business/rental things separate. I am going to find some stuff for you to read. As far as converting an LLC back to a sole prop just be careful because there could be some consequences tax wise. I'll drop you some stuff in an email if moderator let's it fly. :) Angie:
Good posts all around and I do believe you should put the rental property in an llc. It’s true though that we live in a litigous city, and any lawyer whose pockets are laced with money will try to see an LLC and the persons behind it. But its sort of like soldiers who are praying in a foxhole during war. Although, they may not believe in God, it doesn’t hurt.
Just be smart about keeping personal things personal and business/rental things separate. I am going to find some stuff for you to read.
As far as converting an LLC back to a sole prop just be careful because there could be some consequences tax wise.
I’ll drop you some stuff in an email if moderator let’s it fly. :)

]]> By: Know The Ledge http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120374 Know The Ledge Mon, 03 Mar 2008 01:23:12 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120374 Nice post, I am in the process of creating my own LLC and did have a question regarding how easy it is to put money into the company from personal funds. For example, if I start the LLC and contribute a set amount of money on startup as the only member, what would I have to do to contribute additional personal funds to the business entity? Are there legal forms and/or any requirements for doing that? Any additional info would be great. Nice post, I am in the process of creating my own LLC and did have a question regarding how easy it is to put money into the company from personal funds. For example, if I start the LLC and contribute a set amount of money on startup as the only member, what would I have to do to contribute additional personal funds to the business entity?

Are there legal forms and/or any requirements for doing that? Any additional info would be great.

]]> By: David http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120367 David Sun, 02 Mar 2008 23:23:44 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120367 Good posts all around and the rental property should be put in an LLC, but the assumption that an LLC will protect your personal assets from your own actions within a business is a common misconception. Your personal assets will only be protected if an employee or inactive asset (rental property) is the cause of loss within the LLC--this is the advantage of LLC's. But a pilot who's private charter service is held within an LLC can lose his personal assets if he is liable for a wreck because he was the one flying. Good posts all around and the rental property should be put in an LLC, but the assumption that an LLC will protect your personal assets from your own actions within a business is a common misconception. Your personal assets will only be protected if an employee or inactive asset (rental property) is the cause of loss within the LLC–this is the advantage of LLC’s. But a pilot who’s private charter service is held within an LLC can lose his personal assets if he is liable for a wreck because he was the one flying.

]]> By: Jay Reeder http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120366 Jay Reeder Sun, 02 Mar 2008 23:14:19 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120366 I think the single-member LLC is being oversold as a liability protection device. Yes, an LLC will protect your personal assets from any business debts you may owe. However, if someone wants to sue you for libel, negligence, etc, then, as I understand it, their lawyer will probably sue you personally as well as your LLC; in tort cases, the courts are very willing to pierce the corporate veil of single-member LLCs. Any real-live lawyers care to bring a more informed opinion? I think the single-member LLC is being oversold as a liability protection device. Yes, an LLC will protect your personal assets from any business debts you may owe. However, if someone wants to sue you for libel, negligence, etc, then, as I understand it, their lawyer will probably sue you personally as well as your LLC; in tort cases, the courts are very willing to pierce the corporate veil of single-member LLCs.

Any real-live lawyers care to bring a more informed opinion?

]]> By: RDZINS http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120359 RDZINS Sun, 02 Mar 2008 22:07:24 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120359 We were advised not to start a llc right now and mostly for tax purposes. If we would start a llc we would have to pay on the wages that we paid ourselves. We are not at that point yet, we would have had to pay on about 26,000 instead when we our a sole proprietery we only had to pay on 9,000. In other words the business would have lost 17,000 dollars. When are business expenses get paid and depreciated down more(10 year depreciation), and we are showing more of a profit in the business it may pay to incorporate at that time. We have a shop and do carry liability insurance for it, I am not sure if that would cover everything if some one would sue? Is anyone else familiar with this? We were advised not to start a llc right now and mostly for tax purposes. If we would start a llc we would have to pay on the wages that we paid ourselves. We are not at that point yet, we would have had to pay on about 26,000 instead when we our a sole proprietery we only had to pay on 9,000. In other words the business would have lost 17,000 dollars. When are business expenses get paid and depreciated down more(10 year depreciation), and we are showing more of a profit in the business it may pay to incorporate at that time. We have a shop and do carry liability insurance for it, I am not sure if that would cover everything if some one would sue? Is anyone else familiar with this?

]]> By: Angie http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120357 Angie Sun, 02 Mar 2008 21:28:01 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120357 C, I would definitely appreciate any info you could share with us about what tax consequences and responsibilities arise from forming an LLC. We've got a rental house and hope to have more in the future. Although we've got good insurance for that house, we've been advised that putting it in an LLC would establish a "firewall" between our personal finances and the rental finances. Also, while I'm asking, are there any circumstances that would cause someone to dissolve an LLC and revert back to a sole proprietorship (which I'm guessing is the default model for any business)? Much obliged for any direct answers or pointers to good web sites! C, I would definitely appreciate any info you could share with us about what tax consequences and responsibilities arise from forming an LLC.

We’ve got a rental house and hope to have more in the future. Although we’ve got good insurance for that house, we’ve been advised that putting it in an LLC would establish a “firewall” between our personal finances and the rental finances.

Also, while I’m asking, are there any circumstances that would cause someone to dissolve an LLC and revert back to a sole proprietorship (which I’m guessing is the default model for any business)?

Much obliged for any direct answers or pointers to good web sites!

]]> By: C. Middleton http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120355 C. Middleton Sun, 02 Mar 2008 21:05:29 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120355 Chris, Great post. I am an accountant in Cincinnati and I have been preaching what you are saying for years. I would just like to add one thing to your comments. If you do intermingle business and personal expenses together, you are putting your corporate status at risk. The Internal Revenue Service will check specifically to see if these comingly of funds is a habit or if it's a one time thing. If they see it as a habit, they will peirce the corporate veil, and nobody wants that. Anybody who has questions about the Incorporation from a tax and accounting standpoint feel free to ask away. I have some experience with that. Chris,
Great post. I am an accountant in Cincinnati and I have been preaching what you are saying for years. I would just like to add one thing to your comments. If you do intermingle business and personal expenses together, you are putting your corporate status at risk. The Internal Revenue Service will check specifically to see if these comingly of funds is a habit or if it’s a one time thing. If they see it as a habit, they will peirce the corporate veil, and nobody wants that. Anybody who has questions about the Incorporation from a tax and accounting standpoint feel free to ask away. I have some experience with that.

]]> By: Dennis http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120354 Dennis Sun, 02 Mar 2008 21:04:36 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120354 Great post. I think the biggest obstacle with most people starting their own business is financing and not knowing where the next paycheck will come from. Keeping everything separate and organized will really help with that. Great post. I think the biggest obstacle with most people starting their own business is financing and not knowing where the next paycheck will come from. Keeping everything separate and organized will really help with that.

]]> By: ChrisBlogging.com http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120349 ChrisBlogging.com Sun, 02 Mar 2008 19:37:53 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120349 Funny about Money - The main reason that I formed an LLC was to separate my business and personal assets. This way, if somebody would sue me for a writing related incident, I could only lose what I have in the business. You are right about the tax forms; you will definitely have to keep better records and spend more time on taxes. Funny about Money - The main reason that I formed an LLC was to separate my business and personal assets. This way, if somebody would sue me for a writing related incident, I could only lose what I have in the business.

You are right about the tax forms; you will definitely have to keep better records and spend more time on taxes.

]]> By: Get Rich Slowly Visitors | Freelance Writing http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120348 Get Rich Slowly Visitors | Freelance Writing Sun, 02 Mar 2008 19:35:04 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120348 [...] all - I just wanted to personally greet all of the visitors who are coming from my guest post at Get Rich Slowly! Hopefully you will find my blog to be useful as far as starting a freelance writing career, as [...] [...] all - I just wanted to personally greet all of the visitors who are coming from my guest post at Get Rich Slowly! Hopefully you will find my blog to be useful as far as starting a freelance writing career, as [...]

]]> By: Funny about Money http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120339 Funny about Money Sun, 02 Mar 2008 18:04:28 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120339 Will a corporation or an LLC protect a freelance writer (hmm...or, come to think of it, a blogger) from libel or slander judgments against personal assets? The most active writers I know carry libel insurance, which is expensive. But few writers think to incorporate themselves. One thing to bear in mind is that you have to file taxes for the corporation or LLC separately from your own. This means two tax forms, two sets of tax records, and two tax accountant bills. One of the reasons I sold my book-packaging business to my partner was that the accounting bills were higher than my tax bills. That got old real fast. Will a corporation or an LLC protect a freelance writer (hmm…or, come to think of it, a blogger) from libel or slander judgments against personal assets? The most active writers I know carry libel insurance, which is expensive. But few writers think to incorporate themselves.

One thing to bear in mind is that you have to file taxes for the corporation or LLC separately from your own. This means two tax forms, two sets of tax records, and two tax accountant bills. One of the reasons I sold my book-packaging business to my partner was that the accounting bills were higher than my tax bills. That got old real fast.

]]> By: InvestEveryMonth.com http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120338 InvestEveryMonth.com Sun, 02 Mar 2008 18:04:06 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120338 Try to keep a business emergency fund in an interest earning account. You don't want to skip a mortgage payment or a payroll check. Solve this problem before your get there by establishing an emergency fund. Try to keep a business emergency fund in an interest earning account.

You don’t want to skip a mortgage payment or a payroll check. Solve this problem before your get there by establishing an emergency fund.

]]> By: J.D. http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120337 J.D. Sun, 02 Mar 2008 17:42:43 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120337 Peachy, when I started my own LLC, I spoke with my lawyer and my accountant. They gave me quick advice on what to do. In Oregon, LLCs are not expensive to start. (Just $50, I think.) But I hear the cost varies greatly from state-to-state. Peachy, when I started my own LLC, I spoke with my lawyer and my accountant. They gave me quick advice on what to do. In Oregon, LLCs are not expensive to start. (Just $50, I think.) But I hear the cost varies greatly from state-to-state.

]]> By: Peachy http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120331 Peachy Sun, 02 Mar 2008 17:09:24 +0000 http://www.getrichslowly.org/blog/2008/03/02/going-into-business-keep-your-personal-finances-safe/#comment-120331 What type of professional do you talk to about starting an LLC, and about how much does it cost? What type of professional do you talk to about starting an LLC, and about how much does it cost?

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