Wealth Builders Group / MoneyMasters and myEcon Members
MyEcon Incorporation. Why do This?
Greetings MyEcon Associates,
Once you get settled into your business, you need to incorporate as a Sub Chapter S Corp (INC.) or a Limited Liabilty Corporation (LLC).
For MyEcon, I would recommend utilizing a Sub S Corporation, it's a little easier to keep up with and accountants are more familiar with it.
The IRS for 2015 and beyond is getting more focused on home based businesses due to abuse of losses.
The IRS utilizes a very complicated scoring system on everything you file and do with your return. The audit triggers the IRS uses are based on this score. What determans the score and how it is weighted is a closely guarded secret.
However, based on input from some of the largest tax education entities for CPA's, EA's and former IRS ledigators / auditors; incorporating your home based business could help lower your overall audit trigger score. This does not mean you will not get audited, however, it may lower your chances of an audit.
Make sure you have all your business deductions well documented (Utilizing your CashFlow Manager), reasonable and logical for the expense. If you have any questions, contact your tax preparer.
How to incorporate:
Every state has its own way of doing a domestic corporation. The general rule of thumb to incorprate is as followers:
1. Go to the Secretary of State office website for your state. On that site you will find a place to look up and see if the name you want for your company is taken. If it is available, for a small fee, you should be able to reserve it.
2. On the same site you should be able to find "articles of incorporation" to fill out. Some state will let you pay the fee on line and file everything on line. Other states require you to go to the county or city hall and file your articles of incorporatlion and pay your fees. Fees normally range from $150 to $250 dollars.
3. The Secretary of State office will send you certifed copies of your incorporation in a few weeks with a state control or ID number.
4. Go to the IRS website: IRS.gov. Search for "Apply for EIN" (employer Identification number. Fill out the online forms and apply, there is no fee to get an EIN number. If all goes right, you should get you EIN in just a few seconds.
5. Take your articles of incorpration, EIN and ID and go to your bank and open a checking account for your company.
​Use the following calculator to help your clients do correct withholding.
Use the following IRS site to correctly do your small business and self-employment tax.