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  1. #1
    SitePoint Guru htown's Avatar
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    How is your business set up?

    I am just about to cross the threshold of making my hobby of designing and building web sites an official business. I will just go ahead and admit it right now that I am completely ignorant of most accounting issues and how to go about setting up a business although I am getting a pretty good grasp on accounting.

    What I am really in the dark about is setting up a business legally. Should I just do a DBA, LLC, or should I go and incorporate. Sole Proprietorship....etc

    I know the names, just not sure what they mean or the best course of action to take. I am sure many of you have already gone down this road and I was hoping for a little enlightenment.

    Thanks,
    Houston
    Houston Brown
    Split Light Designs
    Bringing your ideas to light.

  2. #2
    SitePoint Addict telos's Avatar
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    htown,

    To be completely honest, you should contact and accountant or lawyer. There are a lot of variables to consider when starting a business. Plus, we can't get too much into the legalities or it is 'giving legal advice without a license'.

    Personally, mine is an LLC and I will continue to do LLCs. Also, many great entreprenuers I know also have LLCs.

    Good luck,

  3. #3
    SitePoint Guru htown's Avatar
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    I was afraid that it would be that simple but that fact that you and several others have formed an LLC does help me. I sounds like a good place to start.


    I appreciate your response.
    Houston Brown
    Split Light Designs
    Bringing your ideas to light.

  4. #4
    In memoriam gold trophysilver trophybronze trophy Dan Schulz's Avatar
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    Only an accountant and an attorney can tell you what the perfect type of business structure is for you and your unique situation. The lawyer will try to decide based on which structure would best protect YOU, and the accountant will try to decide based on which structure will help you save more money on taxes and help raise your profit margin.

    Go talk to them .

  5. #5
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    I am not an accountant or a lawyer so as other mentioned seek advice from them.

    But i think in the end it all depends on the tax and red tape in your country.

  6. #6
    In memoriam gold trophysilver trophybronze trophy Dan Schulz's Avatar
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    Not just your country, but your locale as well.

  7. #7
    SitePoint Addict KelliShaver's Avatar
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    When I was doing work myself, I was operating as a sole proprietor, not the "safest" way to do business, but the least expensive and I had a small set of dependable clients that I could trust, so it worked out fine.

    Now there are three other people involved and we operate as a LLP.

  8. #8
    PHP/Rails Developer Czaries's Avatar
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    Many people setup LLCs (Limited Liability Company) because they want the limited liability they offer. If you do a sole proprietorship, any financial obligations on your business will not stop with your business. Your personal finances can be tapped into as well in the event of any fines, legal fees, or court fees. LLCs are specifically designed to stop that. So if you ever get sued under an LLC, the liability is limited to the company itself only. So if you ever run into trouble, the worst that could happen is the bankruptcy of the company. With sole proprietorship, collectors don't have to stop at just your business alone. They can come after your personal finances to collect debt against the company as well, potentially forcing you into bankrupcy as well a forclosure on any assets you own.

    So basically, the difference is: LLC - I am a company. Sole Proprietorship - I am an individual that happens to do business as a company.

    I believe that in both cases, if you are the sole owner of the company you will only have to file taxes on your own personal income and not the company's (since all the company income goes to only you). But, I would check with a certified accountant on that last one .

  9. #9
    SitePoint Guru htown's Avatar
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    Thanks Czaries

    That is good information for this green horn.
    Houston Brown
    Split Light Designs
    Bringing your ideas to light.

  10. #10
    Web Design Ireland cianuro's Avatar
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    Get yourself an account. Mine is VERY expensive, but worth every cent. It also frees up a LOT more of your time so you can make more money for him/her to manage You will not regret it.

  11. #11
    SitePoint Guru htown's Avatar
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    cianuro,

    I assume you meant an "Accountant" and not just an account. At first I thought you meant a separate bank account and I could not imagine why this would be so expensive.


    Houston
    Houston Brown
    Split Light Designs
    Bringing your ideas to light.

  12. #12
    Web Design Ireland cianuro's Avatar
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    Ahh, sorry. Yea, thats what I mean. I should lay off the sauce. It's giving me a bad image


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