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Why FairCharles?
McKennie Charles knows your business.
Frequently Asked Questions
Should I Incorporate?
A Limited Liability Company, also known as an LLC., is a pass-through entity. It’s profits and losses are directly passed along to it’s stakeholders or members. Owners are not considered employees. The amounts passed to each member is based on the percentage or stock ownership in the business for that particular year. If an LLC has a sole owner, then the LLC is filed together with the sole owner’s individual tax return. If there is more than one owner then the LLC becomes a Partnership and must file a Partnership tax return with each member receiving a K1 at the beginning of the year as a record of profit or loss.
An S Corp is also a pass-through entity. S Corps must file a corporation return regardless of the number of owners. A main feature of an S Corp is that it’s owners do not pay self employment taxes on it’s profits.
Unlike an LLC or an S Corp, C Corps are not pass through entities. C Corps are an entity onto itself. An owner can also be an employee and receive compensation as an employee. C Corps pay taxes at the corporate level and then the owner will pay income taxes on their earnings from the corporation.
Incorporating isn’t without its potential disadvantages. There are costs associated with setting up your corporation and the tax benefits don’t apply to everyone. We can guide you to make sure that incorporating makes sense for your business.
Overall, though, incorporating can be one of the best business decisions many consultants and freelancers ever make. If incorporating is the next step for your business, give us a call or send an email and we will get you started.
Do I need business insurance?
One reason for this is that many small businesses often assume that by forming a Limited Liability Company they’ll be afforded protection in the event of a lawsuit. However, while this structure can protect you from personal liability for business decisions or actions of the LLC – the liability protection is limited.
For example, if you inadvertently break intellectual property laws or are sued by an employee, you could face a lawsuit and potential losses that being an LLC cannot protect you against.
Of course, LLCs aren’t the only business structure that can benefit from business insurance. Sole proprietors, partnerships, S-Corps and Corporations all need insurance.
Insurance can be a confusing business. A good insurance broker can help demystify this process and put together a package based on your unique needs. Once in place, don’t forget to keep your policies current and under review (for example, if you take on employees or new assets).
Should I collect sales tax?
How often you sell or how much you charge for goods and services does not usually determine whether you need to register for sales tax. For example, if you sell taxable items at a craft fair only once a year, you are required to register, and to collect and remit sales tax, because what you are selling is taxable in New York State. However, if you open an office and provide accounting services, you are not required to register for sales tax purposes because the services you will be providing are not subject to sales tax. We can help you obtain a Certificate of Authority and also file the required sales taxes.