Enterprise Vs. Incorperated?

[easyj1on1]

I am starting a new business in the trucking industry. I will be an owner operator. My wife and I will be the owners. I am looking to find out the difference between our business being an incorperated vs. Enterprises. Any information you can give is greatly appreciated.

[Don B]

CNM---when you refer to "enterprises" do you mean operating the business in your own name (sole proprietorship)?

[danny]

Originally Posted by johnmp

CNM---when you refer to "enterprises" do you mean operating the business in your own name (sole proprietorship)?

hi there,

we also have the same situation. we're opening a business and it's a wife/husband ownership. so what's the best organization for a small business like us? - robroue

[JEB]

My business is also husband/wife ownership. For now, we formed a general partnership. It was easy to form a GP here in NC. Between husband and wife, you do not need to have a formal partnership agreement as your marriage basically is your partnership agreement, lol. I'm not sure if that is true for every state or not. We just needed to file for a DBA and then a NC resale # and Fed ID #.

Some day, we would like to open a brick and mortar store. At that point, we will probably transfer into a LLC with the help of an attorney or an accountant of course.

This link is based on NC info but it may be helpful anyway in determining which business model is best for you.

http://www.ces.ncsu.edu/depts/fcs/bu.../menustrc.html

[danny]

Originally Posted by ultipet

My business is also husband/wife ownership. For now, we formed a general partnership. It was easy to form a GP here in NC. Between husband and wife, you do not need to have a formal partnership agreement as your marriage basically is your partnership agreement, lol. I'm not sure if that is true for every state or not. We just needed to file for a DBA and then a NC resale # and Fed ID #.

Some day, we would like to open a brick and mortar store. At that point, we will probably transfer into a LLC with the help of an attorney or an accountant of course.

This link is based on NC info but it may be helpful anyway in determining which business model is best for you.

http://www.ces.ncsu.edu/depts/fcs/bu.../menustrc.html

Hi Ultipet,

Thanks for the link! We actually have the same plan in mind. Someday if we're earning from this business then will incorporate but as of this moment we couldn't afford to incorporate yet.

So how do you manage on your taxes? Do you just do it yourself? Or pay an accountant to do it? Do you just file once a year together with your income tax return (from other income source)? Thanks a lot again! - robroue

[JEB]

Originally Posted by robroue

Hi Ultipet,

Thanks for the link! We actually have the same plan in mind. Someday if we're earning from this business then will incorporate but as of this moment we couldn't afford to incorporate yet.

So how do you manage on your taxes? Do you just do it yourself? Or pay an accountant to do it? Do you just file once a year together with your income tax return (from other income source)? Thanks a lot again! - robroue

No prob! Actually, we have an accountant do our taxes because we have a slightly complicated scenario. I am actually an accountant but I'm in corporate finance and HATE taxes and can't deal so we just pay someone, lol.

I work full time and have income tax deducted every pay check. My husband works as a consultant and does not have taxes deducted. (we squirrel away 25% of every check of his) He is treated tax wise like he is self employed with his own business already.

This last year, we filed jointly so basically, they combine our income and list what came out of my checks as paid taxes and then figured out what we owed from there after our deductions. Deduction requirements differ from state to state, I think. Here (NC) your deductions have to be at least 2% of your gross income.

Last year, Eric didn't pay taxes all year. Since we file jointly and I pay taxes all year, it wasn't really a big deal but you can get fined for that. We didn't, however. They usually don't care who pays it as long as something is getting paid throughout the year. But when we filed our return, they estimated his quarterly tax payments for this year and now he sends that in every 4 months. That gets adjusted every year when you file depending on how much you make. Your accountant should give you the payment vouchers and the payment schedule. It's pretty easy, actually.

Just like a business owner, he is considered self-employed he deducts all of his expenses that he incurs for his job like mileage, cell phone, internet, supplies, etc. You would pretty much do the same thing for your business.

Now we just started this business so I am just going to wait until we file this year to claim any income (that would be nice!) if any. My understanding is that any profit we make will be added to our combined gross taxable income and then we will just deduct any business expenses from both his job and Ulti-Pet expenses that were paid out of pocket. They may give us estimated quarterly tax payments to make for Ulti-Pet next year depending on whether or not we are actually making any profit or taking any draws.

We basically keep a record of everything we spend for the business. Since the company has no money right now, we are pretty much paying for everything. That will all get deducted later.

Any expenses that the business actually pays for will come out of the profit anyway and reduce the amount of leftover profit that will be considered as income. So it all works out to be the same difference either way. General partnerships are not double taxable entities. Only net profit is considered taxable income in a GP. It really isn't that painful. If you and your spouse file seperately, you will each be required to pay income tax on 50% of any net profit from the company.

If you take a draw from your company, I would recommend doing the same thing (automatically putting away 25-30% or so for taxes) because the IRS will consider that to be your taxable income. If you leave it in the company, just keep in mind that any net profit in there is also taxable income even if you don't take it out. However, I assume that if you have a profit there will be money in there to pay whatever taxes you owe and you just have to get over it That is why people often get "creative" to not show a profit from their company by having the company assume every single last penny of expense that is associated with the company.

I hope that was not too rambled and made sense!
I also hope that is really all true! LOL I will find out for sure when we file this year but that's what I am going by for now. HTH!

[danny]

thanks christine, =)

That sure answered most of my questions. Now, I should start my search for an accountant. Thanks again. - robroue

[JEB]

another helpful hint... keep a spreadsheet of the expenses you are recording and record them as you go along. Then just just have a file with all the back up receipts. This will keep your accounant from having to go through all those receipts and figure out what is what. Given they are paid hourly, it will save the accountant a ton of time and you a ton of money. We only paid like $90 to have our taxes done last year.