AS SEEN ON:
Frequently Asked Questions
FAQs
Can you GUARANTEE that I will save at least $2,000 on my personal tax liability if I bundle my setup and my LLC or S-Corporation tax return? YES! If you choose the bundled setup package for an LLC or S-Corporation that includes your first year’s business tax return preparation, we guarantee that you will see a minimum $2,000 in tax savings on your personal income tax return! We guarantee the bundled package will pay for itself TWO FOLD or the tax prep fee of $375 will be fully refundable! NO QUESTIONS ASKED!
- The entity type MUST be S Corporation or LLC to qualify for the guarantee.
- Logo Financial prepares your current year’s Form 1120S or Form 1065, which will include Schedule K-1 to
be added to your personal Form 1040
- The personal Form 1040 is not included in the bundled price and must be prepared and filed separately by
Logo Financial
- Logo Financial can prepare your Form 1040 for as little as $250
- The minimum savings of $2,000 is based on the tax liability your personal Form 1040 would’ve had
without the new entity’s Schedule K-1
Can I incorporate even if I only have a full-time W2 wage-paying job? YES! It is not required to be a full-time freelancer or self-employed individual to become an incorporated business or LLC. As long as some income goes into the business bank account every year, you qualify.
If I incorporate now, can it count for last year? NO… unfortunately, you can’t form a corporation or LLC retroactively. If it is formed in 2021, then it will apply to your 2021 income taxes.
Can I operate my company as a one-person business? YES! You can be a one-person corporation, but only multi-member LLCs take advantage of audit risk elimination because multi-member LLCs are report income and expenses on a separate business tax return. Single-member LLCs report income and expenses as a part of their Individual Form 1040, Schedule C (the most highly audited form by the IRS).
Am I required to go on payroll or give myself compensation as a business owner? Not usually! The IRS wants business owners to reasonably compensate themselves if there are profits (income that exceeds total expenses). Many small businesses operate at a loss, so no requirement for compensation in that instance.
Do I need to hire a registered agent for my company? NO! You don’t need to pay a 3rd party registered agent, unless you want to incorporate under anonymity or you are not a US citizen (you do not have a SSN or ITIN). You can be your own registered agent for free.
Once I am incorporated or an LLC, am I required to pay taxes quarterly? NO! Quarterly estimated tax payments are only required if your business owed more than $1,000 in the previous tax year. Because every new corporation has no previous taxes owed, a new corporation is never required to pay quarterly estimated taxes.
Is it true that LLCs and S-Corporations don’t have a federal tax? YES! LLCs and S-corporations are “pass-through” entities that don’t have a federal tax. The profit or loss from the S-corporation or LLC passes through the federal business tax return (Form 1120S or 1065) and on to the personal tax return (Form 1040), using Schedule K-1. The business is still responsible for paying business state taxes, depending on the state.
Which entity type pays more federal taxes, an LLC or an S-Corporation? S Corporations do! An LLC is legally a partnership, which is defined as two or more individuals coming together to do business. Because of the distinction of '“individuals”, the members of LLCs are subject to personal federal self-employment (SE) taxes (currently about 15.5%) on all LLC profits reported on Schedule K-1. This is in addition to the ordinary income taxes imposed on the personal tax return.
So, for example, if an LLC member who is in the 25% tax bracket nets $10,000 from an LLC, that $10,000 is taxed at 15.5% first, and then (as part of the member’s entire personal tax return as a whole) it is taxed at 25%. So, the potential total tax on that $10,000 is $4,050. An S-Corporation shareholder that is in the same 25% tax bracket and nets the same $10,000 will only pay $2,500 on that profit… there is no SE tax of $1,550.
How much does it cost to incorporate and what does that fee include? The fee in most states is $495 ($995 in Nevada). This includes your articles of incorporation (or organization for LLCs) as well as your filing receipt from the state and your federal employer identification number (EIN). These documents are used to open your business bank account to begin using immediately.
Three state have an LLC publishing requirement: Arizona ($60 - $100), Nebraska ($100 - $250) and New York ($100 - $1,195 in NYC). These one-time fees are separate and not included in the $495 setup fee. Nevada has a higher filing fee which increases the setup fee.
You must have a SSN to obtain an EIN from the IRS. If you do not have a SSN (primarily non-US citizens), you must apply for an Individual Tax ID Number (ITIN). We provide that service for an additional $255. The SSN/ITIN is also required to open a business bank account.
How does the 50% offer work? You can save 50% if you bundle your incorporation & business tax preparation today! Professional business tax return preparation can cost upwards of $750 per year. Today, if you bundle the purchase your current-year business tax returns and your business setup, you pay only an additional $375.... that’s 50% off the minimum you would otherwise be $750 charged if you pay them separately.
Do I have to file separate tax returns every year? YES! All incorporated businesses must file a federal and, for most, state business tax returns annually. These are generally due March 15th for calendar year companies. Keep in mind, business tax returns must be professionally prepared, given there is no consumer software available to self-prepare these types of tax returns.
What are the annual costs of a business? Expect fees for business tax return preparation to begin at around $750. This usually includes the federal tax return (Form 1065, 1120 or 1120S) and any and all state business tax returns, as well as the electronic filing of all qualifying business tax returns. We charge $1,000 for annual non-profit tax returns (Form 990/990-EZ).
You may need to consider bookkeeping expenses as well, if you don’t plan to compile your own annual income statement and balance sheet.
Most states impose a state business tax on profits, and many states impose a minimum tax, whether there is a profit or a loss.
Is it true that all expenses made from a business account are 100% deductible? YES! If you use your business debit card or business checks, those are 100% deductible. The IRS regulations dictate that expenses derived from business bank accounts are already deemed deductible.
What does “audit risk elimination” mean? Audit risk elongation refers to the fact that small, closely-held, private businesses are generally not selected for income/expense audit by the IRS. Less than 1/10th of 1% of non-publicly traded businesses are selected for audit annually by the IRS.
In comparison, as many as 20% of all unincorporated freelance businesses are selected for audit annually, when large amounts of expenses are deducted from Form Schedule C.
How long does it take to process my company setup? Most states allow for 7-10 business days to process. Some are less: For NY, NJ and GA, for example, the process takes 24-48 hours.
Can I setup my company in one state and operate in another? Yes, but you must have an address & bank account in the same state. And, if you open a business bank account in a different state, you must file an annual state business tax return in that state.
Do I need to purchase a corporate kit? No, you don’t need a corporate seal and binder kit. For small, closely-held corporations, just the incorporation documents are needed to get up and running.
You can order kits and bylaws from us if you plan on issuing shares to non-shareholders or unaffiliated business partners.