AboutRichard Fritzler Expertise I am in the business of tax planning for business owners. Our company helps business owners structure so that they can be reduce the taxes that they owe, making them far more profitable.
Experience Since 1986 I have been helping successful business owners reduce taxes, protect assets, and limit their liability. The company is Owelesstax, incorporated at www.owelesstax.com
Organizations National Small Business Owners Association.
Nevada Association of Listed Resident Agents.
Citizens Legal Association
The Business Owners Institute
Publications Contributing author to "The Corporate Standard Newsletter".
I am also a writer for an email newsletter about business
Googlegroups/Successfulbusiness
I am also an Expert in the areas of Tax Law, Retirement Planning, and Estate tax issues.
Expert: Richard Fritzler Date: 9/20/2007 Subject: The right form of business structure for a part-time business
Question Hi Mr. Fritzler,
I am planning on setting up a part-time home-based business that involves the following:
- importing/exporting goods
- selling imported goods... actually, I want to use imported parts to come up with a product and then sell it.
- offering consulting services related to my field
- leasing an equipment for my business
What would be the best form of business structure for this?
I want to stay fully employed by another company, while running my part-time business at night time and some time during the weekends. The business will be composed of my wife and I. At the same time, there may be instances when I have to use my personal vehicle for minor business travel (local).
Thanks!
Carlo
Answer Your list does not include one (1) very critical bit of information that is really the lynch pin for an analysis.
Do you intend to be profitable?
This the key question that many business owners fail to vocalize and therefore leave out of the equation.
This is also why so many startups are given flawed advice.
In order to understand why most advisors recommend the LLC/Sub-S/LP option, we have to understand the circumstances that apply.
A would be entrepreneur goes to the alter of the of the local strip mall tax guru (Accountant or attorney) and says "mirror mirror on the wall, what is the best entity of them all". With no additional information the reflector is left to apply his own variables to the equation. Here is what he knows:
(We will call this the Conventional Wisdom equation)
You are a startup.
Most startups fail.
Since are going to fail you should do business as a passthrough entity.
So that when you get smart and get a J.O.B. (just over broke) you may be able to take the losses that you created and "Try" to write them off against your payroll income.
This "Logical"(?) thought process has become so engrained, that most stripmall gurus don't even go through it they simply spew LLC as soon as they think you might ask the question.
So The Conventional Wisdom Equation states that if you plan to lose money in your business; do that business as a passthrough entity.
My recommendation if you plan to lose money in business is: Rethink your plan.
If you plan to be profitable, then let's set aside the assumption that "conventional thinking" by the stripmall accounting community is wisdom and do a quick analysis.
Name 3 of the most successful businesses.
Are those LLCs?
Are they Sub-S corporations?
Are they partnerships?
NO! they are Real Corporations.
Hmmm.
Now you probably have a bunch of questions and objections swirling around. Just give me a call.
Richard Fritzler
www.owelesstax.com
phone 800 590-6612
