I am a Software Engineer who is professionally employed, but I do work on the side. Most things I do are small time, but I have a few projects that "if" I ever complete, I will potentially be able to market it them respectfully. I have long had a company name and website, but nothing has ever been official. I didn't want to legally register my company as the corporation it should be, unless I had a product that may yield potential income. Since I have never sold anything under the name, I haven't had any concerns. However, I am willing to make the leap and legally incorporate. This brings me to my point... I have a couple questions, that I assume get asked a lot, but I am looking for specific to my situation answers.
My questions are as follows:
1) If I incorporate, and my business (a separate legal entity) does not record any business transactions (i.e. recording neither a loss or gain, or recording neither a purchase or sale), am I required to do any filings with the IRS of any kind?
- Scenario: I incorporate using an online service (example: legal zoom), do nothing with my business outside of the responsibilities necessary to maintain incorporated status, and have no income of any kind for the first two years. In that two years, I do nothing tax related. In the third year, I make a sale for $10,000 and submit to the federal government the appropriate taxes and at the end of the year file accordingly. Can/will the IRS do anything about undocumented years prior to the current? Company history is a registration 3 years prior, so a 3 year legal status would be assumed, but only one filing. Is there a minimal filing that has to be made, or a form of any kind, that expresses zero (0) income for a year?
2) I wish to incorporate so that my company is a separate entity, but unless it grows, I will be the only member of the corporation. Meaning, the company profit is my personal profit. That being said, is it a better choice for me to obtain a "S corporation" status?
- Scenario: If under my company name I make a sale for $10,000... for ease of math for the example, I pay 20% to taxes. My company now has $8,000. This money I would consider to be my money, do I pay additional taxes on this when I issue a "paycheck" to obtain it as personal funds? What is the best way to to structure my company so that if I make a sale, that money is mine to spend on personal endeavors (i.e. mortgage, car, etc.), but taxes are only paid once on it?
These are my initial questions. I ask that if you respond, you have some sort of legal background or extensive knowledge of IRS procedures. Personal experience may not be the correct or legal way of doing things, and we are talking about a business decision here. Wrong advice could cost me, not you. Thanks in advance for taking the time to read and/or reply to my questions.
My questions are as follows:
1) If I incorporate, and my business (a separate legal entity) does not record any business transactions (i.e. recording neither a loss or gain, or recording neither a purchase or sale), am I required to do any filings with the IRS of any kind?
- Scenario: I incorporate using an online service (example: legal zoom), do nothing with my business outside of the responsibilities necessary to maintain incorporated status, and have no income of any kind for the first two years. In that two years, I do nothing tax related. In the third year, I make a sale for $10,000 and submit to the federal government the appropriate taxes and at the end of the year file accordingly. Can/will the IRS do anything about undocumented years prior to the current? Company history is a registration 3 years prior, so a 3 year legal status would be assumed, but only one filing. Is there a minimal filing that has to be made, or a form of any kind, that expresses zero (0) income for a year?
2) I wish to incorporate so that my company is a separate entity, but unless it grows, I will be the only member of the corporation. Meaning, the company profit is my personal profit. That being said, is it a better choice for me to obtain a "S corporation" status?
- Scenario: If under my company name I make a sale for $10,000... for ease of math for the example, I pay 20% to taxes. My company now has $8,000. This money I would consider to be my money, do I pay additional taxes on this when I issue a "paycheck" to obtain it as personal funds? What is the best way to to structure my company so that if I make a sale, that money is mine to spend on personal endeavors (i.e. mortgage, car, etc.), but taxes are only paid once on it?
These are my initial questions. I ask that if you respond, you have some sort of legal background or extensive knowledge of IRS procedures. Personal experience may not be the correct or legal way of doing things, and we are talking about a business decision here. Wrong advice could cost me, not you. Thanks in advance for taking the time to read and/or reply to my questions.
