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Statring a new business doing computer consulting/repair/maintenance etc...

by xjbusiness, Window Shopper

  • Created: January 26, 2013, 2:22 pm
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2 comments
I want to register a new business name. The nature of the business I'm thinking of is IT consulting (network/servers/installation/etc), computer repair. My target is small companies that do not have their own IT department and mostly home computer owners who can maintain their own computers. The business I'm thinking of starting will only be a side job this year 2013. If it gets big and really profitable, I may leave my personal full time job and focus on my new business. I don't have any monetary investment in the business I want to establish. I already have my personal computer/tools to start working. Max I would invest for 2013 is probably $500. My fear about starting this business is I have no clue about accounting, finance, taxes, business types etc... I need some professional advise from someone who has already run a business. I hope you'll find time to answer my dumb questions. TY Q1. What kind of business type should I establish. (Sole Proprietorship, SMLLC, s-corp)? Why do you think this is the best for me? Q2. Do I need to file more than once with Sole Proprietorship, SMLLC, etc..)? Q3. If in case I don't get a lot of income this year, which business type will give me more benefit in terms of returns and not owing more to fed/state. Q4. Which business type will save me more in terms of estimated taxes, self employment stuff, medicare etc...? Thanks.. -X
Tags: Discuss Popular Topics, Starting & Registering a Business
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BizResearcher | Window Shopper | 1/29/2013 - 1:19 pm

As JGabriel mentioned, you may want to meet with a counselor who can help
with your questions. In your situation, you may want to start as a sole
proprietor. You can always change to a different entity type later if this
becomes a full time business. This may be best for you because you are a
small, part-time business at this point with no assurance that the business
will continue for years.

You will pay taxes on a sole proprietorship or a single member LLC by filing
a Schedule C with your personal taxes. This will allow you to report a loss
if your expenses (be sure to track mileage) exceed your income for the first
three years. If you continue to show a loss, however, that will send a red
flag to the IRS and you could be audited.

Self-employment tax is the equivalent of Social Security and Medicare for a
business owner; you do not pay them separately. You need to pay estimated
taxes only if you anticipate owing more than $1,000 in excess of the
withholding from your day job. When the business picks up, you can worry
about that.

You will need to keep your business and personal finances separate. That is
easily done by opening a business bank account and keeping accurate records
of income and expenses.

If you anticipate purchasing and reselling parts, you may need to secure a
sales tax permit. Your city may also require you to obtain a business
license. Some cities license all businesses; others license only a few types.

JGabriel | Community Moderator | 1/28/2013 - 12:33 pm

Hi X, SBA has resource partners like SCORE, Women’s Business Centers and Small Business Development Centers located across the country that provide free business counseling to individuals looking to start or expand a small business. Visit our local assistance guide to find your local SBA resource partners by entering your zip code.