Starting own business - is a DBA necessary?

[Soul_Patch]

My wife has recently gotten quite a few clients booked for her therapy practice, and now has gotten an offer from a friend of hers who owns a therapy office, to do contract therapy work for about 10hrs a week.


She intends (this weekend) to go open up a business bank account, but we were both wondering, would filing for a DBA (or even an LLC) be necessary for this type of situation?

She still has her full time job, but is considering going to a contract vs salary status with them, so she can better manage her schedule. Her intentions is to be working for herself with her own clients, and contracting out to her current employer and friend, and treat everything as business income.

Is this something we should consult an accountant about, before we get too much further into this?

Figure someone out there in the spurstalk think tank would have some advice.

[TDMVPDPOY]

yeh register if your doing other shit like contract work outside of ur main job...

then again self employed can claim alot of dodgy shit on their tax returns....

hey cash in hand yo, no need to disclose....fck the taxman :D

[CosmicCowboy]

If she is working under her own name (Mrs. Soul_Patch) she doesn't need a DBA. If she wants to call herself another name (like pro-therapy or something like that) she needs the DBA. As for the LLC, she might want to consider it just for the legal protection...it really isn't an accounting issue as any LLC income still passes through as personal income.

[Soul_Patch]

Since she most likely will loose her salary status, and go to contract only with her current employer, should all of her income be considered "business income" and sperated from our own finances?

She will be taking in two contract payments and about 8 personal client payments per week.

I just dont know the best way to go about doing this, as to not get bent over by the tax man next year.

[MiamiHeat]

I can give you a customer testimonial if it will help you get a loan.

Your wife gives very good service... every now and then, her therapy helps me unload all of my stress onto her.

[CosmicCowboy]

Since she most likely will loose her salary status, and go to contract only with her current employer, should all of her income be considered "business income" and sperated from our own finances?

She will be taking in two contract payments and about 8 personal client payments per week.

I just dont know the best way to go about doing this, as to not get bent over by the tax man next year.

She will probably need to pay quarterly taxes. Unless she is very organized and disciplined it will make it much simpler if she keeps a separate checking account for her business income and expenses. She would then write checks from her business account to y'alls personal account always leaving money in the business account for making the quarterly tax payments. For instance, if you as a couple are in the 30% tax bracket she should never draw more than 70% of total income from the business.

[Soul_Patch]

She will probably need to pay quarterly taxes. Unless she is very organized and disciplined it will make it much simpler if she keeps a separate checking account for her business income and expenses. She would then write checks from her business account to y'alls personal account always leaving money in the business account for making the quarterly tax payments. For instance, if you as a couple are in the 30% tax bracket she should never draw more than 70% of total income from the business.

Thanks. How would you set yourself up to pay quarterly taxes? Something i should speak to an accountant about? I didnt even know you could do that.

[BacktoBasics]

She will probably need to pay quarterly taxes. Petty Cash write off FTW.

[BacktoBasics]

Thanks. How would you set yourself up to pay quarterly taxes? Something i should speak to an accountant about? I didnt even know you could do that.You set it up automatically but I wouldn't pay taxes with that kind of job she'll have plenty to write off without owing anything.

The first thing you need to figure out is if she should be charging sales tax.

[CosmicCowboy]

"write offs" are highly over rated. It's still an expense. For your "write offs" to be so much that you offset income and don't owe any tax that means your expenses are equal to your income. Even if she works from the house it still doesn't help much...if her office is in an extra bedroom you can only write off that square footage (10%? maybe) of your PRINCIPAL on your house note (interest is already deductible) and that percentage of utilities...

[BacktoBasics]

"write offs" are highly over rated. It's still an expense. For your "write offs" to be so much that you offset income and don't owe any tax that means your expenses are equal to your income. Even if she works from the house it still doesn't help much...if her office is in an extra bedroom you can only write off that square footage (10%? maybe) of your PRINCIPAL on your house note (interest is already deductible) and that percentage of utilities...I use everything as an expense.

Its worked well for me. I use all gas receipts, car repairs and maintenance whether its an actual business expense or not. I stop and get gas on the way home and the wife gets the receipt to deduct out of petty cash. Good luck proving it was me gassing up or her gassing up on the way to a job. Sure by the book its tough to break yourself even but if you're careful in how you keep receipts it works wonderfully.

[CosmicCowboy]

I use everything as an expense.

Its worked well for me. I use all gas receipts, car repairs and maintenance whether its an actual business expense or not. I stop and get gas on the way home and the wife gets the receipt to deduct out of petty cash. Good luck proving it was me gassing up or her gassing up on the way to a job. Sure by the book its tough to break yourself even but if you're careful in how you keep receipts it works wonderfully.

That works great till you get audited. If it ever happens they will bust your ass.

[Soul_Patch]

I use everything as an expense.

Its worked well for me. I use all gas receipts, car repairs and maintenance whether its an actual business expense or not. I stop and get gas on the way home and the wife gets the receipt to deduct out of petty cash. Good luck proving it was me gassing up or her gassing up on the way to a job. Sure by the book its tough to break yourself even but if you're careful in how you keep receipts it works wonderfully.

Kinda what i was thinking too, it will be a lot of income to write off if all of her contract work + personal cients is considered business income, but i can try! i told her we may have to buy a boat, to help write off some income. :)

[BacktoBasics]

That works great till you get audited. If it ever happens they will bust your ass.Bring it on. I don't do stupid shit like other people do. I don't write off a best buy ticket for surround sound as a business expense. I don't toss in dinner bills left and right. Its all in the way that you do it.

Good luck proving that 12 dollars in gas from 6 months ago was a personal expense over a business expense. They gonna review some gas station footage? Even if push came to shove which it won't I could go so far as to say that I'm driving to a job with supplies and needed to gas up.

[BacktoBasics]

Kinda what i was thinking too, it will be a lot of income to write off if all of her contract work + personal cients is considered business income, but i can try! i told her we may have to buy a boat, to help write off some income. :)I think you can write off interest on a auto loan if she uses the vehicle for work. Check on that one.

I wrote a check in June for 12,000 dollars to pay off her car. I've been told, not 100% sure, that I can write that off as petty cash for the purchase of a company vehicle. We'll see how it turns out.

[spursfan09]

Talk to a CPA to determine what kind of of business entity you want, and how it might be taxed. Separate all your finances, from business and personal expenses. Also I bet quickbooks will help you out alot.

Anyways just speaking from what little experience I have. I am an accounting intern at a small company.

[BacktoBasics]

Big fan of quickbooks. Its probably not necessary to form a LLC for a one person operation. Wouldn't this be more valuable if there are multiple owners or shareholders.

Carry good insurance.

[CosmicCowboy]

I think you can write off interest on a auto loan if she uses the vehicle for work. Check on that one.

I wrote a check in June for 12,000 dollars to pay off her car. I've been told, not 100% sure, that I can write that off as petty cash for the purchase of a company vehicle. We'll see how it turns out.

Vehicles are amortized over several years even if the expense came all in one year. Also, on autos the mileage is supposed to be split between business and personal and a log kept. the IRS isn't that anal about the log, but you need to claim at least some personal miles.

[CosmicCowboy]

Big fan of quickbooks. Its probably not necessary to form a LLC for a one person operation. Wouldn't this be more valuable if there are multiple owners or shareholders.

Carry good insurance.

Nope the purpose of an LLC is to limit liability to the professional side...in the event of a claim or judgment they can only go after company assets and not personal assets.

[BacktoBasics]

Vehicles are amortized over several years even if the expense came all in one year. Also, on autos the mileage is supposed to be split between business and personal and a log kept. the IRS isn't that anal about the log, but you need to claim at least some personal miles.I claim personal miles when I inadvertently purchase beer and gas at the same time. Or groceries and gas. However being a DBA might open me up to not having my privacy protected such as my own personal bank account vs. company account.

Its a massive stretch that it would ever become an issue. We're talking about an income under 40k right now.

Yeah I wasn't 100% on the expense of the vehicle. Would have been a bonus expense anyway.

Next vehicle I purchase will actually be in the companies name with payments made out of the company account.

[BacktoBasics]

Nope the purpose of an LLC is to limit liability to the professional side...in the event of a claim or judgment they can only go after company assets and not personal assets.I understand that but that method is used more frequently for situation where there are multiple partnerships. Wouldn't you have to pay yourself as an employee if you were a LLC....you'd be paying a lot of unnecessary taxes by being employed like that. You can't avoid the typical 25% if you an employee.

The liability part should be covered with good insurance and not being a douchebag rapist or criminal.

[Soul_Patch]

Well being on any insurance panels as an LPC requires you to have professional insurance, so that part of it is covered.

Thank you for all the info so far.