Greeting FreeM96,
The advise from CoachMike is good, however I would like to give you a little different view on some of the questions.
One option on the pay, is to pay yourself on commission, so you only pay yourself when you have received funds from a client. An other factor that needs to be looked at is what your projected income is and current and future tax consequences. It sounds like you are considering paying yourself before you have the income from the business to do so. If you have the money to fund the company, including paying yourself, and you are currently in a lower tax bracket, but expect your company to have considerably more income in the next few years, then you may want to go ahead and pay yourself your salary now, and pay the lower tax rate now, then later when you are raking in the big bucks, pay yourself back the money that you loaned it to get the company started, which would then normally be taxed at a higher rate. This is considered a repayment of your own money, and will not be taxed. One note is you should draw up an agreement between yourself and your company, so that your company pays you interest on the money that you loaned it. You can claim this as an expense for your company, but you must also declare this as interest income on your personal return, which is basically a wash, but if you ever get audited, it will help avoid problems in the audit, as to if it was really a loan or not, and thus when you pay yourself back, will not be a problem.
You also stated that you have not incorporated yet. Most states have a process where you can set up your own corporation or LLC on line, without the use of LegalZoom or similar operations. The fees LegalZoom charge are in addition to the state filing fees, which vary between states. In FL you can go to sunbiz.org and file it yourself, provided you are a FL resident. If you want to incorporate in a state other then which you live, then you need a company like LegalZoom to help you.
I agree with Mike that QuickBooks Pro or Premier is a good program to start with, but if your needs initially are minimal and simple, then the SimpleStart is good to get started with (plus it is free), and you can always upgrade to Pro or Premier when the need arises, and still use the same file that you set-up in SimpleStart. I belong to a group that meets once a month to discuss QuickBooks, and has members from novice to expert, some are accountants, others are business owners, and some are bookkeeping staff at various companies. We are in the Fort Lauderdale area, but have recently start to let people join us thru a web link.
The idea of the LLC to start is excellent, plus if you start to grow, you can always file an election with the IRS to be treated as a corporation and when making the election, make sure you make it an election to be treated as an "S" corp. This is an oversight I often see when someone incorporates. You must file an election with the IRS to be treated as an "S" corp, otherwise you are treated as a "C" corporation, which could end up with your income being taxed twice, and that is not a good thing for you.
I hope I have given you some good information to consider. Please feel free to contact me if you need additional information.
Ken Kay
Enrolled Agent
Kay Financial Services LLC
kayk@hdvest.net
