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    7 Replies Latest reply on Nov 17, 2008 1:08 PM by Gotham

    Which type of Business entity that I need to choose?

    Gotham Newbie
      Hi Everybody,

      I have been here in US for 15 months and I am an ESL (English as a Second Language) student (F1 visa Holder) for now, because before i get my graduate classes I still need to improve my English.. Anyway...

      I have a campus job (my school is a college not a private language school) and last month i got my SSN too.

      Before I ask my question I would like to give you some background information about me and my difficulties;

      1- I want to establish(i will be the one owner and there will NOT be anybody other than me do all the works about the company) a WEB BASED company. If i am not mistaken i should not get salary from my own company because of my status (F1 visa holder students cannot work out of campus)

      2- It will be a retail website. I will buy some goods from wholesalers to sell them online via my retailer website or in numerous auction websites.

      3- I am an F-1 visa holder and i have at least 3.5 more years to expire of my student visa, so there is no problem with it.

      4- According to my searches ( http://www.salehoo.com/selling-on-ebay-articles/five-reasons-to-get-a-tax-id/ ) on finding a reputable wholsaler I need EIN because i have to make some business agreements with some of the wholesalers to buy some goods from them and to sell over my retail website. If you do not have an EIN they do not take you seriously. So do banks i guess. I also get a business credit cards from Bank of America for example. It would be necessary to buy the needs of my company. That is why i wanna have an EIN.

      I need to decide about what type of business entity
      that I am going to choose, but my knowledge about business entities is very limited. Although I know that if you chose LLC type of business entity then $800 has
      to be paid per year regardless the company
      makes profit or not. I dont wanna pay this amount without knowing if my company will make profit or not.

      What should I do? Should I choose sole proprietorship or
      something like C-Corp and S-Corp and then take all the
      risks. Because as far as i know while the owner of the business is not responsible about the debt (for example) in LLC's on the contrary in C-Corps or S-Corps the owner is resposible about everything. I dont want to pay $800 before i make money without making money but i dont wanna take big risks either. On the other hand there is a double taxation problem in C-Corps. If my company makes
      profit in the future then i can switch to
      LLC or what ever it should requires i guess right?
      Any comment, suggestion would help
      about it.
      My question are;

      A-Which type of business entity ( LLC?, C-Corporation?, S-Corporation? etc) would be better for me and my company the future?

      B-To have an EIN means that i also have a company? I mean if i get my EIN, does it mean that my company has also being established in the same time or having my EIN and establishing a company are two different things?

      C-If having and EIN does not mean also to have an established company then what should i do? Should i need to establish a company first?

      Thank you very much for your time and efforts. In the beginning my company is going to be a very small, so I dont have fund to go get some lawyer/accounted help for my questions. I have read some of the threads and saw that thare are lots of accontants and lawyers here. If you help me i would appreciated. Thank you for your time in advance.

       

      Gotham
        • Re: Which type of Business entity that I need to choose?
          Lighthouse24 Ranger

          The EIN is associated with the company (it is the company's identification number, just as your SSN is your identification number) -- so you must form and register the company first, then apply for an EIN.

          As far as the business structure, the "right" choice for your situation depends on a lot of different factors, the details of which you might not want to post here. Even though it's costly, I'd seek some one-to-one professional advice -- probably worth it in your case.

          Be aware that regardless of the structure you choose, in order to take on debt as a new business, you will almost certainly have to personally guarantee it. So for practical purposes, you as the owner will be responsible for debt regardless of the structure you select.

          Hope that helps. Welcome to the community and best wishes.
          1 of 1 people found this helpful
            • Re: Which type of Business entity that I need to choose?
              Gotham Newbie
              Hi Lighthouse24,

              Thank you for your time and sharing. This was good beginning for me then:) Now i know i need to establish the company first. I hope i can establish it online too. Because as you know you can apply for EIN. How much would it cost to me establishing a company???

               

              Hello again,

              Thanks for Lighthouse24's sharing, but as you can see i have posted a long entry and I need comments and suggestions. Please let me know what you think. Especially people who are exprienced on online business (home based) establishing would be very helpful. I am expecting to get suggestions about deciding on entity type to begin my establishment. Which would be best choice for me? What can i do?

              Thank you.

              Gotham
                • Re: Which type of Business entity that I need to choose?
                  Gotham Newbie
                  Even the admins have no idea what i have asked for? Well to be honest strange. I dont think my tread is that boring or unattractive either. I have no idea which type business entity I should choose and how to do this. Please let me know what do you thing would be better in my situation. Thx.

                  Thanks in advance
                  Gotham
                    • Re: Which type of Business entity that I need to choose?
                      Lighthouse24 Ranger

                      I would normally advise that a small, one person, on-line start-up begin as a sole proprietor (because it's fast, easy, and expensive) -- and then incorporate when business growth and other circumstances dictate.

                      In your case, however, F-1 is a non-immigrant status and a person cannot legally work in the U.S. with an F-1 visa (although there are exceptions, beyond my level of expertise). I don't see how a sole proprietorship could generate a profit without that sole proprietor doing some work (despite what all the MLM schemes claim). Further, you could put your immigration status at risk by showing that you intend to stay in the U.S. (which starting up any type of business here might suggest to immigration officials).

                      I KNOW that there are F-1 students who do start up and operate businesses here -- so it's obviously possible to do so. But I don't feel comfortable suggesting how you should or might pursue that yourself when following my "advice" could potentially cause you trouble. I hope you understand. Perhaps someone with more experience and expertise on this will respond soon.

                      Best wishes.
                      1 of 1 people found this helpful
                • Re: Which type of Business entity that I need to choose?
                  intechspecial Ranger

                  My company is a sole proprietorship.

                  The upside to this is that taxes are simplified(at least they seem to be).

                  The down side to this is that anything that belongs to me is not protected. So if I get sued, they can take my house, car, investments, etc.

                  An LLC, stands for Limited Liability Corporation, and is the most protected form of business, and is probably the best choice for a start up company with just yourself if you have any type of material of value.

                  www.sba.gov has some great information in regards to your questions and so does www.score.org. Both have offices nationwide and chances are their is one close to you. They offer free business advice.

                  I have not yet incorporated as my business is not quite big enough to do as such, and my material items amount to a whopping $0.

                  You can do business with just your SSN as a sole proprietorship, but I still suggest you apply for an EIN.

                  Also, do not take my advice, the US Small Business Administration, and SCORE offer assistance at a much more professional and comprehensive level.

                  The great thing is they do it for free, and if you did not already know this, this website LOVES FREE!

                  Welcome to the community, and I look forward to seeing your business accomplishments, if you feel like sharing them.

                   


                  Mike(inTech "Special")
                  1 of 1 people found this helpful