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Wife wants to open a website and sell services. She is presently employed fulltime with a company. To start with, can she just file for a DBA in her name and start her online side business. We expect the first year may not be profitable and she can start to see profits next year. We understand all her expenses can be shown as business expenses in the first year and hence we(filing jointly) can claim some tax advantage for this year. Does she need to file for a LLC? Please comment.
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Cheetah2004 said:Wife wants to open a website and sell services.
Sorry couldnt resist. Does this business involve a camera?
Sole-Proprietorship and Partnerships are also pass through entities for tax purposes and will not require the incorporation and annual report fees of the LLC; although, the former do not provide for any form of limited liability. However, if you are not going to operate the LLC has a separate and distinct legal entity from your personal affairs, the limited liability would likely be meaningless as they could pierce the corporate veil.
She doesn't need to, but having a company name, business credit card, and generally good accounting practices might help in case IRS will ask you to back up the claim that expenses were business.
uutxs said:Cheetah2004 said:Wife wants to open a website and sell services.
Sorry couldnt resist. Does this business involve a camera?
No, she will be offering some type of marketing products and services.
Cheetah2004 said:Does she need to file for a LLC?No, she does not. She can deduct legitimate business expenses as a sole proprietor.
LLC provides limited liability, so depending on what services she is selling, she might benefit. How much exposure would this web site open her up to?
This is not a financial decision as much as a legal one. The LLC provides a level of protection if she gets sued.
The big questions are (sorry, I don't know the answers):
1. If she does something actionable, will she be individually liable as well as her company? If so, then an LLC provides no protection unless she's employing others.
2. Are you as her husband impacted by her legal liability?
I'll agree that this isn't a financial decision, but a legal one.
If she is at risk for getting sued, then you'll want to either incorporate or LLC.
Since you say selling materials and services... for marketing... then, well, I don't know. Personally I'm incorporated...
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