yerda Posted January 2, 2009 Share Posted January 2, 2009 If you only have a low amount of machines (1-4), do you have to start a company such as a LLC or a s-corp? Link to comment Share on other sites More sharing options...
alyssamma Posted January 4, 2009 Share Posted January 4, 2009 Yerda, FYI, you *never* need to start a company (LLC) or a corporation (S-Corp). That being said, there are reasons you *may* want to. This thread, and a few others do a good job of explaining this. To answer your question directly, I would not worry about starting a company with less than 10 machines. Kevin Link to comment Share on other sites More sharing options...
U2Rocks Posted January 11, 2009 Share Posted January 11, 2009 Save the $$$ and do it yourself! I formed my LLC on my own for less than $100. I printed the one page form off of the Alabama Secretary of State's website, filled it out, and took it to the Probate Judge's office in the County to register it with them and to file it with the state. Probate judge's fee was a little over $50 and to file it with SOS was about $40. Including drive time to court house, it literally took 40 minutes. You can be your own "corporate agent". Link to comment Share on other sites More sharing options...
antoniocinisi Posted April 4, 2009 Share Posted April 4, 2009 I created my LLC with T Bird Vending online using LegalZoom.com.how much did you pay brotha from anotha motha? Link to comment Share on other sites More sharing options...
nam Posted April 4, 2009 Share Posted April 4, 2009 I did the same as T bird and used LegalZoom.com to form an LLC. This isn't my first business and if I can escape attorney fees then I'm all for it. I considered doing a kit and filing the LLC myself just as U2Rocks did but just took the easiest way and let Legal Zoom do it. Kelly, Forming a business and the requirements are different in each state, although many would be similar, these are state requirements and not federal. The simplest form of business in most states is a dba (doing business as) that you can do very easy and cheap yourself without the help of a lawyer. It may also be called filing a fictious name in some states. Basically, you will fill out very simple paper work probably at your county clerks office saying you Kelly are doing business as " Kelly's Kandies". This usually has to be run in selected newspapers several times (3 usually). You will have to pay a small business license fee typically to the state, county and maybe city depending on the requirements of the state, city and county where you live. You may or may not have to pay sales tax on all your products or maybe just on the non food items (toys, stickers, etc.). Sales tax is a real big pain especially if operating in different counties and states. Alot more trouble than state or federal income tax. The biggest advantage to the type of business you form is liability protection from law suits should a machine fall on a child or something. If you operate as a dba they can come after and get your home or any other assets you may have. When you form a corp. or LLC it is done to protect your personal assets should this happen. They may still come after you personally and in some cases be successful but not normally. The LLC gives you this protection like a Corp. would but simplier requirements as far as taxes, required minutes of meetings, etc. Alot of people in vending have no business licenses of any kind and operate sort of unseen and hope nothing happens. This may be cool until some business you have a machine in gets audited and they say are you paid a commission on that vending machine over there? Who owns that machine? Or you pay the commission to the location and the location reports that on their state and federal taxes and you don't. Or a child does pull the machine over on top of them and they come after you. Kinda like driving with no license or insurance. Saves alot of money until you get caught. Same as far as saying, well I only have a few machines. Doubt the IRS or state dept of revenue will care when they find you are not paying income tax, sales taxes and have no business license. You'll sleep better and hold your head up high when working as then you are licensed just like the businesses you are calling on. Even another business may report you - or a competitor! Some states or counties even have a tax on the machine itself that you have to pay each year. Everybody wants their cut. lol. My suggestion is to do it right and not have to worry about getting caught after not doing it. nam Link to comment Share on other sites More sharing options...
KenVend Posted April 9, 2009 Share Posted April 9, 2009 I appreciate everyone's input on this here as it is always great to see how other people are setting up their business's. I used LegalZoom.com at the recommendation of a lawyer friend. I have started out small with 4 machines but felt that I might as well do the business side now and not have to worry about it later. Looking to place my first machine and meet some growth goals by the end of the year. Link to comment Share on other sites More sharing options...
alyssamma Posted April 13, 2009 Share Posted April 13, 2009 Kelly, nam gave you excellent advice. Just one thing to add...the simplest form of business is a sole proprietorship. You don't have to do anything for that - just start doing business. You'll file a Sched C on your 1040. Kevin Link to comment Share on other sites More sharing options...
alyssamma Posted April 13, 2009 Share Posted April 13, 2009 Thanks Kelly...I've been out of town the past 10 days. Many people here use Legal Zoom so I would assume that is a good route to go if you don't want to do it yourself. Good luck! Kevin Link to comment Share on other sites More sharing options...
candylair Posted April 29, 2009 Share Posted April 29, 2009 I'm a newbie. At what point or how many machines should I have to seriously consider setting up an LLC? If I have 25 machines, should I start with just a liability insurance or start with a LLC? Thanks. Link to comment Share on other sites More sharing options...
alyssamma Posted April 29, 2009 Share Posted April 29, 2009 Candylair, There are many, many posts here about that I'd read through some of them...it will probably answer most of your Q. The real purpose of an LLC or liability insurance is to stop yourself from being sued. The easiest thing to do is to for a single member LLC. You'll have no tax forms to file (federal...state will depend on where you live). If you get larger, an S-Corp can have some advantages. Kevin Link to comment Share on other sites More sharing options...
jaharra Posted May 2, 2009 Share Posted May 2, 2009 Kevin, thanks for sharing your feedback. On your eariler post you mentioned "note, this is because my main business is consulting. I don't make nearly enough money from vending to make incorporating worthwhile."So how much money would you consider one must make in order to make incorporating worthwhile? Or how would one evaluate that for themselves? I personally don’t have any assets other than a retirement account. Do you know if one were sued personally if someone could go after their retirement accts? Or can they go after future assets? Link to comment Share on other sites More sharing options...
alyssamma Posted May 2, 2009 Share Posted May 2, 2009 If you have a corp or an LLC then your personal assets are protected. If you just have insurance then it depends on how good it is Understand that being sued is a very minor concern...no one on this board knows anyone who has been sued because of vending. That being said, forming an LLC is so easy you should do it for peace of mind. Now, to answer your question directly. With an S-Corp, you can take what is known as a distribution. This allows you to take cash from the corp w/o paying FICA taxes - so you save 15.3% In other words, if you were to take $100 in salary, you would only get $85 (before normal taxes). With a distribution you can get the whole $100. However, you really need to be making around $50K or so before you can start doing this. Let me know if this isn't clear and I'll try to explain it a different way Kevin Link to comment Share on other sites More sharing options...
jaharra Posted May 3, 2009 Share Posted May 3, 2009 That was a good explanation Kevin and I understand it clearly. Do you mind helping me understand how you determine needing to make around $50k to avoid the FICA taxes? Link to comment Share on other sites More sharing options...
alyssamma Posted May 3, 2009 Share Posted May 3, 2009 Jaharra, there really is no magic number, but $50K is pretty good. The deal is that the IRS doesn't want you avoiding paying FICA taxes. So, they say so long as you pay yourself a "reasonable" salary then they are ok w/the rest being a distribution. If your vending business does $10K, the IRS wouldn't want you taking $5K in salary and $5K in distribution because that $5K is not a reasonable salary. Some people would be more agressive and say $20K or $30K is reasonable and take the rest as a distribution. I tend to be more conservative $50K is *definitely* a reasonable salary and if you are audited I don't think you'll have any problems. But if you want to be more risky, then you can lower that amount. There is actually a "loophole" with this and LLCs. If you are not someone in an LLC who does the work - you are just a passive investor - then you can take $ from there w/o paying FICA taxes too. However, this is a real grey area and the IRS hasn't been very clear on the matter, but that seems to be the consensus. Kevin Link to comment Share on other sites More sharing options...
granter Posted May 27, 2009 Share Posted May 27, 2009 A lot of good advice here. What are your opinions on something like a Knockout Vending machine, where you don't have any actual product to pay taxes on (gum balls, soda, whatever) but the physical activity involved in using your product increases the risk of injury. Whenever you have guys drinking beer and throwing punches at a punching bag, sooner or later someone is going to walk in front of the bag while a punch is being thrown! Or else the person doing the punching could break his hand, arm....the possibilities are endless. I know that the bar owner has insurance, but my bet is that he would require the owner of the machine to carry additional insurance as well (which is a smart idea anyway) So, I guess my question is this: If I buy such a machine, would you recommend forming an LLC, buying additional liability insurance only one or both? Thanks for sharing any thoughts, Grant. Link to comment Share on other sites More sharing options...
alyssamma Posted May 27, 2009 Share Posted May 27, 2009 Grant, my advice is to buy insurance + form an LLC. The LLC is easy to form and the insurance is cheap. Sleep well at night Kevin Link to comment Share on other sites More sharing options...
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