Business Reopening

[grayfoxcomputing]

Good morning folks,
After watching several local repair shops close up, Geek Squad's future turn a bit more bleak, and working on several computers over the past two weeks (gratis), I've decided that now is the time to reopen my computer repair business. I had originally closed it due to a plethora of competition and my lack of free time outside of work (lots of server migrations at the time).
Previously, I ran my business low-profile, low-cost. My goal was to provide great service at a reasonable price, mostly malware removal, RAM installation, etc. on a shoestring so I could pass on the savings to my customers.
Those goals remain but I've added a few - laptop repair (purchased the PodNutz videos last night and watched several), consulting, and remote support (RS wan't very robust a few years ago in my opinion), Linux support to home users, etc.
While researching this last night, I have several questions for everyone, especially those of you that own a business in Virginia.

1. How did you register with your state - sole, LLC, etc?
2. Did you get a tax id or just use your SSN for the tax payments?
3. Are you including Labor in your taxable sales for tax payments?
4. Did you hire an accountant? If not, what accounting software are you using?
5. Did you setup a business plan (even if it's just for your own reference)?
6. How did you register with the Federal Government?
7. Is there a better time of the year to start - is January better than June?

I'm sure I'll have more questions but I appreciate any answers you folks can provide. I know everyone's (hopefully) busy. Last time, I felt like I was swimming against the tide any time I had legal or tax questions. Virginia's taxation dept. was less than helpful sometimes.

Thanks

 

[FoolishTech]

I'm in NC not VA, but I have a few comments:

I'm a sole proprietorship, but that was a mistake. I'll incorporate sooner or later just haven't got around to it - I strongly recommend it.

LLC is your best incorporation option. About the same as S-Corp but there is a lot less paperwork, and of course you can file your LLC taxes along with your personal income tax returns. Paperwork involved in creating an LLC is so simple it's pathetic, so don't pay a company like Intuit (MyCorporation) or any other to do it for you, save yourself a few hundred bucks.

You don't have to incorporate in your state!!! I made the mistake of incorporating Foolish IT in NC and it's one that I won't make again. Most places online recommend that the best state to incorporate in is Delaware. Most lenient on taxes/fees and requirements.

Going along with the LLC, yes you will want a federal tax ID. Again, easy to sign up, you can get one online in minutes. Since I did LLC instead of S-Corp, there was nothing else I needed to do to 'register' with the federal government.

Even if you register your LLC in Delaware, you'll need a state (or rather a 'Commonwealth' hehe) Virginia sales and use tax ID if you plan to resell hardware or anything requiring state sales tax to be collected. Labor is not taxable as 'sales and use', but rather 'income' so don't include labor in your logic there.

I still use TurboTax for my taxes but I have yet to explore options from a CPA to see what they can save me.

My only business plan ever was to make money but I'm just not a planner and I never needed to borrow any money against the business. Probably my downfall but working so far so good.

I don't think time of year matters as when you register your LLC because you can choose your own fiscal year start/end. I'm not sure what the differences are as far as tax season is concerned (probably has to do with paying estimated taxes, which I do not do) but I chose my fiscal year start as Jan 1st just so that and my personal taxes were on the same schedule.

Hope this helps...

 

[Maniaman]

My business is set up as an LLC. I highly recommend it, as that helps protect your personal assets in the event something happens with the business or someone decides to sue the business.

My former business partner took care of setting most of it up. I don't remember much about it. There's a few forms you have to fill out and that's about it.

We were doing all of the accounting in house the first 2 years. Since then my business partner left to pursue other ventures, and we contracted the accounting/payroll/etc out to a CPA. In the amount of time I was spending doing accounting and trying to make things balance, I can make more money than it costs us to pay the accountant to do it.

FWIW, we never made a business plan. It basically boiled down to fix computers, make $$. One of these days I may sit down and actually write one out.

Best time to start depends on your market. In our market fall & winter are our busiest times. We opened in the spring. It was a slow start, but that helped us work on our processes and tweak the way things were set up before the winter rush came in. Granted we weren't drawing any money out of the business until almost fall at that point.

 

[grayfoxcomputing]

I appreciate the info guys. It helps. While researching the resources available to me, I found this site:

http://bos.virginia.gov/

We also have a small business/startup center here in town. I have an appt. on 8/7 with them. They have a workshop that helps you get the paperwork needed and questions answered.

I also downloaded the now-free MS Money Home & Business (sunsetted) here:

http://www.microsoft.com/en-us/download/details.aspx?id=7564

No support and no online functionality but I'll be checking it out nonetheless. It may help me with invoicing and such while I start out. It does export into Quicken and csv format which will be nice for the future.

Anyone else have any suggestions?

 

[drpcfix]

Great advice on the corporate structure and timing, I would also suggest something simple for end of year taxes - we tried quickbooks for invoicing but it was just too much work..

we ended up using the tool we built, and just do a single monthly memo in quickbooks for "income" every month. Your CPA will love the P&L at the end of the year, and you will only have to spend about 30 seconds doing book keeping.

A book keeper comes for 3 hours a month to do the expenses and payroll stuff.

I do have one strong opinion on taxes, even in our first small year a CPA saved us WAY more than they cost.

You'll be able to find someone from $150 flat fee to $300/hr to do your taxes, and we've tried it all - pick someone you can communicate with, and try to pay attention to what they are doing

 

[grayfoxcomputing]

Thanks Troy. Great suggestion. I'll add "choose CPA" to my list.