| Many of the self employed are interested in the tax | | | | 4. All of your future business related expenses should |
| advantages and liability protection of an LLC, but are | | | | come out of your business checking account, and all |
| uncertain about the mechanics of forming and | | | | of your business income should be deposited there. |
| operating a single member LLC (SMLLC). | | | | This might mean changing your direct deposit |
| From actually forming the LLC, to collecting an | | | | information with your customers or clients. If you |
| income from their business, fortunately, operating | | | | operating an internet business and use Google |
| your small/home based business as a single member | | | | Adsense, Google requires you to open a new |
| LLC is less complicated than you might think. | | | | account to change payees if the new payee has a |
| Here is an overview of the steps for forming a single | | | | different tax ID. Some other advertising networks, |
| member LLC: | | | | such as Commission Junction or Clickbank might have |
| 1. Form your LLC by filing Articles of Organization | | | | different policies. In any event, this is a one-time |
| with your state, along with your state's required fee. | | | | switch. |
| 2. File form SS-4 with the IRS so you can get your | | | | 5. As your LLC earns a profit, you can write a check |
| EIN (Employer Identification Number; also called an | | | | from your LLC's business checking account to |
| FEIN for Federal EIN). Even if you don't have | | | | yourself. You do not need to pay withholding taxes |
| employees, your EIN is analogous to a social security | | | | (but don't get too excited, you still have to pay |
| number for your LLC, and you'll need it to open a | | | | self-employment tax at the end of the year). |
| business bank account, among other things. The IRS | | | | However, you will be expected to pay quarterly |
| does not charge a fee for appyling for an EIN. | | | | estimated federal taxes (and possibly state), the |
| 3. Open a business bank account in the name of your | | | | amount of which is based on your prior year's |
| LLC, using your EIN. Some banks also ask to see the | | | | earnings. |
| certificate issued by your state acknowledging your | | | | 6. As a single member LLC, the IRS by default treats |
| status as an LLC. In some states, this information is | | | | your LLC as a disregarded entity, meaning that you |
| online, and all you'll need is your EIN. There are many | | | | don't have to file a separate informational tax return |
| banks that offer free business checking accounts, so | | | | for the LLC. Instead, all of your revenues and |
| there's little reason to pay a monthly fee even if you | | | | expenses are recorded on your Schedule C on your |
| maintain low balances. | | | | personal 1040 return. |