Debating starting an L.L.C.

My friend (an incredibly talented graphic artist) and I (an avid web programmer) are trying to start our own web development business in Omaha, NE.

The market is here, but I am unsure as to what the best way to go about it would be.

Do I start an L.L.C., but if so, how much do I designate for personal income?

Should I just sub-contract, but what are the tax liabilities?

Do I just take money under the table?

Also, what should I charge for sites? Recently, we received our first comission ($2700) for a 15 page mortgage site with custom graphcs, and PHP script. I have no idea if that was too much, too little or just right.

I am a newly married 24 year old trying to get on a good path to support himself and his new family.

As I see most of you have already done what I am trying to achieve, or are working in the field already. (I've tried to get into the market here, but they won't hire on merit, only based off of having a Bachelor's degree which wasn't in my budget)

So, I guess what I am looking for is some strong words of advice from my peers and elders.

Thanks,
-Josh

 

(I was joking about taking money under the table....)

But I am looking for some guidance or an arrow in the right direction.

 

Taxation is not my area so I'll leave that to the accountants as that is their job.

Sub-contracting is a good option especially if you are press for time or may not possess certain expertise needed for the job. It would allow you to reduce the recursive monthly expenditure of hiring someone else on a full-time basis.

As for the prices, it is hard to say whether it is too high or too low because each job is different. Basically, as long as you and your customers are happy with the price for the work, that would be a good price.

Web design is basically something based on artistic talent and skills so it is hard to put a price on that.

All the best in your venture.

You don't need to incorporate your LLC here but http://www.bizfilings.com/learning/ has some relevant information here about it which may interest you.

 

You're asking so many questions I'm not sure where to start.

If you want to start a business a LLC can be a good business structure depending on the situation. In this case you and your partner could each own 50% of the LLC if you wanted.

I would recommend visiting nolo.com and doing some light reading on the subject..

 

I love operating under an LLC. Wouldn't have it any other way.

Of course... mine is in Nevada and we all know about Nevada LLC's. Very easy to deal with.

 

Do you have to pay taxes quarterly with it, and how do you designate how much to pay yourself?

 

I use an accountant so I'm not completely familiar with the tax structure. I know I only file taxes anually, and pretty much EVERYTHING is expensed out so the LLC really has very limited, if any, tax liability. I pretty much only pay taxes on what I pay myself.

I pay myself whenever, and whatever I want.

 

You need to pay quarterlies no matter what, unless you form a corp and take out taxes each pay period. The best (only) person who can tell you what to do is an accountant. The best path for you will depend on your exact situation which will include a lot of info you don't want to share with us Choosing the wrong business type can cost you a lot of money.

That being said I operate under an LLC because it was the best for me.

 

Not necessarily true. With a LLC the only federal requirement is to file an annual Form 1065. You don't need to file a quarterly return unless required by your state.

Now, separate from that is the fact that if you are not having taxes taken out of your paycheck (i.e. you don't have a job that will give you a W-2) you may be required to file "estimated taxes" (IRS form 1040-ES) which does require quarterly payments of your income tax.

 

What I am worried about is that since my partner and I are just starting, I don't think we'll make more than 5K to 10K this year, and if that get's taxed the way I normally do, I won't be able to afford to get this thing up and running.