How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask PDtax Your Own Question
PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 3975
Experience:  Tax professional and business consultant for 35 years.
64119565
Type Your Finance Question Here...
PDtax is online now
A new question is answered every 9 seconds

Hi. My father, brother, and myself have a home remodeling business

This answer was rated:

Hi. My father, brother, and myself have a home remodeling business which we started a couple years ago. Thus far, doing this on the side and mostly for cash we would like to register the business and get a business account. We would like to set up the business so that myself and my brother are paid as employees (so we have paycheck stubs for borrowing purposes), but would also like if possible to have our own separate accounts under the same business name. What would the best type of business to form be in order to have provable income asap?

PDtax :

Hi from Just Answer.

PDtax :

The best entity to use is an LLC or S corporation. I prefer S corporation, but the entities are pretty similar for these purposes.

PDtax :

You need a separate entity so that the two of you who need paycheck stubs can get them.

PDtax :

As the business operates, you could have a separate account under the business name that is exclusively yours. Your brother and father will have to have similar accounts, and take out similar money each year (there are special rules regarding paying one S corp shareholder more in distributions than others(that's called disproportionate distributions).

PDtax :

The S corp can be formed very quickly, and a number of online services offer this service if you don't want to have an attorney create the corporation for you. I can't recommend any from Just Answer, but names like LegalZ*** and others will come up if you google incorporation services.

PDtax :

Thanks for asking at Just Answer. Ask any follow up you may have, or leave positive feedback to close out your question. I'm PDtax.

Customer:

What do you mean by separate entities? Also, after forming an llc or s corp do we need to file any additional paperwork before printing paycheck stubs?

PDtax :

no. either the llc or s corp will be the separate entity you need to produce payroll checks and stubs. Call it Jones Home Improvement, LLC or Johnson Remodelers, Inc. as a separate entity. That way, your pay stub comes from a separate entity. sorry for the confusion.

PDtax :

I see you're in chat now. How else can I assist?

PDtax :

Please advise if you need anything else.

Customer:

Ok, once we set up an LLC and get a business account, what do we have to do before we get paycheck stubs?

PDtax :

When you set up the LLC and get a federal ID number from IRS (you can do it online, http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN is the link), you can take the LLC book to the bank with your ID number and set up banking. Then you can start writing payroll checks.

PDtax :

Thanks again from Just Answer.

PDtax and other Finance Specialists are ready to help you
I would like to ask that you accept my answer before 8/31 so that it can be counted in the month's activity. thanks.

PDtax