The first quarter of 2006 is over, time to check in on my progress towards my 2006 Financial Goals.
Separate business and personal financial worlds. – Partially done, but not completely. Still need to research LLC v. S-Corps.
Open a SEP IRA for 2005 business income at Vanguard. – Done.
Do my taxes and research to maximize tax return. – Done.
Roll over Traditional IRA to Roth IRA. – Holding off for now since we may not be in the 15% tax bracket, will reconsider at years-end.
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LLCs pay $800 a year in franchise tax in CA (something I did not know about until I got the bill). S-corps require board of directors, minutes, all the fun stuff.
Congrats Jonathan! Looks like you’re right on track.
So many people set goals for themselves, then completely forget about them just a few weeks later. I think it’s cool to check in and hold yourself accountable for what you said you were going to do. Sometimes we hit ’em right on and sometimes we have to improvise, but it’s better to progress than to stand still and do nothing.
Good job!
Question: I apologize if I missed a previous post but is there any specific reason why you chose Vanguard for your Roth?
What kind of business do you have again cause I could ask my fathers lawyer about LLC vs S-corps for ya…
For tax year 2006: “Tax-bracket thresholds will increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15% bracket from the 25% bracket will be $61,300, up from $59,400 in 2005”
Don’t forget the tax bracket applies to TAXABLE income only.
I don’t know how much you’ve researched LLC’s vs. S-corps yet, but be aware of one thing. If you plan on being the sole member/shareholder, if you decide on the LLC, which is generally treated as a partnership for federal income tax purposes, a single-member LLC is known as a “disregarded” entity and you’ll end up reporting its activity on your personal income tax return (as done with a Sch. C sole-proprietorship, as you probably have now) Let me know if you want more info.
S-Corps also pay the $800 franchise tax, which is nothing when you compare it to revenue.
LLCs are for certain types of businesses; s-corps are for others. If it’s just going to be you selling stuff or providing some type of business service, an S-corp really is a no-brainer. It’s so easy to create (go to mycorporation.com) and benefit from this type of corporate structure. Find an entrepeneur-friendly accountant and start using Quicken religiously and blammo! you’re a law-abiding biz entity with write-offs.
I formed my S-corp in California 5 1/2 years ago. The beauty of corporations is separate banking accounts. Another way to say that is “FORCED SAVINGS ACCOUNT”.