Using professional help vs DIY for small business corp

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zenb
Posts: 54
Joined: Mon Nov 09, 2009 10:37 pm

Using professional help vs DIY for small business corp

Post by zenb »

Follow-up to my thread last week: viewtopic.php?f=2&t=154312&newpost=2316556. Based on above discussion, consultation with CPA & constraints to my specific situation, going ahead with setting up a "LLC taxed as S-corp" entity (in CA). Discussions and the feedback in this thread were helpful to sanity check the advice i got from CPA, and help me decide on an entity type, and get past my fear of hassles with managing a SB account.

Now to the fun part of implementation.

The setup for the business will be fairly straightforward:
1. Single member & not planning on taking any other employees.
2. In-flow - one payment from a single client per month.
3. out-flow - one w2 payment per month, one annual contribution to solo 401k.
4. Not planning to make use of any of the complex deduction techniques (depreciation of equipments, vehicles or deduction for rent for office space or anything similar)

Whether to use professional help for all parts, or use professional help for some parts or do everything myself. As I understand it the three major steps are:
1. Incorporating the entity (articles of organization, operating agreement, EIN) - Options are:
(a) Use a full service attorney (Not considering going to a full service attorney as my usecase seems like fairly straightforward.)
(a) do it through online service like legalzoom (about $250 + gov fee)
(b) DIY (gov fee).
2. Setup business account, payroll, quarterly/annual tax reporting (federal and state) - Options are:
(a) "use an accountant (about $800 per year)" or
(b) "DIY with one of payroll services attached to a business account provided by a bank (free or about $120 per year). I think i still have to figure out how to generate 1120S, K-1 forms etc.,"
3. Book keeping and filing annual tax return - Options are to use an accountant (about $2000 per year), DIY with an accounting software like quickbook (costs about $200 per year)

The fee for professional help were based on checking with 3 CPAs over the phone on their service cost.

Questions:
1. For setting up the entity im mostly leaning towards just using legalzoom to create the entity. Any downsides to using legalzoom or are there other online services that are better?
2. For payroll and bookkeeping, for those of you who have gone through this process, are there downsides of going the DIY route with online tools (quickbook, free payroll services provided by banks).
3. Do these self-service payroll services like quickbook or ones that are associated with business banking accounts, also take care of generating required tax documents - filing quarterly/annual tax report to federal/state & generating 1120s, K-1 documents?
4. Since im doing it for the first time, i have the fear of missing some legal things that can come back to haunt me. If I go the DIY route, are there any cost-effective protections (like insurance) to protect myself against any un-expected mistakes.
5. Is it better to use legal help for few years and switch to DIY mode.
6. If I go the professional help route, i was told (by a CPA) the total cost of #2+#3 (payroll, generate quarterly/annual tax reports, file business taxes, book keeping) to be about $2750 per year. Is this fee about right, or expensive?

Thanks in advance.
learnfinance
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Joined: Thu Jan 31, 2013 10:29 pm

Re: Using professional help vs DIY for small business corp

Post by learnfinance »

@zenb,

I'm no expert at all in this but researching the same thing what you have listed above. Here are some of the findings -

1. There are few other online legal firms like www.rocketlawyer.com, www.nolo.com, www.lawdepot.com etc. apart from www.legalzoom.com. I think they all must be differing in their pricing for the package (incorporating llc or s-corp etc., some support and services apart from filing documents to the respective states)

2. For payroll I was looking at www.zenpayroll.com apart from online services from the banks and intuit (quickbooks etc.) - have to do some price comparison and their offerings.

This weekend I found out that I can't open a business account in a bank unless i have EIN and Article of Incorporation. I remembered a rep in Chase opening a business account for free without any documentation in 2008 when I went there to open a checking account for me and my spouse. Some bank can open a business account if my sole prop name has my name in it.

I'm not sure whether you have seen this article - https://www.upcounsel.com/blog/guide-to ... ia-s-corp/ but might be a good cross check with what you have listed above.

I'm following this thread to get all the useful information.
Thanks.
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Hayden
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Re: Using professional help vs DIY for small business corp

Post by Hayden »

Sounds like you don't fully understand what the various forms and required submissions are (eg, payroll processors absolutely do not prepare the 1120s and the k-1). Why don't you hire a CPA to do this for the first year or so, and then decide if you want to do it after you better understand what's involved.

Wrt payroll, there are several payroll providers that will process payroll for you and submit all of the required federal and state payroll reports. I have used Paychex in the past, and am thinking of switching to Intuit (purchased through Costco) for 2015.
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Lieutenant.Columbo
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Re: Using professional help vs DIY for small business corp

Post by Lieutenant.Columbo »

Hayden wrote: payroll ... Intuit (purchased through Costco) for 2015.
1) Payroll
OP is single employee (himself) LLC: why would he need help in doing payroll in a one employee case like his? am I missing something?

2) Intuit
do you have to have a Costco business membership to by Intuit at Costco?

thank you
Lt. Columbo: Well, what do you know. Here I am talking with some of the smartest people in the world, and I didn't even notice!
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Lieutenant.Columbo
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Re: Using professional help vs DIY for small business corp

Post by Lieutenant.Columbo »

zenb wrote: 1. Single member & not planning on taking any other employees.
2. ... payroll,
...
2. For payroll and bookkeeping, for those of you who have gone through this process, are there downsides of going the DIY route with online tools (quickbook, free payroll services provided by banks).
I am in the process of figuring out if I go LLC taxed as S Corp myself too and wonder from your post what it is that I do not know about payroll for one employee alone (yourself),
Can it be that complex that one would need help in doing it after month 1?

Thank you.
Lt. Columbo: Well, what do you know. Here I am talking with some of the smartest people in the world, and I didn't even notice!
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Hayden
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Re: Using professional help vs DIY for small business corp

Post by Hayden »

JLMA wrote:
zenb wrote: 1. Single member & not planning on taking any other employees.
2. ... payroll,
...
2. For payroll and bookkeeping, for those of you who have gone through this process, are there downsides of going the DIY route with online tools (quickbook, free payroll services provided by banks).
I am in the process of figuring out if I go LLC taxed as S Corp myself too and wonder from your post what it is that I do not know about payroll for one employee alone (yourself),
Can it be that complex that one would need help in doing it after month 1?

Thank you.
You certainly could do it yourself. There is the form 941, 940, and W2. Depending on your state, you may have SUI and workers comp forms to file. You certainly could do this yourself. Or you could pay $28/month and save yourself a little time.
knswamy
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Re: Using professional help vs DIY for small business corp

Post by knswamy »

The first 2 months (and first cycle for each tax filing requirement) will take you longer, but after that, processing payroll for an solo owner-employee is a breeze! Especially if you have a fixed salary!
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Hayden
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Re: Using professional help vs DIY for small business corp

Post by Hayden »

knswamy wrote:The first 2 months (and first cycle for each tax filing requirement) will take you longer, but after that, processing payroll for an solo owner-employee is a breeze! Especially if you have a fixed salary!
How do you do the 941/940? Do you do electronic submittal, or fill out a paper form and mail it in?

I'm semi retired and travel alot, so I need an electronic (non paper) solution.
knswamy
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Re: Using professional help vs DIY for small business corp

Post by knswamy »

Hayden wrote:How do you do the 941/940? Do you do electronic submittal, or fill out a paper form and mail it in?
If I remember right, the IRS does not have free electronic filing for any type of tax form. It's unfortunate (why they can't when the state can, I don't know, but suspect lobbying by H&R Block, TurboTax, etc.) but I end up filling forms electronically and mailing them. For payments I use EFTPS.
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Artsdoctor
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Re: Using professional help vs DIY for small business corp

Post by Artsdoctor »

Although you COULD do it all yourself, you're really going to have to read up on a lot. There are little nit-picking taxes, often CA-related, that are a nuisance and will become an even bigger nuisance if you're late or don't know to pay them. You're also going to have to fill out your 1120S and unless you're born with that knowledge, it'll be very time-consuming to learn to do it right.

Hire a CPA. All the money you pay him or her, you'll pay out of your S Corp so Washington and Sacramento will subsidize your learning experience. There may come a point when you're familiar enough to do it on your own, but in the meantime, paying a CPA will be money well spent.

You should also know that the IRS has made it common knowledge that S Corps will be increasingly scrutinized for tax fraud. No one really knows what this means, but it's awfully nice knowing that you have a CPA in your court if something goes awry.
knswamy
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Re: Using professional help vs DIY for small business corp

Post by knswamy »

I didn't mean to suggest you shouldn't have a CPA. I have one and he's awesome! You just don't need him for monthly payroll. Actually the CPA told me that he couldn't compete with the online services for the monthly payroll and was quite happy to help me get setup with my Excel spreadsheet and do the work myself. The quarterly reviews, 1120s, ... that's the kind of stuff he earns his keep with! 941s - I'll take care of.
GreenGrowTheDollars
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Re: Using professional help vs DIY for small business corp

Post by GreenGrowTheDollars »

You are in California?

I would do a LOT to avoid having to file returns with the Employment Development Department (EDD). They are a complete and total PITA. Whatever a service costs to handle it for you will be worth it. These are the same folks who managed to implement a new online system that couldn't even add the numbers entered in two different boxes on the same page, or calculate the required percentages -- I had to sit there with calculator in hand and do it manually. :annoyed
furikake
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Re: Using professional help vs DIY for small business corp

Post by furikake »

I would just setup your business entity yourself with your state directly. I'm not in CA, but I have done a couple myself and it was very easy each time and I didn't have to pay an extra fee for a third party to do it for me.

Check out Bank of America, as far as I know, they offer free payroll service up to 4 employees I think. I believe they file the federal tax forms for you quarterly, but not the state ones. So you have to do the state ones yourself.

Definitely hire a CPA. Buy Quickbooks, do your own bookkeeping, and then at tax time, you can give your CPA your QuickBooks file for him/her to do your business taxes for you. Our CPA does not do our quarterlies or payroll for us, but he does our annual business taxes, I want to say it's like $1,000-$1,200 for his service.
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