dak
Bronze Knight of the Realm
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I'm starting a panel shop as a side business that specializes in conversion of industrial automation control systems from relay logic to programmable logic control (PLC). We will also do general magnetic and PLC control panel services including: design, layout, wiring, I/O controls, programming, troubleshooting, and turnkey fabrication of customized panels.
My partner is a licensed electrical engineer with over 35 years experience in industrial automation. We already have a couple customers lined up for conversion of their manufacturing plants.
It will just be me and my partner for a while. He will be handling the technical end, I'll be handling the business end of things like sales, accounts receivable, purchasing, and a good portion of the upfront investment.
I really don't have much background in starting or operating a business, I've mostly worked in academia up until this point. My partner is aware of this, but we are ok taking this slow. I've done a lot of R&D and WotC tax credit studies for C-Corps/S-Corps/LLC's in the past, so I have some exposure to payroll processing and the Federal/State tax code, but I'm by no means an accountant or tax attorney. I understand I'll most likely need an attorney/accountant eventually, but part of this venture is I want to learn the process so I'd like to remain hands on as possible.
Major to-do and in-progress items so far:
As for federal tax, seemingly:
For Texas state taxes, seemingly franchise tax, but I haven't looked into the rest. Local, I haven't a clue.
I guess I'm creating this thread to seek advice on helping to fill in the gaps in the list of steps I provided above and also to provide the next steps.
I'm wondering if there there a downside to just forming the LLC and sitting on it for a while without generating revenue, just so we can start marketing without having to be limited by the 120 day name reservation limit. Are there ongoing fees or taxes levee'ed just by virtue of having the LLC even if we are not actively generating revenue for a year?
My partner is a licensed electrical engineer with over 35 years experience in industrial automation. We already have a couple customers lined up for conversion of their manufacturing plants.
It will just be me and my partner for a while. He will be handling the technical end, I'll be handling the business end of things like sales, accounts receivable, purchasing, and a good portion of the upfront investment.
I really don't have much background in starting or operating a business, I've mostly worked in academia up until this point. My partner is aware of this, but we are ok taking this slow. I've done a lot of R&D and WotC tax credit studies for C-Corps/S-Corps/LLC's in the past, so I have some exposure to payroll processing and the Federal/State tax code, but I'm by no means an accountant or tax attorney. I understand I'll most likely need an attorney/accountant eventually, but part of this venture is I want to learn the process so I'd like to remain hands on as possible.
Major to-do and in-progress items so far:
- Set up as an LLC
- Register for an EIN
- Draft operating agreement (already drafted, based on a friends, currently around 15 pages and seems like I've covered everything)
- Figure out which Federal/Texas/Local licenses and taxes I need and apply (Hoping someone can give me a crash course on this, SBA sites information on this is sparse)
- Setup Quickbooks for record keeping, reconciling with bank statements and invoicing (Seems like getting an accountant to help with this is the recommendation, but is it really that hard for a small 2 man operation?)
- Seemingly I'll need to make us a UL 508A shop, but I'm unclear if it is the workers, the shop, or the individual panels that must be submitted for UL approval. Admittedly I haven't researched this step much, but I'm just throwing it out there.
As for federal tax, seemingly:
- Income tax - Seemingly as an LLC this would pass through to our 1040's?
- Self-employment tax - So this is going to be around 12.4 % for social security + 2.9% for Medicare on the first $117,000. Then I just deduct half off gross income, right?
- Taxes for employers - If it is just the two LLC members, do we need to pay this?
- Excise taxes - Would this apply for manufacturing and selling electrical panels?
For Texas state taxes, seemingly franchise tax, but I haven't looked into the rest. Local, I haven't a clue.
I guess I'm creating this thread to seek advice on helping to fill in the gaps in the list of steps I provided above and also to provide the next steps.
I'm wondering if there there a downside to just forming the LLC and sitting on it for a while without generating revenue, just so we can start marketing without having to be limited by the 120 day name reservation limit. Are there ongoing fees or taxes levee'ed just by virtue of having the LLC even if we are not actively generating revenue for a year?