Anyone own their own business?

[GeoffM]

I have many questions.
I'm about to draw up (literally) a chart showing how I'd like it to be setup.
I'm sure there are many regulations and laws to follow. I'll probably ask on a business themed site, but I do a lot of my online identity here, so I wanted to start here.

Think of it like this (with a graphic in bound):
There will be an ownership company that oversees all other businesses.

For sake of example, lets say I have 3 smaller businesses:
- Software development
- 3D printing
- Mechanics shop

I'd like most of them (specifically the software development one) to be setup to sell off portions of the company and various products.
So let's say software development makes PC and Android apps, and another company wants to come along and buy Android app A. They do, and I make much money and transfer all Android app A stuff to them.

They're impressed, and want to buy the Android development arm of software development. This is where I have more questions.
Let's say the Android arm is in the process of creating Android app B, and I've started writing down plans for Android app C.
Android app B would be transferred, but what if I'd like to keep Android app C?
Would I want to keep it in Software development company, or would I want to keep it in the oversight company that owns all 3?

If you know them, I'd like specifics about how to set these up.
(Picture forth coming for clarity)

[deevergote]

It looks to me that your just looking for information on how to properly sell intellectual property. If that's the case, it's not very difficult.

If you sell off your Android development arm, you can specify in the contract what is and is not included in the sale. App C doesn't have to be included. However, it would need to be branded as something else, most likely.

How you arrange your holdings will be based primarily on your own needs. I'd suggest doing a bit of study regarding contract law, and general business law.

[GeoffM]

How you arrange your holdings will be based primarily on your own needs. I'd suggest doing a bit of study regarding contract law, and general business law.

This is what I'd like to focus more on. Selling apps is something I want to be prepared for, but only as an option.

Do you happen to know of any good books/articles?
I forgot to mention that in my main post.

I'm currently reading through the SBA guide an a few reddit threads.
They're helpful, but I'd prefer to have solid guidance, rather than what some guy said on reddit.

[deevergote]

I don't know many. I excelled at business law in college (it was an area that I considered going into... I kinda regret not doing so.) Sadly, that was nearly 15 years ago. Whatever books and resources I had then might not be very useful now.

The first thing to consider is how you want to group your company (or companies.) I'd say your best bet is to have a single company with different branches. Look into forming an LLC or S-Corp. As you grow, if the need arises, you can form new child companies and divide your assets among them.

[toycar]

Deeves right in saying that you'll specify in the contract what all is included in the sale of whatever you are selling, wether its software, options in the company, selling the company, whatever.


It'll be in the contract, and most likely the buyer will have a contractual agreement of their own. Such as a "Non competition" disclosure, which more or less stops you from being a direct competitor to them in whatever industry or whatever the fuck.


Basically, its so you cannot just duplicate whatever you just sold and then become their competitor.



As far as setting all of this up, you'll start with an LLC to protect yourself, and go from there. The "Umbrella" in your description will be the LLC. I dealt with this in great detail when I was promoted and my employer asked me to step away from my contracting company.


Instead, I created an LLC(sidestepped their request) and became a silent partner in the company I created. I own the LLC, the LLC is a silent partner in the contracting company I started. My buddy more or less took over and I still get money out of the deal and my wife still does her part and it works. They get it done without me, but I still basically own 51% of the company and have the final say-so. My employer is comfortable with this, and so it works.


My LLC has an "office" in my house which makes 25% of my mortgage a tax write off. My rental properties are owned by a business that is owned by my LLC. I just bought a male boxer, purebred, and will be buying 2 females in the coming months. They will become a dog breeding company, and guess, what(wait for the drum roll)my LLC will own that business.

I do security consulting, which is a business my LLC owns. I also still do pesticides for a select few customers(couple hotels/few apartment buildings), and, LLC owns that business too. My son is the employee at the pesticide place, and he handles that shit for me nowadays.


Anways, you have to basically layer the businesses that you own to protect yourself. For tax purposes, you'll want to study local and state laws since they vary quite a bit. Moving to a new zip code could = saving 10% in taxes. Seriously. Look into that.

What exactly do you need help understanding? I deal with business all day long, but, seriously, its nothing I could educate you on in a post or two. Theres way to much to consider when making any decision. Is there something specific you need help with?

[GeoffM]

Anways, you have to basically layer the businesses that you own to protect yourself. For tax purposes, you'll want to study local and state laws since they vary quite a bit. Moving to a new zip code could = saving 10% in taxes. Seriously. Look into that.

What exactly do you need help understanding? I deal with business all day long, but, seriously, its nothing I could educate you on in a post or two. Theres way to much to consider when making any decision. Is there something specific you need help with?

I was waiting for a post from you

The way you have your companies set up is what I'd like to have.
I'm still full time school and work, but I want to start researching now so it's easier to get going once I'm done.

The Android bit is real. I have a few ideas that I'd like to create over the semester and really push them over the summer.
If I can get those going to a actual business (ad money/licensing/etc) by the time I'm doing with school, then I can implement whatever plan I come up with now.

Obviously I can't just start everything into something like what you have, but that's a pretty good comparison to what I'd like to have.

I've forgotten most of my questions from yesterday. Lack of sleep I guess

Is there any sort of paper work that needs to be filed, or anything that actually needs to be done?
Can I just stand up right now and say "GeoffM Enterprises is a go!" and be a business?
Aren't there taxes? Do I have to tell someone that I'm a business?
I'm assuming that since I'll be starting this from lots of hours of work programming, that I won't need to file any stuff until I actually start making money.

I'll have a lot more to do before I come to this point, but what if I need a bank loan? Do I have to write all my ideas down and show them to the bank loan person? What if they steal my ideas? (Prior to this past semester, I've never taken a loan for anything. I've still never taken one from a bank)


A little abstract: As I've gotten older, I've realized I can essentially do whatever the fuck I want, as long as no one else cares.

Want to light my car on fire? No one notices/doesn't touch anyone elses property I'm good.

Want to build a bigass log cabin? No neighbors to report you means I'm fine.

Roller coaster in the middle of the woods? Same.

Do these analogies make sense, and does it apply in the business world?

[toycar]

I was waiting for a post from you

The way you have your companies set up is what I'd like to have.
I'm still full time school and work, but I want to start researching now so it's easier to get going once I'm done.

The Android bit is real. I have a few ideas that I'd like to create over the semester and really push them over the summer.
If I can get those going to a actual business (ad money/licensing/etc) by the time I'm doing with school, then I can implement whatever plan I come up with now.

Obviously I can't just start everything into something like what you have, but that's a pretty good comparison to what I'd like to have.

I've forgotten most of my questions from yesterday. Lack of sleep I guess

Is there any sort of paper work that needs to be filed, or anything that actually needs to be done?
Can I just stand up right now and say "GeoffM Enterprises is a go!" and be a business?

Setting up an LLC is pretty simple. I would start here;

http://www.michigan.gov/som/0,4669,7...2213--,00.html


Getting started and weeding through the paperwork is tedious, but YOU can do it if you are patient and take the time to do it right. The local GOV should be able to assist you as well. I bet you'll find some super savvy, under paid person working at the courthouse that will be more than happy to fill in the blanks for you.


The overview(some details may change from state to state, but Im fairly familiar with MI law)


1.) Pick a name, and register that name. I think this costs like $25-$50. Basically, you need to make sure nobody else is using your name and then you register it for your own use if nobody is using.

2.) File article of incorporation. Usually like $50-$100. Lets the gov know what you are up to, what kind of business you are, what your intents are, how long you plan to do business(perpetual is the term if it comes up) etc

3.) Apoint somebody as the owner/agent. Someone has to be responsible, with a MI address.


Thats pretty much the jyst of getting the LLC going. Doing business is the next step. So, if you were "Geoffm Enterprises is a go" you'd actually be "Geoffm Enterprises is a go dba Whateverthefuckyourbusinessisactuallycalled"


Setting up that business is a vital move before you can actually start doing anything legally. So, LLC owns business, LLC starts business, LLC is not business. Make sense? You'll need a business to operate as before your LLC can start doing anything.

Aren't there taxes?

Sure, and there are tax breaks too. You'll actually want to get this going sooner than later, so you can take advantage of these years that your "business" makes no money but has operational costs. I mean, you don't work for free do you?


So, make a paystub. Even if you don't get paid real money, its still a "cost" of the business to employ you, right?

Did your CPU that you use to do this work purchase itself, or did you, Geoff, owner of your LLC, that does business as whateverthefuckyourbusinessnameis, did your company have to pay for that?


Do you have an office? Well shit, if you do, your LLC can operate from home and now 25% of your rent/mortgage can be a tax write off. Do you drive a car? Slap a magnet on there, and now your oil changes and costs of insurance etc are a tax write off. Cost of doing business right?


I mean, tax code is written for businesses that make money as well as the ones that lose money. No matter what the tax rate is, if you made 0 money, you are going to owe 0 taxes.


Do you see how I just illustrated the need to get this going sooner than you were thinking? You can also lose a ton of money in this business, and sell all of your products off of another one that is more profitable and then balance it all out at the end of the year to help off set taxes. Example;


I lost a fortune on my pesticide business last year. I mean payroll at 30 hours a week for an entire year and we only made 16k in service calls. After 300/week($15,600) in wages, we didn't make shit.

LOL


Start working in all the jobs we bid on that we didn't land, all of the miles driven on the company car to do that, the cost of the company car, the chemicals and equipment that we needed to buy, and we were upside down almost 10k for the year.


So, why do that at all?


Its a job for my son. Easy to manage. The "losses" actually reduce my tax burden on other investments since it lowers my total income for my LLC. My teenage son LOVES making $300/week. He is "contracted" -we I9 him. He is responsible for his individual taxes, and we pay him as contracted labor. Why?

Unemployment and insurance loophole. No need for unemployment insurance or workmens comp-if you don't have employees.



Are you starting to see the layered affects of an LLC yet? Do you see how losing money in one business can contribute valueable stuff to a profitable LLC, like tax write off's. If a branch of your LLC loses 10k in a year, your total taxable income is reduced by 10k. But, did we really lose 10k?

Do I have to tell someone that I'm a business?

Sure, once you go through the hooplah of starting an LLC, starting a business will seem even easier. Its a similar approach with a couple more steps. When you get to this point, if you need additional help, holler at me.

I'm assuming that since I'll be starting this from lots of hours of work programming, that I won't need to file any stuff until I actually start making money.

I'll have a lot more to do before I come to this point, but what if I need a bank loan? Do I have to write all my ideas down and show them to the bank loan person? What if they steal my ideas? (Prior to this past semester, I've never taken a loan for anything. I've still never taken one from a bank)

Well, you'll want to get things handled sooner than later for tax purposes if you are serious about this. Also, those hours of work you are referring too, what, do you work for free? Pay yourself as a consultant from one company to another.


Like, Geoffmenterprises dba geoffm consulting getting paid by GeoffMenterprises dba androidsrus or whatever.


Make the paperwork happen, even if there is no money going anywhere. Do you work for free? No? Struggling company cannot afford to pay Geoffm consulting? Bill them.

Having outstanding bills still counts as a part of the cost of doing business. Learn more about this than anyone, myself included, can teach you in a single post. This process, layering business and handling things accordingly is going to be your #1 assett. YOU will be the most important part of YOUR success.

A little abstract: As I've gotten older, I've realized I can essentially do whatever the fuck I want, as long as no one else cares.

Want to light my car on fire? No one notices/doesn't touch anyone elses property I'm good.

Want to build a bigass log cabin? No neighbors to report you means I'm fine.

Roller coaster in the middle of the woods? Same.

Do these analogies make sense, and does it apply in the business world?

It does and it doesn't. If you have the cash, you can do anything as long as some politician that has the power isn't out to stop you. If they do, we usually just pay them and they change their mind.


Seriously.




As far as being older and wrapping your head around being able to do anything, why not think about this for a second;



For every single thing in your life, every cup, every keyboard, every program, every button, remote, knob, doorhandle etc etc etc, behind every single thing in your life, some jackass thought "well Im going to start selling toasters and then I will get rich"


Some of it sticks. Some of it doesn't. However, for evey house you see, every street light, every inch of concrete, every light bulb, ever pencil, EVERYTHING, business made that happen.


Doing business is what made those products appear and happen. Get in where you fit it. The sky is the limit brother, do it and don't let anyone stop you.



I was a criminal when I was younger. I did some crazy shit, stuff I could probably write a book about and it would sell. Seriously.


Thing is, when I lived that way I had the same idealogy as I do now. The difference? I was driven by money then, and am still driven by money now. What changed? Why am I a developer now, when I used to be a hooligan then?









I learned that if you do business the legal way, nobody can stop you. All the REAL PLAYERS IN THE GAME EVENTUALLY MOVED ONTO BUSINESS.

[GeoffM]

Your advice is perfectly spot on. I'll reply to it in the morning, when I'm sober.

[GeoffM]

I just finished my initial pass of my Android book, and am in the beginning steps of writing some programs.

I came up with these questions:
At what point should I officially form my llc, and start record keeping?

Yes I can take your advice and say it took me 200 hours to write this program, and at $25 an hour my llc is now in the hole $5000.

But what if it takes multiple years to recoup that $5000?
I mentioned your bit about a business can only pay tax on money it makes, and someone responded with you can only avoid paying taxes for so many years.
Is this a valid concern?


Before I go any further into what-ifs, I want to layout some concrete costs that are coming up:
Google play store fee $25 (one time)
Register a domain name $.5
Host that domain for a year $50

So lets say I actually form this llc (and we'll leave out the cost of doing that)
and I pay what will be close to $100 to get up and running (those costs will allow me to host multiple apps).
I'm out $100 actual money, and $5k worked time.

In these scenarios, the time frame is one tax year.
Scenario A: Do I have to have any additional taxes, just as I have described this to you?

Scenario B: Ads and in app purchases pay off $100. I've recouped the actual costs to me. Do I still need to pay taxes on these?

Scenario C: Ads and in app purchases pay off $5100 (Actual + time worked costs). What sort of taxes would I owe now?

I realize this scenarios are area dependent(for taxes), and it'd be a smart idea to talk to an accountant, but things like this are mentally holding me back, and from you've said you're fairly successful. Your posts act like little motivators, so I like hearing your advice.

[toycar]

I just finished my initial pass of my Android book, and am in the beginning steps of writing some programs.

I came up with these questions:
At what point should I officially form my llc, and start record keeping?

Yes I can take your advice and say it took me 200 hours to write this program, and at $25 an hour my llc is now in the hole $5000.

But what if it takes multiple years to recoup that $5000?
I mentioned your bit about a business can only pay tax on money it makes, and someone responded with you can only avoid paying taxes for so many years.
Is this a valid concern?

When you do your taxes, the money "spent" paying that bill is considered a loss. If you claim the money was spent, you'll have to claim it as income on your business. If you leave it as an unpaid bill, your business will claim the unpaid bill as a loss and your LLC will claim it as a debt. Depends on who is paying who, but I hope that answers your question.

The thing with taxes is if you owe, even 1 day extra is a bad deal. You cannot owe if you do not make though. You still file a tax return, showing your losses.

If they owe you, you have 3 years to file before it provokes issues. You want to know whats up with this every year though, and you want to make sure you file every year once you start.

So basically, the 5k is never "recouped" it was either a "loss" on the business that paid the bill, or it was a "loss" on the business that had the bill out and never was paid. The "loss" lowers your taxable income and that is the benefit of doing this.


You cannot create money out of thin air, but you can create "losses" which lower your taxable income, which creates money that was previously lost in taxes paid. Make sense? Showing losses on a business isn't bad at all and if overall your LLC makes money but you have an individual business that lost money. That lost money will lower your taxable income for your LLC.

Before I go any further into what-ifs, I want to layout some concrete costs that are coming up:
Google play store fee $25 (one time)
Register a domain name $.5
Host that domain for a year $50

So lets say I actually form this llc (and we'll leave out the cost of doing that)
and I pay what will be close to $100 to get up and running (those costs will allow me to host multiple apps).
I'm out $100 actual money, and $5k worked time.

In these scenarios, the time frame is one tax year.
Scenario A: Do I have to have any additional taxes, just as I have described this to you?

Nope. You haven't made any money. However, if you do make some money(anything at all, even as an employee at autozone or whatever) you'll want to create your LLC to claim these losses to lower your taxable income. Business expense = loss.

Scenario B: Ads and in app purchases pay off $100. I've recouped the actual costs to me. Do I still need to pay taxes on these?

Anything under $600 is a freebie. However, if you have an LLC and the LLC made $100 but lost $5100, you can lower your total taxable income by 5k by structuring things accordingly.

Scenario C: Ads and in app purchases pay off $5100 (Actual + time worked costs). What sort of taxes would I owe now?

Now we are talking business.


So the LLC paid Geoffm enterprises 5k to write a program and had $100 in costs arise in doing business.

LLC = -$5100

Geoffm Enterprises(business) made $5000 in contracted labor, writing a program. Geoffm Enterprises now has a net income of $5000 that taxes are due against.


Geoffm Enterprises + $5000, however LLC = -$5100

LLC = -100 for the year.


So, on paper you'll owe taxes for the $5,000 in income for your business, and that business will owe taxes. However, that money is also a loss for your LLC, and therefore it will balance out basically when you do your taxes. Losses lower taxable income.


You can do business with anyone you want. If you paid me 5 grand for whatever, it would be my income and your loss. No different, you just happen to be the guy on both sides of that equation.

I realize this scenarios are area dependent(for taxes), and it'd be a smart idea to talk to an accountant, but things like this are mentally holding me back, and from you've said you're fairly successful. Your posts act like little motivators, so I like hearing your advice.

Dont let stuff like that hold you back. If you really want to do well in business, you have to push past that fear and build the confidence that it takes to pull the trigger.


Tax rates will vary quite a bit from area to area, but the concept is the same.


An example of an LLC I worked with recently, and hopefully this will illustrate some more of the "layers" I was talking about.



LLC owns financial company.
LLC owns real estate company.
LLC owns collection company.
(I'll leave the rest out of it, but they own more shit)

LLC tells financial company to sell debt to collection company for huge loss. Like $1 on the thousand. Collection company collects on debt and makes huge profits, but under contract must give 66% of collected debt to financial company. Financial company shows losses on debt, $1 on the thousand. Lowers taxable income.

Collection company shows losses on 66% of "income" in payments to financial company which lowers taxable income

Both businesses operate in a strip mall.

Both strip malls are owned by the LLC real estate company.

Leases on both locations are outrageous. Financial company and collection company make hardly any money because of overhead costs. Outrageous costs to do business.


LOL


Empty bays = losses = lowers taxable income.


LLC owns real estate company. Real estate company losses money in empty bays, lowers taxable income. Nobody wants to rent bays because their costs are inflated. However, estimated loses are based on assumed value of the sq footage not being leased. Filled bays are filled with other businesses owned by LLC, paying sky high rent and making no money because of sky high rent.

One business sells their losses to another, which generates losses.

Losses, losses, losses.

Lol

Its all about taxes, tax write offs and business. If you could buy collectable debt for $1 on the thousand, you could make bank too right?

So, you just need a source to buy debt at that rate.


LOL


Or you could just be the company that creates the debt in the first place, and then sell it back and fourth to create losses in the process.



Business, business, business.


Get in where you fit in fella's.








Hows about this for an LLC idea;



Russians form an LLC, bankrupt its credit, and then sell the business and all its assetts to another Russian to basically carry the torch. They steal tax money from the gov while doing this, and that is how they get rich.


Rack up tons of credit debt, sell the merchandise and keep the money. Sell gas, keep the taxes that are due to the gov. When the shit hits the fan and you are about to get deported, pass the business off to an associate that can do the same. It takes at least 3 years for tax debt to catch up with you, so, yeah.


Thats why Russians own so many gas stations and cell phone companies all over the country. They are all based around heavily taxed industries, and as the consumer you pay that without even batting an eye.

They pocket the tax money + run the business into the ground in the process on credit debt all the while ligning their pocket and making sure that the next guy that owns the business will be paying you a percentage going forward.
Bankrupting companies, selling off their assetts to another associate and continuing as though nothing ever happened.


And thats just the LLC side of gas stations and cell phone joints.


The real money is in interstate trafficking.


But, anyways, this isn't a thread about organized crime now is it......


LOL



Organized crime = college of business.