Lynn,one more thing, it doesn't matter if it's TN. or NV. or any other state as far as Federal Taxes are concerned. That's IRS stuff. However, because NV. has no personal or corporate income tax or tax on corporate shares, there can be a substantial advantage for an internet business to be domiciled in Nevada as it's not a "brick and mortar" type of business. This is in Nevada's constitution and it will almost certainly never change as it would take an amendment to the Constitution (minimum of 5 years) and NV. has a business friendly environment that's over 100 years old.
I think the confusion is stemming from the definition of "Sole Proprietor". It does not mean someone who works alone with no employees. A sole proprietor can employ hundreds of people.
"Sole Proprietor" is a business classification which loosely translated means, "I and my company are the same entity". It is a default. If you haven't formally organized your business as a partnership, LLC, C corp, or S corp, then you are automatically a sole proprietor and all your personal as well as business assets are fair targets in a lawsuit.
It was explained to me that if you have no partners or full time employees, that even if you form an LLC you and your business entity are still considered one and the same. I'll have to look back over my notes - and Frank, thanks for the book recommendation, will definitely pick that up as well as I continue my research.
Steve, you hit the nail on the head. Another factoid: Sole Proprietors are THE most targeted group for IRS audits. It really is the worst way of conducting business in this country (and most others too.) And, Lynn, the whole idea of forming a business entity is so you are NOT one and the same. A corp. or LLC is what I call an "artificial person." It can do anything a person can do,have a business, own property,etc. except think for itself. A manager does that for an LLC,board of directors for a corp. Partners,employees, full or part time are absolutely not mitigating factors whatsoever. I still get calls from lawyers,CFPs, CPAs, etc. that have stuff terribly wrong. But only a few of the arrogant lawyers have really been a pain. Unfortunately, some clients have paid a terrible price for getting bad advice from a licensed professional (locally, Wayne Newton came very close to losing everything, including his daughter's trusts. Now he's married to a very smart, beautiful lawyer from TN. and she handles everything now and they're living happily ever after) I will gladly help any and all forum members with this stuff, just let me know.
[QUOTE]Also you should pick up "Lower Your Taxes Big Time" by Sandy Botkin.[QUOTE]
Got it today @ B & N..wicked great info, suggest you gotta' have it. And, be sure to read the part about liability insurance umbrella, which I've had for many years because it's not expensive and helps you sleep at night if you're self-employed.
Frank, you'll definitely be hearing from me. I've been contemplating forming a corporation for my biz, but I'm not sure which format would be best. I'll be in touch.
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