b0mbrman, you are one sharp tack. Although I must point out that in this case, the young chap likely has nearly no seed money to invest, hence revenues generated from a venture will likely contribute to possible asset-building stemming from ordinary income as a result of business operations.
I'm planning to start my own business with a friend next year when we both have cars and driver's licences. It would either be a proprietorship or a general partnership, I don't really know which route to go yet.
What are the tax and liability considerations? Long-term plans? Financing and investing desires?
The business would be going to people's houses and backing up their harddrives, cd's or dvd's, installing stuff for them, building PC's for them, etc...
That's a decent idea, but what exactly is tha plan? What's the market? What are the expenses and projected sales/revenues figures? You DO want to run a business, right?
How can we get started and get clients?
Advertise. Go out and knock on doors (make sure this is legal, some cities require solicitors to register), go to local businesses, tell family and friends. be professional and courteous. Tell people you are builsing a business and ask them specifically to refer you to thers. Follow through on potential referrals with phone calls. Maintain contacts with clients to check further needs and ask for feedback. Basic business stuff... It should all be part of your plan and included in the targets and projections.
How much cheaper would parts be for us being a business and all?
Depends, how much are you going to buy? And from whom? What are the sales tax implications? What are the tax implications and inventory method used for accounting? What sort of depreciation scheme? As a rough estimate, you should be able to get about 15% off on parts, much more if you buy bulk.
Also, how would the profit sharing et al work with a proprietorship or partnership.
Proprietor has personal liability and has unlimited risk. Therefore, all profits after expenses and tax are distributed with a single tax on income as ordinary income. Really easy tax preparation for sole proprietorships.
General partnerships can agree on whatever they want. Members are managers but can hold different stakes and interest in the company. Profits are distributed according to percentage share. If you do 50-50, that makes things hard as disagreements have no way of being resolved. It's pretty straightforward.
Proprietroship, 1 person. Partnership, more than one person. Same liability and similar tax implications.
What are the risks?
You tell me, this is your industry. What type of insurance will you need? There's the obvious risk of losing your shirt. There's the risk of liability... You tell me.
Is this even a good idea for a business?
I haven't seen the numbers. The graveyard is full of good ideas. Stupid ideas that make millions are still stupid ideas but they're profitable. So show me research and I'll try and make some sense of it.
As you can see, I don't really know much about this at all, so please educate me
What exactly would you like to know? There's a lot one can say.
Cheers !
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