united-states, llc, texasI’m considering inching my way into business as a software contractor. I currently have a day job, which I have no intention of quitting unless or until this contractor job becomes clearly sustainable.
The most likely scenario is that every few years, I’ll do a small bit of work as a contractor. I could possibly get away without incorporating, but would still like to do so. I’d like a corporation that just sits dormant until I need it, and the goes back to dormancy for months or years.
I’ve read that single member LLC is the way to go for this. Its tax status as a disregarded entity makes handling the taxes as painless as possible (though from what I understand, not necessarily as cheap as possible).
But are there other obligations I would need to fulfill? Aside from counting income from it on my tax return, is there any other obligation or reporting I would need to do? What does it take to maintain a (single member) LLC from year to year? I’d welcome any resources that are out there as recommended reading.
https://startups.stackexchange.com/questions/241/what-is-the-ballpark-total-cost-to-register-an-llc-in-texas mentions that I would need a registered agent, but it could be myself. I see from https://startups.stackexchange.com/questions/1/is-my-llc-required-to-have-a-registered-agent that at least in New Hampshire, it’s highly recommended that you have a registered agent. In the interest of keeping things as cheap as possible, since the first link recommends being your own registered agent as the cheapest alternative, I think I will follow that advice.
I started following the advice from https://startups.stackexchange.com/questions/7842/what-are-requirements-to-open-llc-in-usa. https://direct.sos.state.tx.us/help/help-corp.asp?pg=fee does show that forming a Texas entity will cost $300; I don’t see a line-item for how much it would cost to maintain per year. Am I right that it’s free?
I’m posting an answer as I learn it from research. I would still very much welcome answers from those of you who are more experienced than I.
The state llc certificate of formation mentions that this kind of LLC would be subject to a state franchise tax. If I’m reading the chart correctly, if the company’s income is less than $1,110, I would have no tax liability, and I could claim up to $360,000 in fair market compensation, which would almost certainly be a higher threshold than I’ll reach (at least as a single member). But either way, the company would be liable for filing tax forms by May 15 of each year.
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