Making money in new business post BK???

[ltrain823]

Hello everyone...i hope all is well! As always, I want to thank everyone who has helped me in the past and also thank whoever is taking the time to read this post.

I have finally filed for Ch. 13 and a couple of weeks ago a friend approached me with this new online business venture and it was a pretty small investment so I figured why not? This was one of my best friends and I trusted her so I ran with it. Well she told me the kind of money I "could" be making and I thought it was completely unrealistic...boy was I wrong!!! In less than 2 weeks I have generated over $1,200 in profit!!!

So my question here is...I started it off by putting my social security # on it and my personal checking account. This is obviously going to report to the irs so I was told that the best thing to do is to start an LLC and report the income to a tax id #. This is where I am not too knowledgable about. If I get a tax id # and open up a business checking account and have all the profits direct deposited into that account...will the trustee have anyway to come down on me about this? I know I might sound like I'm trying to beat the system but this was totally unexpected and had this been approached to me a year ago I probably wouldnt of stopped paying my creditors and filed but we cant look back now...it is what it is.

If anyone can give me some positive insight it would be greatly appreciated.

Also, if anyone is seriously interested in a new business venture to generate some extra income...let me know and I will contact you personally...just leave your email address if you dont mind...i dont feel too comfortable leaving mine here because its my first and last name and my bakruptcy is a private issue. I have always wished to positively contribute to this site and would love to help anyone out there...I genuinely believe this is more of a family oriented group of individuals and i know if I bumped into anyone face to face who has helped me in the past...I would give them a huge BEAR hug!!!

Thanks again...and good luck everyone!

[FloridaGuy]

I'd see a lawyer

I would check with a lawyer familiar with business. An LLC and even an S-Corp you will be liable for income, as it flows through to your personal tax returns. Any income you generate over $600.00 will generate a 1099-misc income form.

I think the only way to seperate yourself from the business income is a C-Corp. However, then you get double taxed. (The corp pays a tax, then you pay tax when you pay yourself)

Maybe others can chime in who may be more knowledgeable.

[domaingamer]

An LLC or an S-Corp is a good way to go, but you need to make sure you separate your personal activities from the activities associated with your new business venture. I have set up an LLC and an S-Corp in the past and both times I paid lawyers about $1,000 to set it up and file all the necessary paperwork with the state. You end up getting a Uniform Business Identifier (UBI#), Tax Identification Number (TIN) - for the IRS and a few other important numbers. If this is your first time hiring a lawyer is probably a good idea.

[StartingOver08]

But FloridaGuy is exactly correct when he says that the money flows THRU the S corp or LLC to the individual for tax purposes. You have a FID for the LLC or S corp but that corp does not pay taxes - the individual does. You file a 1120 with the tax man for the corp and a 1040 individual.

The trustee looks at the S corp as a ASSET of the individual (I am going through this exact thing right now). All receivables (100%) belong to the trustee with NO DEDUCTIONS FOR BUSINESS EXPENSES as of the date of filing. Yours is a little different because you started this business after you filed - but check with your attorney

[ltrain823]

So any suggesstions on how I should go about this? There is a very good chance that at the rate I am going with this new venture that I will probably make some serious money in the near future...what would happen to me if they see all this income coming in through the business? Can I start the LLC under a family member's name? I never thought I would be so scared about making a lot of money!!!

[StartingOver08]

I think that again, FloridaGuy had the right idea when he said form a C corp.

A C corp is a separate entity. You may want to speak to an attorney to discuss ALL the issues with this new income and the proper way to structure your new business. The question is, if you have a new asset (the corp) do the receivables belong to the trustee?

[ltrain823]

I am not sure what a C-Corp is...can someone please be kind to explain a bit more on how c-corp would benefit my situation...I dont mind paying double tax...it's better than giving it all to the trustee!!!