My first contact with the IRS
The day that I got back from my vacation, I saw a threatening envelope laying on my desk from the “New York State Department of Taxation”. Oh, man. Here we go. Inside the envolope was a “New Entity Questionnaire Form”, which contained such questions as:
- Please check off the tax method of your entity: individual, partnership, or a corporation
- Please enter in your tax ID; if you do not have one, but have applied for one, please write “Applied For”
- Please provide names, addresses, and social security numbers of all members of your LLC
And so on. Needless to say, I was quite preplexed by all this, since I haven’t given this one iota of thought yet. The worst part was written in bold letters on the bottom of the letter:
Please fill out this questionnaire and return it to sender withing 15 days of your receipt.
Uh…right. By the time I got back from vacation, it was already past the deadline, and I had no clue how to answer the questions, anyhow. I realized that I was inadequately prepared for this and decided to stock up on some books. After a search on business formation on Amazon, I ordered the following:
- Nolo’s Quick LLC: All You Need To Know About Limited Liability Companies (3rd edition)
- Profits, Taxes, & LLCs [Paperback] by Crouch, Holmes F.
- Small Business Taxes Made Easy: How to Increase Your Deductions, Reduce What You Owe, and Boost Your Profits
- High Tech Start Up, Revised and Updated: The Complete Handbook For Creating a Tech Start-Up
- Engineering Your Start-Up: A Guide for the High-Tech Entrepreneur (2nd Edition)
I recommend all of them, but the LLC formation books are more practical than the tech start-up books (as well as more up-to-date), so I would advice starting with them first. I have honestly not yet read the Small Business Taxes book, but it’s gotten really good reviews and I’m looking forward to it. Nolo’s LLC provide an outline of the LLC structure and compares it against others. It’s both informative and easy to read and I recommend it.
Profits, Taxes, & LLC uses California laws and forms as examples throughout the book, so a California resident would get a lot more out of it than most other people. Regardless, it’s pretty helpful in terms of legal ramifications of an LLC and various IRS tax quirks. It drills down deeper into actual state statutes and IRS language for partnerships and LLCs than Nolo’s book does, although it’s a bit more verbose. Still, I would read them both in sucession.
High Tech Start-up is somewhat dated (last updated in 2000, pre dot-com crash), so a lot of its findings come down to the fact that during the Internet boom, there may be periods of extended share price increases and quick paths to an IPO. That’s obvious. However, it does manage to have enough foresight to look at aggregate research and not just the dot-com era. It examines and interviews a number of start-ups from about 1970 to 2000. I found it to be more useful to a group of experienced engineers who have a fundamental tech idea that they are trying to get VC funding for and, ultimately, go public with. I guess, once it comes down to it, that IS the definition of a start-up, but that didn’t help me. As a dot-com founder, I don’t care much about hiring VP of Operations or can extract much benefit from knowning that I should have “the most experienced management team in place”, because I don’t know any experienced managers. I’m just a college graduate trying to start a website. So a lot of this book went right over my head, but I could see how a lot of its lessons are both timeless and invaluable to people it’s more closely aligned with.
Engineering Your Start-Up seemed like an interesting read, although it was meant for engineers. It talked about what it’s like to start your own company, the realistic demands and stress of going solo, etc. It’s meant at first-time enterpreneurs and tries to give them a balanced view of pros and cons of starting up your own firm. It’s a little more up-to-date, as well, since it was written in 2003 and is able to analyze the dot-com era retrospectively. However, I can’t speak about the entire book, as it was in the same stolen back as my LLC filing receipt and I never got past the first 100 pages.
One other book that deserves a mention is the Startup Company Bible for Entrepreneurs by Michael Stathis. I haven’t bought it myself, because it’s pretty expensive (even on Amazon - $66), but it’s got the best reviews of all start-up books I’ve seen and from the excerpts I’ve read, looks to be a definitive guide and reference on the subject. If I ever get to the first round of financing, I will definitely be buying this.
September 1st, 2009 at 9:28 pm
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