Legal Question in Business Law in California

Advice Needed on Starting a Business

Hi guys,

I was talking with the owner of a small business and he has agreed to sell his products for about 10% more than the unit's cost for every sale I generate, with the rest going to me. Sounds simple enough, but I want to raise my profits by hiring more sales people below me and collecting additional commisions off their sales.

I'm sure the best way to go about this is to seek advice from an attorney and set up a company, but I don't have that kind of money (I'm 18 and broke) So how could I set this up cheaply. Liablility is not a concern here, all I need is a legal entity that will allow me to

1. Set up a sales agreement with the company I am marketing

2. Allow me to have employess

3. Allow me to collect payments from my employee sales

Another big plus is if the entity is ''easy to run'' because I haven't even done a tax return yet and don't want to be tearing my hair out on some complicated company tax return!

Any Advice is appreciated. Thanks


Asked on 1/20/04, 5:42 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Advice Needed on Starting a Business

The simplest form of business organization is the sole proprietorship, and for that reason, despite the drawback of personal liability, this is numerically the most prevalent form among small businesses.

Nevertheless, the IRS (and state) will expect you to account for and report your earnings from the business (using, typically, Schedule C with your 1040 return).

If you have employees, you will have to calculate, withhold and deposit the employer's and employee's share of witholding, medicare and unemployment taxes. NO way around this.

You must also provide workers' comp. insurance. Failure to do so will subject you to a $1000 a day fine.

I recommend getting a paperback book on small business setup and management, and also ask the IRS for their employer's guide.

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Answered on 1/20/04, 7:41 pm


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