Did You Really Save
Money by Opening Your Company Online?
By Juan V. Fanti, MBA, CAA, PA
The Internet has transformed business. Today we can purchase products, communicate, open accounts and complete countless administrative procedures without leaving home.
But that convenience has also created
a dangerous perception:
“If I can do it online for $49, $79 or
$99, why should I pay a professional?”
After many years working with business
owners and taxpayers, I believe the better question is:
How much could tomorrow's problem cost
me compared with what I am trying to save today?
Forming a company is
not simply completing a form
One of the most common mistakes is
believing that creating an LLC or corporation consists only of registering a
name and receiving formation documents.
It does not.
Before forming a company, important
questions should be considered.
What will the business actually do?
Who will own it?
Are any owners foreign persons?
How will it be taxed?
Will it have employees?
Will it acquire real estate?
Will it receive investments?
Will it operate only in Florida or in
other states or countries?
What tax and administrative
obligations will follow?
An automated platform may ask what
you want to register.
An experienced professional should
first ask what you are trying to accomplish.
That difference matters.
When the price seems
mathematically impossible
Some online offers appear
extraordinarily inexpensive.
The business owner should stop and
ask:
What does that advertised price
actually include?
Florida government filing costs do not
disappear because a website advertises a promotion. A new Florida LLC currently
carries $125 in required state filing and registered-agent designation fees,
while the required state charges for a new Florida profit corporation total $70
before optional services.
That does not mean every inexpensive
service is bad.
It means consumers should understand
exactly what is included, what is excluded and what additional charges may
follow.
“They also got my
EIN”
An EIN provides another excellent
example.
The IRS issues EINs free of charge
directly to qualifying applicants.
Therefore, when a professional charges
to manage an EIN application, the professional value should not simply be
selling a number that the government provides for free.
The value should involve helping
ensure that the application properly reflects the entity, responsible party and
circumstances that may later interact with the company's tax filings.
The problem is not paying someone to
handle an EIN application.
The problem is paying someone to
handle it incorrectly.
Then tax season
arrives
This is frequently where our work
begins.
Over the years, clients have walked
into our office holding IRS letters and saying:
“I don't understand what happened. I
paid someone to prepare my taxes.”
Then we open the file.
I have reviewed tax-return packages
approaching 100 pages, containing numerous essentially blank pages,
unnecessary forms, information inconsistent with the taxpayer's activity and
tax treatments requiring substantial review.
A long tax return is not necessarily a
sophisticated tax return.
More pages do not mean more expertise.
The problem no
longer costs $50
Once a return is prepared incorrectly,
the potential cost is no longer simply the original preparation fee.
There may be an IRS notice.
Then penalties.
Then interest.
Records may need to be reconstructed.
Returns may need to be amended.
IRS correspondence may require a
response.
And more complex matters may
eventually require a CPA, Enrolled Agent, tax attorney or another professional
with appropriate representation rights.
Federal tax rules provide penalties
for various filing and accuracy problems. For example, an accuracy-related
penalty can equal 20% of the portion of an underpayment attributable to
certain covered conduct, and interest can increase the outstanding balance.
Suddenly, the money that seemed
expensive at the beginning can become thousands of dollars in corrections,
professional fees, penalties, interest and lost time.
The Internet is not
the enemy
This distinction matters.
Technology is extraordinarily useful.
Many legitimate online platforms
provide valuable services.
Business owners can even complete
certain formation procedures directly through official government systems.
The mistake is confusing:
a tool that submits documents
with
professional advice that helps
determine which documents and decisions are appropriate.
They are not the same thing.
A platform may execute the wrong
instruction perfectly.
An experienced professional should
attempt to identify why the instruction may be wrong before executing it.
Accountant, attorney
or online platform?
Not every business matter requires an
attorney.
Legal matters should be handled by
qualified legal counsel.
Accounting and tax decisions should be
evaluated by professionals competent in those areas.
And simple administrative filings may
sometimes be handled effectively through technology.
The intelligent decision is
understanding which situation requires which professional.
At 200GFS, our accounting and tax work
does not replace legal advice when legal counsel is required. Recognizing when
an attorney or another specialist should become involved is itself part of
responsible professional service.
Did you actually
save money?
Suppose you save $100 today.
Two years later, you spend $2,000,
$5,000 or more correcting an entity, tax return or compliance problem.
Did you save $100?
Or did you simply postpone the real
cost?
Perhaps it is not
yet time to start the company
This may not be a popular opinion, but
years of working with businesses have reinforced it:
If properly starting a company is
completely beyond your current budget, you may need to reconsider whether this
is the right moment to start it.
Businesses require capital.
They require accounting.
They have tax obligations.
They may require licenses.
They incur administrative expenses.
And those responsibilities do not
disappear simply because the business has not yet generated enough revenue.
Entrepreneurship involves risk.
But removing the controls that can
protect the business merely because they cost money is not necessarily
intelligent entrepreneurship.
At 200GFS, we do not
simply want to open your company
We want to understand why you are
opening it.
We want to understand what the
business will do, who will participate, how it expects to generate revenue and
what obligations may follow.
Perhaps you need an LLC.
Perhaps a corporation.
Perhaps additional legal advice is
necessary.
Perhaps the structure you originally
considered is not appropriate.
Or perhaps this is simply not the
right time.
Our job is not always to tell you “yes.”
It is to help you ask the right
questions before committing your money.
After decades in this profession, I
continue seeing the same lesson:
Cheap does not always become
expensive. But doing something incorrectly simply because it was cheaper can
become extraordinarily expensive.
Before forming your next company—or
attempting to repair one that already has problems—talk with us.
First, let's understand your situation. Then let's make the decision.
Juan V. Fanti, MBA, CAA, PA
Two Hundred Global Financial Solutions, LLC — 200GFS
Tel. / WhatsApp: +1 (954) 683-3578
Web: 200GFS.com
This article is for educational and informational purposes and does not
constitute individualized legal, tax or financial advice.
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