… continuing on from yesterday, we are filling out the part of the Legal Zoom online incorporation forms that focus on the Federal Tax ID application.
1. Do you expect to have $1,000 or less in employment tax liability for the calendar year? (If you expect to pay $4,000 or less in wages, you can select Yes.) I’m answering yes because as the sole stockowner of my company, I’m not required to give myself employment tax liability.
2. Does your corporation own a vehicle with a taxable gross weight of 55,000 pounds or more? Only include vehicles that were designed to carry loads on the highway. – Well, since you are just starting your corporation with the completion of this form, it’s doubtful your corporation owns ANY vehicles at the moment, even if you do personally. So perhaps what this question should say is WILL your corporation own a vehicle that you plan to use for the purposes of this company, with a taxable gross weight of 55,000 pounds or more. That sounds awfully big (like construction equipment big), so the answer is most often “No.”
3. Will your corporation operate a casino, or does your corporation’s business involve gambling or wagering? – Uh, no.
4. Does your corporation need to file Form 720 (Quarterly Federal Excise Tax Return)? Unless your company sells the following, the most likely answer is “No.”
- Gas and other fuel;
- Air or ship transportation services;
- Insurance policies issued by foreign companies;
- Fishing equipment;
- Electric outdoor motors; or
- Bows and arrows.
5. Does your business make or sell alcohol, tobacco or firearms?
The final question on this screen asks: Which of the following best describes the corporation’s primary business activity?
If you are an independent consultant working for another company or two, there’s no need to limit yourself to THEIR type of business here. You would just select “Consulting” which is second only to “Retail Store” on this alphabetical list (even higher than Accommodation and Accounting) for a reason – “Consulting” is a nice catch-all, although remember that this answer will play a role in determining whether your company name and trade name (if provided) are acceptable.
If you chose “Consulting,” the next screen will ask you if you provide your companies (clients) with operating advice and assistance. Unless you’re consulting as an tempoary COO,CEO, CFO or some other executive-level position, the most appropriate answer here is probably “No.” It also asks what your primary type of business is.
The purpose of these last few questions is primarily so Legal Zoom knows what kind of “forms” and templated agreements to try to up-sell to you, which comes with a $8/month subscription. I think I’ll pass.
… to be continued…