Q about Business/Incorporating and Tax for a side business

[gordita]

So I have the side/hobby business bug that I cannot seem to shake off and now must be implemented asap.

Here's my situation and my ask for suggestions/ideas/comments.

1st Endeavor: Start a service/knowledge business which will require buying equipment and outsourcing developing the web site. (through oDesk or eLance). I anticipate the total expense for this to be about $2000 + about $1000 for marketing efforts.

2nd Endeavor: I have a smartphone app idea which I would like to develop for the iOS and Android platform. Once again, I will have to outsource the development work which I expect to cost about $2000 + some marketing $$$ ( I don't know how much).

Three things can happen after this.
a) I don't get a single $ of revenue for both my endeavors (I'm fine if this happens and can absorb the $$$ loss)

b) I get some revenue from each endeavor which may or may not break even with my expenses.

c) Income exceeds Revenue for both or one project.

So, now to the meat of the Question, how do I structure/incorporate my business and what form of taxation should I choose for both my projects?

Should I go two separate DBA's and sole proprietorship or lump one under another? or go LLC for 1st but simple DBA for the other?
How about the taxation part?

If both these projects take off, I still will not be adding any employees in the future nor will be able to sell it off...
With the worst scenario, if both projects tank and I'm out of $5-$6k, it would be nice if I go the sole proprietorship way and can deduct this from my regular 1040 and recoup at least 25% (my tax bracket)...

suggestions/comments will be very much appreciated!

 

[Ns1]

I say 1040 sole prop that shit since it's less of a paperwork hassle.

If you incorporate you're already out so much money in legal/accounting fees.

 

[ViviTheMage]

sole prop, you're dealing with very little $$ here as a one man shop.

 

[Fern]

I'm a tax CPA.

Because both projects are small, I'd also suggest intially treating both as sole proprietor (report each on a Schedule C attached to your Form 1040.

If they turn out to be money makers you can always incorporate (Sub -S corp) later.

To incorporate them now strikes me as needlessly incurring potentially expensive legal/accounting fees for no real tax benefit.

The other potential benefit from incorporating is the limited personal liability corp's provide from civil lawsuits. Your projects don't appear very risky to me, but if you're worried about it you could handle the incorporation yourself. You might consider the LLC in that case. As long as you are the only member (shareholder) in the LLC you still put the profit/loss on your schedule C/1040. This means you won't have to go to the trouble or expense of filing corporate tax returns.

Fern

 

[gordita]

excellent suggestions. I think I will target my research on sole prop and stuff to file with the city n state (NY)