It has been a whirlwind two weeks for my family. On December 5th, I attended my brothers wedding. 2 days later, my wife gave birth to our second child Kyle (6lbs 11 oz). The following day, escrow closed on our new house and the day after that contractors began working on the house. During these next few weeks, we will be packing our bags for the big move.

In any case, it has been a while since I last did a mailbag so here are the questions for the week. I’m a bit backlogged but am doing my best to go through my mail.

I love your introduction to corporate entities and I am linking to it in my own blog to recommend it a resource for my readers. One question, I’m surprised that you didn’t choose the S-Corp as a store owner. Often, the S-corporation structure can help the owner avoid some employment taxes (social security, medicare, etc.) that a pass-through entity like a limited partnership or LLC cannot shield them from. I believe that a businessperson should speak with both their attorney and their tax specialist before deciding upon an entity as both legal and tax issues are involved.

My wife and I definitely considered forming an S corp over an LLC or rather we considered forming an LLC taxed as an S corp over just a plain old pass through LLC. The main reason we didn’t was because we didn’t think that the extra paperwork burden was worth it. As you probably already know, S Corps have the advantage in that you can pay yourself a small salary and then take the remaining profits as a distribution which avoids a good chunk of self-employment taxes. If you factor in Social Security and Medicare, the self-employment tax comes out to about %15.3.

You would think that a %15.3 savings on our taxes would be worth it, but in my situation I still have a full time job so I already max out on my social security payments every year. If you remove social security out of the self-employment tax equation, the savings is drastically reduced to only %2.9. But in order to save this %2.9%, my wife and I would then have to…

• Do payroll and pay ourselves a salary. If we paid someone else to do this, it would probably be around $30/month plus additional headache.
• Pay taxes as a corporation which carries a much greater paperwork burden which could lead to additional accounting costs

In the end, we decided to keep things simple and leave a little money on the table.

Google webmasters tools tells me that my website is slower than 97% of all sites on the web. Does this mean that I need to switch to dedicated or semi-dedicated hosting for my website? How did you know when to switch to dedicated hosting?

Just because your website is slow doesn’t necessarily mean that you require more high powered hosting. In fact, I would argue that 9 times out of 10 the webmaster is to blame for a slow website and not the webhost.

It’s hard to provide a diagnosis without a URL but without getting too technical, here are few common things to look out for.

• Are your images larger than they really need to be? Make sure you resize your images to their exact dimensions at a reduced quality for the web. Also, avoid hotlinking images from other sites.
• Try to reduce the amount of external javascript on your site. Each access requires a DNS lookup which makes your website speed dependent on a third party.
• Are you taking advantage of caching? Are you using gzip compression for your site? By compressing down your website, there is less data to be downloaded to the client. Since webpages are mostly text, the compression rates can be extremely high.

I’ll probably follow up your question with a dedicated post so please stay tuned. My wife and I knew we had to switch when staying with shared hosting was actually costing us more money.

Thank you for your articles on product sourcing! They’ve been really helpful and I’m now trying to import clothing from overseas. This vendor from China is quoting me really low prices for name brand apparel. Should I be suspicious?

Beware of any name brand goods from Asia especially if they seem too cheap to be true. Don’t get sucked in, otherwise you not only risk getting cheap merchandise but you might also get sued by the designer as well. I remember this one vendor who tried to sell us designer handbags that he claimed “accidentally fell off the truck” so they were 100% genuine. Yeah right! Use common sense and you’ll be fine.

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