Setting up a C-Corporation, questions

[ShoerFast]

Having a few questions about setting up a C-Corporation.

Perhaps the most important ones are those I should be asking my CPA that will be setting this up for me. Appointment for the first meeting will be latter in the day.

So totally green here, maybe any advice would help me here.

A little histroy...

Operating as a Sole Proprietor with a Farrier business, it's my wish to roll that into a C-Corp that will add fronts and changes business name.

Thanks in advance for any help, really at a loss here!

 

[ASD]

Ask about an "S" corp it may be to your benefit and before you start one call an attorney also as both people will have a little different info on what YOU need.

 

[PA Plumber]

The attorney and accountant idea is a good one. I did that 8 1/2 years ago. Had the attorney set it up and the accountant follow through with the paperwork.

What kind of liability protection are you looking for?

I have an LLC with an "S" filing status.

All flow-through income tax to personal and the benefits of a small business owner tax wise.

I can not get Workman's Comp. on myself with the LLC. With an "Inc." I would not be denied Workman's Comp. With an LLC, the employees would be covered, but not Partners.

This post might be more confusing than helpful; hopefully you have a good accountant.

 

[Garfield]

c corp

C corp has a lot of formalities and has for the most part fallen out of favor. An llc for you and then renting your equipment from another llc owned by you can avoid some self employment taxes etc. of course rents need to be fair market value etc. In the end you need to do something your accountant is comfortable with and probably be best to work with whatever atty he reccomends. If you go it alone you can buy a book and cd at nolo.com that will set up a legitimate llc probably just as well as an attorney. Good luck!!!!

 

[ShoerFast]

Thanks for the help!

Did not get anywhere today, perhaps the better!

What kind of liability protection are you looking for?

Liability Protection is not the first concern, but up there. More looking to pay my self some sort of a wage, SS and WC.

Have the structure to hire, and the ability to purchase equipment instead of the old fashion way,,,, out of pocket.
One portion of of the business will still be shoeing horses, and that occupation is just flat-out un-insurable, becoming incorporated I would fall under a General Liability insurance.

No one knows what is around the corner, sort of scary, being a little more structured might be a better idea, if my hunch is accurate?

This post might be more confusing than helpful; hopefully you have a good accountant.

Not at all, your 'spot-on' , as there are way more questions for every one I get answered for now!

 

[Tim Krause]

Having a few questions about setting up a C-Corporation.

Perhaps the most important ones are those I should be asking my CPA that will be setting this up for me. Appointment for the first meeting will be latter in the day.

So totally green here, maybe any advice would help me here.

A little histroy...

Operating as a Sole Proprietor with a Farrier business, it's my wish to roll that into a C-Corp that will add fronts and changes business name.

Thanks in advance for any help, really at a loss here!

talk to your insurance broker about the c corp as well. we started an s corp and had to pay workman's comp on the owner, as well as the employees. changed to an llc to avoid the 19% chargeon the owner, and bought a health care package instead, covering the whole family. the laws probably vary from state to state but thats the way it is in jersey.much better option.

 

[Mike Cantolina]

http://www.scorporationsexplained.com/scorporation-advantage-disadvantage.htm

My accountant recommended the S Corp mainly to avoid double taxation.

This site gives some advantages and disadvantages.

Mike

 

[ant]

i am looking to go the other way. from a s corp. to a llc. lot of savings it seems to be. but i am still in the planing stage,

 

[trimmmed]

i am looking to go the other way. from a s corp. to a llc. lot of savings it seems to be. but i am still in the planing stage,

Where does the llc offer savings over the S corp?

 

[PA Plumber]

Where does the llc offer savings over the S corp?

I have an LLC with an S filing status. One benefit is flow through tax returns to the personal side. There is still liability protection.

There were other benefits, I just can't remember all of them. I think there was a thread on this very topic a while ago.

I'll try to find it.

 

[Tim Krause]

i am looking to go the other way. from a s corp. to a llc. lot of savings it seems to be. but i am still in the planing stage,

when your a member of a llc you don't have to pay workman's comp on the owner. the minimum yearly pay for an owner(as considered by the state of new jersey) is $24,500. so if your comp rate is 18% thats about $4410. i have a partner so thats $8820 per year. so we spent that on buying a health insurance policy instead.

 

[PA Plumber]

Here's the thread I was thinking of...

http://www.arboristsite.com/showthread.php?t=47436&highlight=LLC

 

[ponderosatree]

Most accountants and tax lawyers will recommend an S-Corp. As I understand it S-Corp profits are taxed through the shareholders whereas a C-corp has its earnings taxed and the shareholders ALSO have their earnings taxed. You're effectively being double-taxed. It's been a while since I've been involved in this but that's my understanding of the matter. Consult a tax attorney or your CPA.

For what it's worth my company is an S-Corp and a previously non-tree related corporation I was involved with years ago was also an S-corp.

If you're making anything over $50K a year you want to incorporate. There's nothing but benefits. You can pay yourself a base salary and then take profits as a distributions (aka, dividends) at a lower tax rate. Additionally, if the company goes bankrupt you're moreorless protected. Now, bare in mind that this isn't fool proof. You can't simply incorporate, rack up thousands of dollars in debt and sink the company. You must protect the "corporate veil" which basically means you must follow all the rules required to be a corporation. Your accountant and/or bookkeeper should handle most of this. All you need to do is have an annual meeting of shareholders and record the minutes of the meeting. You don't even need to file these minutes with the government. You just file them away and if there's ever a dispute the government will ask to see these minutes. Oh, and you'll have to name a president, vice-president, CFO and Secretary. If you're the only one running the show you can wear all these hats.

Now, if you decide to bring on partners and investors you can sell shares on your company. However, you need to make sure your paperwork is rock solid. If a partner is divorced their ex-spouse can own a piece of your company. If a partner dies their children or spouse may inherit a piece of your company. Partners can sell of their shares to other people, etc. A good contract can protect you from a lot of this but you'll need a good attorney to draft up the paperwork. Generally speaking partners are always bad news. If you can't do it yourself don't do it at all.

My 2 cents.

 

[ShoerFast]

What wonderful help!

I knew that there would be a lot more involved then just setting it up, like sole-proprietorships, but the bennies far out weighting the hassle.

Many here would understand were we decides to go, just for now, as my CPA mentioned to wait till after the election.

We both agree that it is the right move for me, but a couple directions as to what way to go depending the outcome.

 

[Mike Cantolina]

Most accountants and tax lawyers will recommend an S-Corp. As I understand it S-Corp profits are taxed through the shareholders whereas a C-corp has its earnings taxed and the shareholders ALSO have their earnings taxed. You're effectively being double-taxed. It's been a while since I've been involved in this but that's my understanding of the matter. Consult a tax attorney or your CPA.

For what it's worth my company is an S-Corp and a previously non-tree related corporation I was involved with years ago was also an S-corp.

If you're making anything over $50K a year you want to incorporate. There's nothing but benefits. You can pay yourself a base salary and then take profits as a distributions (aka, dividends) at a lower tax rate. Additionally, if the company goes bankrupt you're moreorless protected. Now, bare in mind that this isn't fool proof. You can't simply incorporate, rack up thousands of dollars in debt and sink the company. You must protect the "corporate veil" which basically means you must follow all the rules required to be a corporation. Your accountant and/or bookkeeper should handle most of this. All you need to do is have an annual meeting of shareholders and record the minutes of the meeting. You don't even need to file these minutes with the government. You just file them away and if there's ever a dispute the government will ask to see these minutes. Oh, and you'll have to name a president, vice-president, CFO and Secretary. If you're the only one running the show you can wear all these hats.

Now, if you decide to bring on partners and investors you can sell shares on your company. However, you need to make sure your paperwork is rock solid. If a partner is divorced their ex-spouse can own a piece of your company. If a partner dies their children or spouse may inherit a piece of your company. Partners can sell of their shares to other people, etc. A good contract can protect you from a lot of this but you'll need a good attorney to draft up the paperwork. Generally speaking partners are always bad news. If you can't do it yourself don't do it at all.

My 2 cents.

Well said!

 

[ponderosatree]

Well said!

I said it before but I really want to emphasize that you should speak with your tax attorney or CPA before deciding what type of entity you want to create. An S-Corp is common but in some cases an LLC is more appropriate. I think a lot has to do with how large you want to grow your company.

I will say that almost anything is better than remaining a sole proprietorship.