going from s corp to llc 12/1/08

[ant]

i am in the process of going llc from a s corp with the help on my accountant. each time i converse with him he sends me a bill. (i cant blame him..i should know some of those answers)

QUESTION
i changed my business name and i have to open a new bank account.
he is telling me that as of 12.1.08 i have to start depositing money in the new bank account.
1.how is the bank going to let me deposit checks made out to my old company name into the new account?( i am still getting paid from jobs that i billed out in September)
2. is it a good idea to run the s corp bank account down as low as possible to prevent the double taxation like a llc?(llc from 12.1.08-12.31.08 )

 

[KRS]

Hello.

I've been a banker for 16 years. My job (for the last 8 years) has been as a commercial loan officer specializing in loans to small businesses (under $10 million in revenues). I'm glad to hear you are making the change... BUT I have some advice; take it or leave it:

Your new bank shouldn't let you deposit checks from one company into a new account.

More importantly; you shouldn't want to do it either.

That money was earned by your s corp this year; not your LLC; so don't show it as income in your LLC. I would make the switch at year end; so you don't have to file two returns in one year (I'll bet your CPA wants to charge you for two returns this year).

If you make the name difference generic enough; your bank will never know the difference: aka: Madman's Tree Service vs Mad Man Tree & Lawn Service (LLC).

I would keep the income separate and make the change at your fiscal year end; not in the middle (or near the end in your case).

Have you already reserved your new LLC name from the corporation commission?

KRS

 

[KRS]

As for question #2; I don't have an answer; advice on your situation is best given by a CPA.

I do have advice though; don't run your business from your checking account; start running it from your income statement (profit & loss). Remember; the checking account may pay the bills but you're taxed on your revenues. A good manager should know his balance sheet and income statement inside and out and manage this business with it in mind.

To reduce your taxable income; sure you should maximize your legitimate expenses and deductions (depreciation, section 179 depreciation, interest expense, etc); but you can only grow when your profitability can sustain your rate of growth.... so don't spend it all

KRS

 

[OLD CHIPMONK]

Don't forget to close-out your old E.I.N. # & apply for a new one ! You'll need it to open your new checking account. S-corp. alright, but carries some expensive accounting fees. Are you going to be saving on accounting fees by switching to L.L.C. ? You are assuming more personal liability with L.L.C. ! Good Luck !

 

[Jacob J.]

As for question #2; I don't have an answer; advice on your situation is best given by a CPA.

I do have advice though; don't run your business from your checking account; start running it from your income statement (profit & loss). Remember; the checking account may pay the bills but you're taxed on your revenues. A good manager should know his balance sheet and income statement inside and out and manage this business with it in mind.

To reduce your taxable income; sure you should maximize your legitimate expenses and deductions (depreciation, section 179 depreciation, interest expense, etc); but you can only grow when your profitability can sustain your rate of growth.... so don't spend it all

KRS

That's some great info, thanks.