LLC, Sole Proprietor, S Corp...

[BlueZero]

LLC, Sole Proprietor, S Corp...

Where to start!

What are you? Why? Any good info or links?

Here's the best link I found on the subject. Sole Proprietorship vs LLC-Know the Difference But it's pretty vague.

When I was on my own before I was a sole proprietor. It seemed to work out alright but my accountant told me I got nailed big time on taxes since I didn't have many deductions. The place I work at switched from a sole proprietor to an LLC acting as a sole proprietor. All the corporation stuff looks to be for bigger companies.

Just wanted to get some input here. I'll probably end up having to talk to an accountant or attorney. Advise from you guys is a lot cheaper!

[PorscheGuy997]

Re: LLC, Sole Proprietor, S Corp...

Kinda funny...we've been talking about LLC's and sole proprietors for ages in our businesses classes.

I think the link is pretty good, though.

The one thing she didn't mention is a sole proprietor with independent contractors. The main benefit is the tax decrease. You really have to be sure that you truly have independent contractors, or you'll have to pay those taxes.

There are many benefits to be a sole proprietor, but the liability can be a problem. So, it's probably a good idea to liability insurance.

As you stated, LLC's have limited liablity, but the taxes are higher.

[BlueZero]

Re: LLC, Sole Proprietor, S Corp...

Cool, that's sort of what I was getting from it.

This will go for my architectural business right now and hopefully detailing in the future. In the architectural I shouldn't have any liability back to me. The one thing I was disappointed about with a sole proprietor is that I couldn't deduct my health insurance. I pay all of my own health insurance. I guess the other tax breaks might make up for that. I just have to figure out what they are and make sure to take advantage of them.

That's right, your going to school for that. How much do you charge?

[drculinarian]

Re: LLC, Sole Proprietor, S Corp...

File for a corp. thru your state then apply to the IRS for S corp. status. The benefit here is that you have a small business that is separate from you personally but allows you to use your profit/loss on your personal taxes. The IRS isn't so apt to audit an S corp. and you can run multiple businesses thru it. You can make your home corprate headquarters so every time you leave your house your on company miles.

Dr. Maurice

[Bert31]

Re: LLC, Sole Proprietor, S Corp...

As you stated, LLC's have limited liablity, but the taxes are higher.

How will you have higher income taxes? The income from the LLC should go right on your federal 1040 Schedule C just like if you are a sole prop correct?

As an LLC you will have to most likely file with your Secretary of State as an LLC each year and pay the related fees which a sole prop would not but I assume those would be considered fees rather than taxes.

[PaintPolisher]

Re: LLC, Sole Proprietor, S Corp...

LLC, Sole Proprietor, S Corp...

Where to start!

What are you? Why? Any good info or links?

Just wanted to get some input here. I'll probably end up having to talk to an accountant or attorney. Advise from you guys is a lot cheaper!

I am a LLC.
Seek out a tax CPA to be sure of what will or will not work for you and why. I have used my tax CPA for a number of years. Keeping good records and having him prepare my business and personal taxes let's me sleep sound every night.

[drculinarian]

Re: LLC, Sole Proprietor, S Corp...

The differences between LLC and an S Corp are strictly tax related. The big advantage of the S Corp is the taxes are paid on the dividends to the stock owners. An S Corp does not pay corporate taxes only personal.
You really need to talk to an accountant if you need write-offs for your insurance premiums and such. There are some limitations to S Corps.

[Mort Corey]

Re: LLC, Sole Proprietor, S Corp...

In the architectural I shouldn't have any liability back to me.

Walking out the door in the morning can almost make you liable for something. Insurance, corporate structures, etal, are largely layers to hold back the vultures.......kinda like layering clothes in the cold.

I'm a "C" corporation and have found it best to use the services of an attorney for the paperwork aspect and a CPA for the money aspect. Part of the liability shield is keeping personal and business aspects totally separate from one another. If the corporate vail is pierced the officers can become personally liable.

Mort

[BlueZero]

Re: LLC, Sole Proprietor, S Corp...

Good advise guys! Thanks much! Feel free to post more information anyone.

I having a feeling I will be out on my own sooner than later. A few of us got sent home yesterday from work since there wasn't any work. Today I am cleaning my desk and some of the rest of the office and pretty much just trying to stay busy. The boss just told me we where going to close for the rest of the day pretty soon since we don't have work. I've been calling my clients trying to bring in some work but everyone is at a stand still.