Sole Prop or LLC taxed as S Corp?

I can't answer all your questions, but I do know a few of the answers. If you are any kind of a business entity, besides a sole prop, yes you will have to file more than one Federal tax return. One for the business entity and one for personal.

Sole prop is the simplest form, especially if you have no employees.

 

question 1,2,2a are all yes, in Pa I also have to Unemployment compensation (tax) probably where you are as well. 2b you will be taxed on your profit the same as sole prop. but you have some tax advatage. If you go LLC get a good accountant/tax advisor. It is alot easier/simple as a sole prop. If you ever plan to hire a driver I would go LLC otherwise I would not.

 

Been busy with a loss of water to the town and hauling it for them. Then left to Canada with limited wifi use.

Question 1.

The end result is the same. As a sole proprietor you pay the entire portion which is because you are an owner.

As an LLC, you are the sole owner. You will pay the taxes on the earnings just like a personal if you run it as a LLC and not as a S corp under Corp rules. If as a corporation, you would then be an employee and the corp would be paying the employer share and you the employee share.

Question 2.

Each entity files a tax return. If the LLC is operating under corporate rules.

Question 2a.

Yes. Only if a corporate and a employee.

Question 2b

If you are operating as just a LLC then there is no problem whether you tak a salary or not. You pay tax on the net profit not the withdrawals.

If you run as a S Corp then you take a salary and can take distributions of the profit during the year.

These are just simplified statements of a complex issue.

You are probably best going the way you have decided.

 

I can't answer those questions as each state has different rules. You need a good accountant, familiar with trucking to guide you.
However, there is one thing I can comment on.
The purpose of a corporation, whether C or S, or an LLC or LLP is to protect you. If you pay personal bills and expenses from that entity's checking account directly, you negate the primary purpose of that shield.
If you were to get into a legal battle, the opposing side would 'pierce the corporate veil' and you would become personally liable for any debts of the company.
Let me give you an example:
You haul a high value load...say 40,000 pounds of prime rib. The refrigeration unit goes bad without you knowing and some of the meat spoils. It's not found out until after some is served and patrons become sick.
The lawsuit goes after ABC Trucking, LLC. The total damages exceed 5 million dollars and the lawsuits begin to go crazy.
Your 1 million in coverage doesn't begin to cover things.
However, it's possible at that point for ABC to close down and walk away.
You personally are exempt. You are simply an employee or contractor to ABC.
If, however, the other side can show ABC paid your personal bills, it will likely be construed that the company was an alter ego and you will be held personally liable for whatever the company's insurance doesn't pay.
You can lose everything you have worked. for.
I am telling you this from personal experience.
If in doubt, spend a couple hundred dollars and have a consultation with a good business lawyer.
It could be the difference between a comfortable retirement and being homeless and driving a truck at age 60.

 

If you're pretty positive that you will never hire another driver or have a partner, you might be on the right track with the sole proprietor and umbrella policy.

Plus you can convert your business to LLC/S-corp down the road if needed.

As said, it definitely wouldn't hurt to setup an hour consultation with a business lawyer that deals in trucking

 

Emulsified hit the bulls eye. Business entities, such as corps, LLC's, and limited partnerships, are about asset protection.

The IRS will disregard them if your only purpose of setting them up is to save taxes. You have to have some other valid business reason to set them up. If you can set up your entities for a valid business reason, and you happen to save taxes, too, then they will be allowed.

To say it another way:

• You are not required to structure your affairs to pay more taxes, but

• You cannot structure them simply for tax purposes.

 

Businesses are always structured for tax purposes. I think you might be referring to tax evasion purposes. Otherwise, IRS has no problem with the structure of a business and the purpose of it under taxes.

 

Roadmedic, you and I know that people set up structures all the time for tax benefits. As long as there are other economic benefits, it's OK.

However, not everybody has real economic benefits other than tax savings in their structures. The IRS closes down tax shelters every year because they serve no valid economic purpose other than to save taxes. It's sometimes called substance vs. form.

Here's a quote:

Here's the link for the source doc:

http://www.irs.gov/pub/irs-utl/economic_substance_(1_25_05).pdf

The quote's from page 6 and footnote 4.

Best,