LLC or S corp?

The LLC only protects personal assets from being used to pay off debts of the business. It is correct, one selects how they are taxed.... sole proprietor, S corp, or C corp. It does not protect from liability for a driving mishap or other similar action.

Depends on one's net income as to whether it is viable, and where one lives, as that is used as a means test to determine the average annual income of drivers. For instance, in my area now, average annual income for a driver is around $40K a year. I netted roughly $80K last year. I paid myself $40K, and that was taxed for income and SSI. The remaining amount was distributed to me by the LLC, and that is only subject to income tax and not SSI. So I essentially saved around $6200 in taxes last year. I could only do that being taxed as an S corp. If I was using sole proprietor tax status, I would have had to still pay the $6200 I saved, as all net income from the business would be, essentially, personal income subject to full taxation for both income and self employment (SSI) tax. Each person has to work it out and see if there is any advantage.

 

C corp. Own shares. No liability. Learn the loopholes. LLC and S corp obsolete.

 

If you're behind the wheel, no business structure out there will shield you from liability.

 

Sure seems to be a lot of them to be obsolete. Ask the guys who ran the C Corp Enron if no liability.

 

Limited liability only applies to passive shareholders. If you are any kind of a decision maker in a business you can be held liable for torts the business commits. That's why corporation board members and senior officers are always covered by officer and director liability policies.

 

But in all consideration, the primary motivation is tax structuring. We can drift all over the place on other issues that makes for fun academics.

 

In that case the execs who were charged with crimes were culpable in the decision making that was clearly made to deceive the public and the government with regards of earnings and liabilities. They setup several llcs to hide liabilities and falsified the true situation with their sec reports, as a result, llcs are poor choices for things like trucking and other high liability service work.

 

There is a significant difference between financial liability and accident liability or fraudulent activity. Most small trucking operations are simple business models and are not front ends for illegal money scams. Limited liability is quite appropriate for trucking concerns, as it was meant to protect personal property from asset seizure in the event the company were to fail financially and creditors needed to claim assets of the company. Without doing something like LLC, if one has, say, a sudden medical problem that prevents them from operating the truck, they might lose their business and truck, depending on what they owe, and their house and personal autos would be fair game to make up the loss above what could be covered by the actual business equipment and such. By structuring as an LLC, while the creditors can seize the business assets to cover loss, the personal property like homes and autos would be outside what they can legally seize. That is what liability protection was intended for. Seems strange this simple concept is lost on so many folks. It was meant to provide simple protection from personal asset forfeiture, and the LLC is the simplest to set up and has the fewest hoops that an owner has to jump thru, like it doesn't require quarterly board meetings and minutes being submitted to state agencies and other time consuming hassles like full blown S and C corp setups do. No requirement to pay for unemployment insurance on yourself as is the case with S and C corp entities. Yet an LLC can take advantage of tax structure of S or C corp.

 

The only problem with that is lenders almost always require personal guarantees on financed equipment, making that point irrelevant. Tax structure is all you'll get out of a Corp or LLC as an owner operator.

 

And that was my primary motivation. Tax structure. I don't have fits over what I do owe for taxes, I just want to make sure that it is the lowest amount I owe. And doing an LLC with tax structure as an S Corp, for me, is a substantial amount of tax savings. Ballpark $6000 a year. If others feel that they really want to support government waste, then by all means, enjoy yourself. I will take advantage of what is available to minimize my taxes. The limited liability thing really wasn't a part of my decision to do this. I could only get a tax structure that would benefit me by doing a LLC taxed as an S Corp.