Corporation vs LLC

TALK TO YOUR ACCOUNTANT TO SEE WHICH ONE WOULD ADVANTAGEOUS FOR YOUR SITUATION.

 

then please follow the advice of your accountant. what works for one, does not always work for another. your husband may not know all about his cousin's operation and tax base, etc,etc. best he not do as his cousin did.

 

Hmmm, would like to know his reasoning behind that?

 

I'm an LLC but I filed form 2553 with the IRS that let's my LLC be taxed as an S-corp.

So now when its tax time, its gross revenue, minus deductions, my meager salary, and a fat dividend.

I dont see the point of being a corporation in a small/one person trucking outfit. But as always do some research.

 

First off, the IRS does not care what corporate form you take, and in most cases, whether or not you incorporate at all. In trucking, especially after the tax law changes, it's almost always better to take S-Corp treatment. Just because you elect your LLC to be taxed *as* a corporation by the IRS does not mean you are one or have to be one.

Now, you want to make *absolutely* sure the accountant is taking into account the new tax law changes. How you elect depreciation on the truck could save or cost you thousands in tax over the life of the truck. You really want them to model out your particular situation.

That being said, there are *very* few reasons you would elect a Corporation over an LLC, and most of these have to do with peculiarities in state law, insurance or lending. Absent a very clear reason to become a Corporation, you would almost always want to be an LLC. That being said, unless you want to sell the business, it usually does not make a difference.

 

I'm not an O/O but here is one question to ask your accountant. Filing as a Sole Proprietor(LLC) you can no longer take the per diem deduction. If you are an S Corp. the company can pay you per diem and take the deduction as an expense and you do not count it as income. If your husband is OTR then this could be a 10 - 15,000 write off.

 

LLC has nothing to do with taxes. It supposedly gives you protection in a lawsuit and is state specific. For tax purposes according to the IRS you are either a Sole Proprietor or a Corporation. On the Corporation side it would be an S or C. Most are S unless they are very large. As a Sole Prop all income after expenses is taxed at the same rate. The advantage of the S Corp is you can pay a lower salary and not pay as much into Social Security/Medicare. If you have 60,000 after expenses the SP pays 15% of that or 9,000 to SS. An S Corp could pay you a salary of 30,000 which would mean 4,500 for SS and the other 30,000 would be taxed as ordinary income not wages. A savings of 4,500.

This does lower your SS benefit when you retire but another advantage of an S Corp is you can set up a 401k where the company matches a percentage of your salary. With the 30,000 salary and the company matching 25%, the company writes off 7,500 and it goes tax deferred into your retirement account.