S.P., Inc. or L.L.C.???

I got tore apart on that comment. I only said it can help protect personal assets. I also said seek professional advise. I was told "engaging in contracts as a sole proprietor is risky business." In the case of fraud or even an at fault accident an LLC won't help you a bit. Has to do with negligence I think. That is why I have a personal umbrella insurance policy. Cheap piece of mind.

Most of you say a LLC does so little it's not worth it. I feel a little is better than nothing. To each their own. This is America.

 

I have been in the accounting industry and represented clients on the ways of doing their business setups for years.

Corporations that have only one or two family stock holders are closely scrutinized for many reasons. These small companies tend to lose sight of whose money is in the account. In addition, being so closely held, they are basically looked as the same.

I have always told my clients that as truck company, they are the stock holder. They are also the driver of the truck. Attorney will sue all.

I set myself up back years ago in a corporation for reasons of tax that I wanted where S corp was not in the best interest.

Since 2003, I have run as a Schedule C. Deeming it not to be worth the hassle of the extra work on maintaining records and such.

Umbrella policy is nice, and so is the increase on the homeowners policy as well.

 

what most are failing to realize...

SP, LLC, S-Corp, Corp, C-Corp, all are tax categories for the IRS. For mainly financial reasons and structuring.

 

This is what I said the whole time make it simple as possible and let the government into your business as little as possible. If I had 100 trucks running I'd still keep my one seperate and on schedule C and the other 99 in some corp filing.

 

You can have some asset protection with a corporation, but could have personal liability if you go to court. There are two advantages that I have found to having a corporation. First, it is easier to keep business separated from your personal. Second, there could be some tax advantages to working in a corporate structure. For instance, you could pay yourself a small salary and any profits could be paid as dividends. That would save social security taxes since that tax is paid on earned income and dividends are considered unearned income. You could also more easily set up a 401k or other retirement program under a corporate structure. There are some additional fees that you will pay to the state for maintaining your corporation. I pay a minimum of $100/year plus the annual report filing. Some people prefer an LLC or proprietorship. I have owned corporations for many years and it works for me. I have owned both S-corporations and regular C-corporations. The difference between the two is in how you are taxed by the IRS. It has nothing to do with liability.

 

There are pluses for a corporation.

1 - it is easier to sell, trading stock for money is all the biggest step, the others like changing officers and banking access, etc. ... is easier.

2 - the tax savings can be realized if there is a good CPA/EA behind you, not a TAX PREPARER.

3 - there is some asset protection but not what people think - this can be explained by a lawyer.

4 - you can move money around (legally) to make more money.

The negatives are

1 - the setting up the corporation with the right people costs money and time to find them.

2 - paper work isn't bad but if you are used to just a few things to fill out, then it can get tiring.

3 - keeping a plan in place and following the plan.

The game is to limit your tax liability, not for protection, if you wanted protection, then trucking is not where you want to be.

 

must be right, I've been moving my money around for 10 minutes now and it hasn't made any more appear. must need a LLC

 

One of the big reasons I have no problems with the business and tax implications. Been an enrolled agent since 1985.

 

Road Medic, you may be able to do a better job at this but my CPA said to me that there is one thing I must avoid - a tax preparer because they can't do a job of representing you with the IRS, but an EA can. Can you tell the members what an EA is and why they are important?

 

A tax preparer is a person that may or may not be up to speed on the tax laws. They cannot represent a client without the client present. However, their knowledge and ethics training is becoming more stringent. I find there is testing for them now when there was not any before or education requirements each year.

An enrolled agent is someone that has taken the 2 day test to get the status. This requires extensive studies of the law. They are required to get education each and every year.

An enrolled agent can submit a power of attorney at the initial interview and the clients can leave and not see the agent until the audit is over. The agent cannot discuss anything without the enrolled agent present. The EA is the tax payer in the eyes of the IRS and this is the major difference. I have negotiated the entire audit without my client there. I have settled on the amount of the tax if there is some without worries of the IRS accepting them.

This is important since a client may not be aware of the comments that can sink the boat.