Converting Sole Proprietorship to LLC, & S-Corp

[Thecrew]

Seeking feedback on Pro's & Con's

Why would a small business convert?
My accountant thinks we should do this for the 2021 year
I'm plan on hiring 2 new employee's this year, IF that makes a difference in your feedback
Accountant says we will pay less in taxes but how is that possible?
Concerned about doing this....

Thanks so much

 

[FredC]

Accountant says we will pay less in taxes but how is that possible?

you didn't ask him?

 

[Fat Mike]

Seeking feedback on Pro's & Con's

Why would a small business convert?
My accountant thinks we should do this for the 2021 year
I'm plan on hiring 2 new employee's this year, IF that makes a difference in your feedback
Accountant says we will pay less in taxes but how is that possible?
Concerned about doing this....

Thanks so much

Llc is to remove liability from you personally and put it on the business.

if it’s a single member llc you’ll still file as sol prop. hence the scorp. Like Fred said you didn’t ask your cpa?

 

[hogjowl]

Why do people make things so hard?

 

[Papa John]

It's better to have a Trust instead of a Will when you die, according to my Tax advisor.
An LLC avoids Probate court with the distribution of your asset after you die.
I pay an extra $800/year in taxes to have a Trust in California, AND extra to have my taxes prepared by my CPA.
My CPA thinks I didn't need a Trust.
My Tax advisor thinks my CPA is an Idiot.

Tax Rules and Tax Advice varies from State to State-- SO ASK YOUR CPA and not people from a variety of States.

 

[Fat Mike]

Why do people make things so hard?

Because They don’t have Matts helmet

 

[hogjowl]

I’m just wondering why he’d hire an accountant he doesn’t trust?

 

[Desk Jockey]

As an officer of the Corp a portion of your income can also be received through dividends, which the Corp pays the taxes on.

There are many advantages along with the corporate shield Mike mentioned.

Your accountant didn't go over them with you?

 

[Thecrew]

Llc is to remove liability from you personally and put it on the business.

if it’s a single member llc you’ll still file as sol prop. hence the scorp. Like Fred said you didn’t ask your cpa?

Well I came here to ask questions to get ideas of what to ask when we speak over the phone today. This was just something he mentioned in an email to me and since I'm not an accountant or a tax lawyer I figured I'd ask some of those that might have been in a similar situation while I was waiting for the phone conversation. I guess this isn't the place for those sort of questions though. I'll be sure to remember the comments here in future post.

Happy Holidays

 

[Thecrew]

Why do people make things so hard?

I'm not sure why you even took the time to post provide feedback......totally not helpful but thanks so much for the effort I guess

 

[Lee Stockwell]

We did the conversion in 2003, and then undid it about 5 years later.

 

[hogjowl]

I'm not sure why you even took the time to post provide feedback......totally not helpful but thanks so much for the effort I guess

Because not being helpful is what I do

 

[Thecrew]

We did the conversion in 2003, and then undid it about 5 y

We did the conversion in 2003, and then undid it about 5 years later.

I'm curious why you made that decision. Would you care to share?

 

[Thecrew]

Because not being helpful is what I do

whatever floats your boat....

 

[Lee Stockwell]

It was more profitable for my lawyer and CPA than it was for me.

PITA paperwork

 

[Desk Jockey]

You do have hold an annual meeting and keep good notes in your corporate book.

For us all stockholders were family and meetings took place regularly anyway. Whenever it was anything that merited being in there we just wrote it up and stuck it in.

 

[Fat Mike]

Well I came here to ask questions to get ideas of what to ask when we speak over the phone today. This was just something he mentioned in an email to me and since I'm not an accountant or a tax lawyer I figured I'd ask some of those that might have been in a similar situation while I was waiting for the phone conversation. I guess this isn't the place for those sort of questions though. I'll be sure to remember the comments here in future post.

Happy Holidays

But your op states you had a convo with your cpa. That’s the time to ask her/him questions. If your cpa isn’t willing to teach you hire another one

 

[Thecrew]

It was more profitable for my lawyer and CPA than it was for me.

PITA paperwork

So it's not really worth the headache. Gotcha! I told him there's no way the government ISN'T getting their greedy hands on the dollars we make so what's the catch? He said, if I convert then I won't pay self employment taxes which is the biggest incentive for my business. I'm no accountant or for that matter a lawyer and I've been burned by a previous accountant and we only hired this guy last year so ya I'm just trying to determine what's best for my business and so my thought on posting the question here was simply to get feedback from others that have been through it so THANK YOU for the feedback. I appreciate your time.

Happy Holidays!

 

[hogjowl]

You’ve welcome

 

[Desk Jockey]

You’ve welcome

English as a second language?

 

[hogjowl]

I’d change your post if I was Mikey

 

[Desk Jockey]

lol

 

[Cleanworks]

I’d change your post if I was Mikey

Another Mikey wannabe.

 

[Fat Mike]

So it's not really worth the headache. Gotcha! I told him there's no way the government ISN'T getting their greedy hands on the dollars we make so what's the catch? He said, if I convert then I won't pay self employment taxes which is the biggest incentive for my business. I'm no accountant or for that matter a lawyer and I've been burned by a previous accountant and we only hired this guy last year so ya I'm just trying to determine what's best for my business and so my thought on posting the question here was simply to get feedback from others that have been through it so THANK YOU for the feedback. I appreciate your time.

Happy Holidays!

Talk to a lawyer also. It’s not just tax liability but your personal liabilities. That also depends on actual revenues you bring in. I’d hate for one of my businesses to cause me to lose personal assets

 

[hogjowl]

From what I’ve been told, it’s very easy for attorneys to “pierce the corporate veil” and make your personal protection useless.

 

[Desk Jockey]

A good reason for umbrella insurance. Wife or children get in a car accident, you don't want them to get to personal assets.

 

[Mikey P]

From what I’ve been told, it’s very easy for attorneys to “pierce the corporate veil” and make your personal protection useless.

Fred tells me that all the time

 

[Ron K]

From what I’ve been told, it’s very easy for attorneys to “pierce the corporate veil” and make your personal protection useless.

I agree Insurance is what protects you.
If it's an accident .....Insurance protects you.
If it's malicious you're getting sued.

 

[Kenny Hayes]

I waded through all that well some. First of all, LISTEN to you accountant, he telling you straight. The S Corp will save you thousands, if you make that much in self employment tax. Everything funnels through the Corp. and you pay tax on profit. You’re able to expense more off as an S Corp. DO IT!!!!!!!

 

[Old Coastie]

whatever floats your boat....

Did someone mention boats?

My company is an LLC. I get asked all the time if I am a franchise owner, until they see my FUV.
Self employment is a snap at tax season. An LLC or Corporation is stupidly confusing, so I pay a local firm to track the numbers and do my business taxes. It costs more than I save in personal taxes but it also gets done properly, on time and saves me hundreds of hours of hateful bookkeeping.
You may be able to do the incorporation paperwork on Legal Zoom.

Now about those boats...