Time to form an S Corp?

[Russ T.]

I should have done it last year. Talk to your accountant about it. This misstep cost me thousands (almost 10K) but I'm glad to get back on track for 2014. Just something for you to check up on...


The Clean Machine

 

[jcooper]

Russ,

I actually made a post about a year ago wondering why more of us aren't some type of corp, just for the tax savings.

 

[Russ T.]

Russ,

I actually made a post about a year ago wondering why more of us aren't some type of corp, just for the tax savings.

I vaguely remember that. I was more focused on other things I guess. I shouldn't have been though, it cost me a lot of $.


The Clean Machine

 

[Mark Saiger]

We are an LLC operating as a S-Corp.

Also, take a look at a Simple IRA plan to invest in your retirement and also save you tons of tax money.

We also invest in a HSA (Health Saving Plan) that we max out each year and do not use for Medical. We pay our medical bills out of our pocket and get another tax savings. We are planning to use this in the future or roll it over to some other type of investment.

Take a look at all of these.

Costs some money up front but saves a ton to the tax man.

Pay yourself first!

Mark Saiger

 

[Russ T.]

We formed an LLC a few years ago, when I started up in Iowa. I think we will be doing as you guys are, in operating as an S Corp. I'll double check that. We had our first 6 digit sales year in 2013. It was significantly higher than 2012 and caught us and our accountant a little off guard. Moving in the right direction though!


The Clean Machine

 

[ruff]

So, in a medium size nut shell.....what are the S corp tax advantages over an LLC ?

 

[kingjoelking]

If I remember correctly the main reason. Is that you give yourself a salary of $18k or so a year which is taxed at regular rates. Then the rest of your profits are recieved as dividends and then taxed at the capitol gains tax which I believe is 15%.

 

[jcooper]

Simple version...
S-corp you pay yourself, rest of the money from the biz stays "in" the biz and is not taxed.



Not simple version...
For Federal income tax purposes, however, taxation of S corporations resembles that of partnerships. As with partnerships, the income, deductions, and tax credits of an S corporation flow through to shareholders annually, regardless of whether distributions are made. Thus, income is taxed at the shareholder level and not at the corporate level.

http://en.wikipedia.org/wiki/S_corporation

 

[jcooper]

We had our first 6 digit sales year in 2013.

That's KICK ASS, Russ! One truck?

 

[Russ T.]

That's KICK ASS, Russ! One truck?

Yes. I have 2 trucks and ran both several times in July but 1 truck for the most part. I didn't put near that in my pocket but very exciting for us. Thanks!


The Clean Machine

 

[Spurlington]

Yes. I have 2 trucks and ran both several times in July but 1 truck for the most part. I didn't put near that in my pocket but very exciting for us. Thanks!


The Clean Machine

 

[floorguy]

also how are you paying yourself???

draws?? and figured out at the end of year

or

w-2 yourself....

i have been doing draws, and was recently informed that the IRS is now going to start "checking" corps, who have draws instead of w-2 in their paper work....

so i am switching (and its going to be a pain) to an LLC.... but thats me and the headaches of doing the w-2 with holdings and quarterlies out weigh the hassle of giving out new tax id #s

 

[GCCLee]

After all the BS the Government pulled this past year, we shouldn't pay em shit!

And It's gonna get worse this year! Might send em a $5 check as thats about all they have earned.


Personally I would rather throw punches than give my hard earned money away to useless spending. Times are a changing!

 

[Russ T.]

Times are changing. I wish the outlook was better for our kids but we have to do the best with what we have. The worst thing you could do for you and your fam is to not pay them what you owe.

Find a great accountant, not HR Block! There are ways, for now, to legally handle your money in a way that "the man" won't pound you.

For us, we are forming an S Corp. I don't understand it completely yet because it was just introduced to me the other day. Essentially my wife and I will become employees (W2 forms) of TCM. We will take a salary from the company. We still have total control over how the biz $ gets spent so I can grow it in the best way I know how.

I was pounded in 2013 but my accountant (who I've been with for 6 years) is going to help us with the transition so it doesn't go down like this again. GET A GOOD ACCOUNTANT CHRIS! They will educate you along the way too.


The Clean Machine

 

[Chris A]

Times are changing. I wish the outlook was better for our kids but we have to do the best with what we have. The worst thing you could do for you and your fam is to not pay them what you owe.

Find a great accountant, not HR Block! There are ways, for now, to legally handle your money in a way that "the man" won't pound you.

For us, we are forming an S Corp. I don't understand it completely yet because it was just introduced to me the other day. Essentially my wife and I will become employees (W2 forms) of TCM. We will take a salary from the company. We still have total control over how the biz $ gets spent so I can grow it in the best way I know how.

I was pounded in 2013 but my accountant (who I've been with for 6 years) is going to help us with the transition so it doesn't go down like this again. GET A GOOD ACCOUNTANT CHRIS! They will educate you along the way too.


The Clean Machine

Amen to the good accountant! My cpa has had more to do with my businesses growth than anyone else!

Sent from my SM-G730V using Tapatalk

 

[Spurlington]

Since you're in the figuring stuff out phase - find out how you can position yourself to be the employee that can draw workmans comp when injured and unemployment when not working .. that might mean removing yourself from ownership title

I'm not sure how it works or if it can be done .. but wouldn't it be nice

 

[Russ T.]

Since you're in the figuring stuff out phase - find out how you can position yourself to be the employee that can draw workmans comp when injured and unemployment when not working .. that might mean removing yourself from ownership title

I'm not sure how it works or if it can be done .. but wouldn't it be nice

Doesn't hurt to ask...thanks Paul.


The Clean Machine

 

[Newman]

Since you're in the figuring stuff out phase - find out how you can position yourself to be the employee that can draw workmans comp when injured and unemployment when not working .. that might mean removing yourself from ownership title

I'm not sure how it works or if it can be done .. but wouldn't it be nice

I W2 my salary to me.

I am not sure about the unemployment end of the deal, I never looked into collecting it from myself.

Workmans Comp is a killer! I have signed a "Owners Exemption" from workmans comp with my insurance company. This keeps me from paying WC on my wages. I just pay it for my employees.

 

[GCCLee]

I did,




An she's a mean ol hussy! won't lemme pull no shenanigans. Said buyin bubble machines was tax deductible, so I jus shud up there : )

 

[floorguy]

the problem with workmans comp is....for yourself.....you will never get out of it, what you pay into it....which is why you do an exemption....

why the hell would i want to pay all that money into an acct like that, and not get it back....shit put it in a savings acct if you are worried about it....

plus they charge you based on your salary...high salary...high cost

 

[Spurlington]

What about a wife that owns the company and the hubby working part time 5-10 hrs a week @ $10 an hr .. yeah .. probably be a big red flag and now youre looking over both shoulders ..

 

[Joe Appleby]

Ofer, what would your friends say if they knew you were a corporation? It''s a slippery slope to off shore accounts, country clubs and driving a hummer.

 

[Russ T.]

Ofer, what would your friends say if they knew you were a corporation? It''s a slippery slope to off shore accounts, country clubs and driving a hummer.

It's THAT easy!!! ;-)


The Clean Machine

 

[NobleCarpetCleaners]

Ya I had this conversation last week at my tax meeting. Lots of ongoing corporate procedures, meticulous records, definitely a change in my book keeping. For a one-man band with a simple insurance policy filing a schedule C I gotta say not for me at this point in my career. My insurance goes up (for some reason, not much though) and I gotta hand over $800 per year to the State of Cal just to remain in business as a corp. Filing for a corp out of state?, ah not for me.

 

[Joe Appleby]

One of the biggest advantages of having a corp. is the liability exposure of your personal assets,
homes, cars, savings...

 

[ruff]

Ofer, what would your friends say if they knew you were a corporation? It''s a slippery slope to off shore accounts, country clubs and driving a hummer.

Another damn Republican.

 

[ruff]

One of the biggest advantages of having a corp. is the liability exposure of your personal assets,
homes, cars, savings...

Does an S corp give you a better liability protection than an LLC?

 

[Ron K]

Does an S corp give you a better liability exposure than an LLC?

Does the LLC protect you or does your Insurance Policy?

 

[ruff]

Good question Ron.
I don't know. I hope both do.

Does an S corp give you better protection?

 

[jcooper]

Does the LLC protect you or does your Insurance Policy?

Generally speaking, both do. Simple example - Lets say something REAL bad happens and you get sued for more than your insurance policy is worth. That is where the "inc." or llc will protect you.

Does an S corp give you a better liability exposure than an LLC?

S-corp is just for taxes.
http://en.wikipedia.org/wiki/S_corporation