S-Corps get rid of the double taxation...but you are limited to how many shareholders you can have and some other limited things.
Scottie ---------- Original Message ---------------------------------- From: "Marlon K. Schafer" <o...@odessaoffice.com> Reply-To: WISPA General List <wireless@wispa.org> Date: Wed, 3 Jun 2009 08:23:37 -0700 >Melissa does work at an accounting firm..... She's not the CPA but she does >most of the paperwork etc. And, naturally we work very closely with the >CPAs at the firm. > >We've looked at the money differences between sole proprietor and corp. >There really isn't much difference if you stay honest with things. At least >not at the low levels we're at. > >When we start making more money (in the next couple of years as things are >sitting now) we'll likely be better off as a corp. Because the current >business doesn't actually own anything we'll be able to easily set things up >so that the corp rents things from us. The office, vehicles etc. In that >way we can personally take some of the income while the corp writes it off. > >The way you juggle things to keep taxes down is to work the tax brackets. >Right now we're able to stay in a pretty low one. But I'm running out of >places and ways to expand so that's going to change. We'll pay less taxes >when we have two smaller entities in smaller brackets. At least that's the >way I understand it now.... > >One of the really great things about a sole proprietorship is asset >management. We can take old computers home all day and it's no big deal. >Just move it. If it's something owned by the corp we have to somehow >transfer that product. More paperwork etc. > >Another thing a person has to be very careful with is who owns what. Mom >and Dad own a large farm. Thousands and thousands of acres, mostly >irrigated. Back when their corp got formed all of the assets were put into >the corp. Now that they want to sell the farm they have to somehow make >nearly twice as much because they'll be double taxed at the time of the >sale. There will be income tax at the corp level AND capital gains at the >personal level. Or some such similar mess. Basically when they sell 50% or >so will to go taxes. Unless they can sell the corp it's self which is >something no one wants to buy. People only want the assets, otherwise they >end up with the same long term tax mess. It's also nearly impossible to >gift enough assets back to themselves or their kids to make a difference. > >Both sole owner and corp have their places. The choices are not REALLY as >simple as some people try to make them out. And how they get structured >over the long run is very important yet almost no one ever goes to a lawyer >that specializes in such things for advice on the best type of corp to form >and how to run it from day one. Many things get done just because that's >they way it is, even if there is a better way...... I still look at my >avoidance of routing cpe. The reasons I liked bridging cpe have proven to >be very true (radios are inflexible crappy routers) but the benefits have >been wonderful anyway. It's something I wish I'd have listened to others on >years and years ago. Human nature I guess. I am listening to the experts >on tax matters though. grin > >marlon > >----- Original Message ----- >From: "George Rogato" <wi...@oregonfast.net> >To: "WISPA General List" <wireless@wispa.org> >Sent: Wednesday, June 03, 2009 2:38 AM >Subject: Re: [WISPA] Legal Entity - which type? Was: Quesiton on Funding >/Financing / Capital Availability > > >> Unless you actually make a decent salary. >> When your a sole proprietor you have to pay the self employment tax. >> Self employment tax is matching social security payments. >> You pay both the individual ss tax and as well as the employers >> contribution which comes to about double. >> >> If you were incorporated and you were an employee, which you would be, >> you could collect half your pay in salary and the other half in >> dividends, or 1/4 in salary and 3/4 in dividends (which yields a deeper >> tax break) >> >> Dividends are not subject to the 2nd half of the contributing tax or the >> self employment tax, never mind workers comp, state unemployment, etc. >> >> For those that rant and rave against the big bad government and their >> unreasonable taxes (count me in), then it's foolish to voluntarily pay >> what is not required of you. >> >> But to all those that do go ahead and pay the extra not required ss tax, >> My family and all the rest of those who will someday collect ss in our >> golden years thank you for being so generous as paying this extra >> voluntary tax to help insure the solvency of ss so it will be there when >> we retire as well as give the government even more money to borrow >> against so they can spend even more tax dollars that really aren't there. >> >> Also, if you have a good cpa, they tell you this stuff when they do your >> income taxes. >> >> a cpa is not a tax preparer or a book keeper. >> >> >> >> >> >> >> >> RickG wrote: >>> Makes sense to me...thanks! -RickG >>> >>> On Tue, Jun 2, 2009 at 11:32 PM, Marlon K. Schafer <o...@odessaoffice.com> >>> wrote: >>>> Let me get my accountant wife to answer that one. Here's Melissa.... >>>> >>>> Well, for us it's not yet in our best interest to incorporate. >>>> Sometimes >>>> the reason for incorporating is to help insulate the individual from a >>>> lawsuit - but usually if the corp is sued, they also sue the owner of >>>> the >>>> corp. I agree with you about the S-Corp - the income from an S-Corp is >>>> picked up on your personal return so there aren't usually as many >>>> advantages >>>> when doing tax planning. We have not incorporated because the cost of >>>> being >>>> a corp (accounting, legal, another set of books, more time on Melissa's >>>> part >>>> to work on the books...) is greater to us right now than the benefits. >>>> I >>>> see it as something that we will probably need to do in the future as >>>> our >>>> income increases and we need to do more tax planning. Hope that >>>> helps..... >>>> Melissa >>>> >>>> There ya have it! >>>> marlon >>>> >>>> ----- Original Message ----- >>>> From: "RickG" <rgunder...@gmail.com> >>>> To: "WISPA General List" <wireless@wispa.org> >>>> Sent: Monday, May 25, 2009 12:02 PM >>>> Subject: [WISPA] Legal Entity - which type? Was: Quesiton on Funding >>>> /Financing / Capital Availability >>>> >>>> >>>> Ha! Another interesting topic! In the past, when doing business for >>>> myself, I legally filed as a sole-proprietor. When I got into the WISP >>>> business, for a multitude of reasons, I became an "S-Corp". After >>>> filing my taxes, it seems to be much simpler and possibly more >>>> advantageous to just be a sole-proprietor. But that goes against all >>>> advise I receive. >>>> Marlon, I'm actually surprised that you are a sole-proprietor. What >>>> benefits have you found by remaining so? >>>> -RickG >>>> >>>> On Mon, May 25, 2009 at 11:54 AM, Marlon K. Schafer >>>> <o...@odessaoffice.com> wrote: >>>>> One more thing. I don't agree with your definitions per se'. >>>>> >>>>> We all have businesses. A proprietorship is a TYPE of business. We are >>>>> a >>>>> proprietorship because I'm not incorporated (incorporating is over >>>>> rated >>>>> and >>>>> expensive to do right). I'm still a business though.... >>>>> >>>>> http://en.wikipedia.org/wiki/Business >>>>> >>>>> http://en.wikipedia.org/wiki/Sole_proprietorship >>>>> >>>>> http://en.wikipedia.org/wiki/Asset >>>>> >>>>> marlon >>>>> >>>>> ----- Original Message ----- >>>>> From: "Charles Wu" <c...@cticonnect.com> >>>>> To: "WISPA General List" <wireless@wispa.org> >>>>> Sent: Sunday, May 24, 2009 10:03 PM >>>>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital >>>>> Availability >>>>> >>>>> >>>>>> Hi Marlon, >>>>>> >>>>>> I think it's appropriate to make a few definitions and distinctions on >>>>>> things so everyone is on the same page >>>>>> >>>>>> Specifically, for purposes of making my point, I define >>>>>> >>>>>> Proprietorship: A commercial activity engaged in as a means of >>>>>> livelihood >>>>>> or profit >>>>>> >>>>>> Business: A unique system of processes and procedures that documents >>>>>> and >>>>>> codifies a specific method of proprietorship >>>>>> >>>>>> Asset: cash, inventory, equipment, infrastructure, customer contracts, >>>>>> brand, marketing, etc >>>>>> >>>>>>> Grin. Sure it is. That's what a LOT of small business people do. It's >>>>>>> also kind of common for doctors, dentists, plumbers etc.... Sometimes >>>>>>> it >>>>>>> sucks, >>>>>> Now, everything you stated above is just a method of proprietorship, >>>>>> and >>>>>> in most cases, from a sale perspective, a proprietorships isn't worth >>>>>> anything more than the depreciated value of its assets >>>>>> >>>>>> Say you were buying out the local plumber's office -- what would he >>>>>> have >>>>>> of value? His truck? Some old tools? A customer list / brand perhaps >>>>>> (but the reality of things is that customers do business with him >>>>>> because >>>>>> of him, and if you bought him out and he moved out of town, those >>>>>> customers would probably go back to being on the open market) >>>>>> >>>>>> Now, in comparing the WISP 'proprietorship' vs. the plumber, it's >>>>>> worth >>>>>> noting that the WISP is somewhat unique in that it results in the >>>>>> creation >>>>>> of an independent asset that holds onto a lot of value (e.g., the >>>>>> recurring revenue and everything that goes to support it); in many >>>>>> ways, >>>>>> this is akin to real-estate >>>>>> >>>>>>> Not >>>>>>> everyone out there even wants to get that big (if I had a nickle for >>>>>>> every >>>>>>> business owner that's told me the most fun they had and the most >>>>>>> money >>>>>>> they >>>>>>> made was when it was just them, no employees......) But then again, >>>>>>> that's >>>>>>> one of the really cool things about this buisness, it's big enough >>>>>>> and >>>>>>> flexible enough to allow many different business models and operator >>>>>>> dreams >>>>>>> to bear fuit! >>>>>> True...and you have the added benefit of building an asset that has >>>>>> value >>>>>> (be happy we're not plumbers =) >>>>>> >>>>>> -Charles >>>>>> >>>>>> >>>>>> >>>>>> >>>>>> >>>>>> -------------------------------------------------------------------------------- >>>>>> WISPA Wants You! Join today! >>>>>> http://signup.wispa.org/ >>>>>> -------------------------------------------------------------------------------- >>>>>> >>>>>> WISPA Wireless List: wireless@wispa.org >>>>>> >>>>>> Subscribe/Unsubscribe: >>>>>> http://lists.wispa.org/mailman/listinfo/wireless >>>>>> >>>>>> Archives: http://lists.wispa.org/pipermail/wireless/ >>>>> >>>>> >>>>> -------------------------------------------------------------------------------- >>>>> WISPA Wants You! 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