Seriously, the person you should be asking this question to, is your accountant.
They are going to know best. RickG wrote: > Correct, compared to C-Corps. Is there and advantage of LLC versus S-Corp? > -RickG > > On Wed, Jun 3, 2009 at 5:36 PM, Scottie Arnett <[email protected]> wrote: >> 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" <[email protected]> >> Reply-To: WISPA General List <[email protected]> >> 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" <[email protected]> >>> To: "WISPA General List" <[email protected]> >>> 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 <[email protected]> >>>>> 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" <[email protected]> >>>>>> To: "WISPA General List" <[email protected]> >>>>>> 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 >>>>>> <[email protected]> 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" <[email protected]> >>>>>>> To: "WISPA General List" <[email protected]> >>>>>>> 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! 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