I know and I have many times. Depending on who you talk to, you get different answers. It's interesting to see what others are doing. -RickG
On Thu, Jun 4, 2009 at 12:55 AM, George Rogato <[email protected]> wrote: > 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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