Posted by NCLisa on 9/2/06 6:58am Msg #143121
To Incorporate or Remain a Sole Proprietor?
What are some of the pro's and cons of incorporating? What are some of the pro's and cons of being a sole proprietor? I've got my list of pro's and con's and know that I'm missing many points, so I could use your input.
Please tell me how & why one or the other works best for you.
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Reply by Teri_PA on 9/2/06 7:53am Msg #143124
Or another option to consider is to become an LLC. With a form 8832 (Entity Classification Election) filed with the IRS, you have the ability to select for tax purposes any form you choose (Corp, S Corp, sole proprietorship, Partnership) and are afforded the legal protection of an LLC. The beauty of the LLC is that if you decide that you do not like the form you selected or your business needs change, you can switch back by filing another 8832. You'll keep your same EIN no matter which form you select. However, there are some disadvantages to LLC's in terms of the longevity factor of the firm, etc. A good lawyer can best advise you (coupled with an awesome accountant)...
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Reply by NCLisa on 9/2/06 8:22am Msg #143127
I just want to get this from a peers perspective for now. What other NSA's find the pro's and con's are of Corps, LLC's, sole proprietorship. Then I'll contact my attorney. Obviously, my attorney doesn't do this for a living, so she would have no clue what the pro's and con's are, only the legalities. I also can't find an accountant that has worked with NSA's as it is relatively new to NC (2 years).
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Reply by John_NorCal on 9/2/06 10:00am Msg #143129
For my 2 cents worth, I really don't see a benefit to operating other than a sole proprietor. With LLC's or Sub Chap S corps there is no liability protection when you work as an SA, this is a personal service business and if you make a mistake on your notarization there will be no protection other than your E&O policy, the corporate veil will not protect you. You can't write off your medical insurance premiums as a corporate expense unless you're a C corp. In our line of work, I really can't see the point of creating an extra level of reporting, having to pay the minimum LLC or corporate tax rates for no real benefit.
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Reply by Traveling2U on 9/2/06 11:26am Msg #143137
I have a "C" and its working for me.
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Reply by John_NorCal on 9/2/06 12:04pm Msg #143139
A C corp can work for certain entities. There is usually an easier way to raise funds if needed. However, most service type businesses like ours do not need a C corp. There is a double taxation liability. Income is taxed at the corporate level then at the personal level. In my opinion if you REALLY feel the need for a corporate persona, then I would go with either a Sub Chapter S or an LLC. But strictly on a liability issue, I don't see any benefits to going with other than a sole prop. This is strictly my opinion as a business person and a professional tax preparer.
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Reply by Traveling2U on 9/2/06 12:40pm Msg #143142
Re: I had them
I had a Sole many years ago it helped us reversing our taxes being a consultant. we have no kids so we paid every single year :-) it was nice to breakeven the first year the next year we got a check.
I had a Corp changed it to a "S" that worked okay since I was still working. But in CA lot of taxes in our case.
I will end this year with huge profits from of my services and stocks. since I provide a service I'm not doubled taxed.
2007 I'll be ready to start buying Notes my income will justify why I went with the "C" among other things I'm self employed. I love making it happen for myself no matter how long it takes. I've done really well and I have other goals ready to be executed ;-) Estate planning is next on my list.
I had a one free hour with my CPA I explained everything I plan to do and she guided me from there. Everyone situation will be different. I had a business plan and she has made tax time like it never happen a non-event.
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Reply by John_NorCal on 9/2/06 8:01pm Msg #143167
Re: I had them
Yes, you can have the income, keep it in the corp, pay yourself a salary then pay dividends to yourself, your spouse and any other stock holder. Long as you're happy with the results, that's all that matters. Speaking strictly as a signing agent with no other issues, I still believe that it makes more sense to be a sole prop. When you through in the other activities, then it is a balancing act as to which makes more sense, "C", "S" or LLC. Good luck in your endeavors.
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Reply by NCLisa on 9/3/06 6:05pm Msg #143270
Re: I had them
I want to be able to protect my "business assests" from my personal life.
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Reply by ME/NJ on 9/2/06 1:43pm Msg #143149
LLC has worked for our company, If you do a fair amount of work consult an accountant.
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Reply by MelissaCT on 9/4/06 9:18pm Msg #143449
Re: Great question, I was wondering the same n/m
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