Posted by Marie_MN on 6/15/05 4:32pm
Msg #44920

Incorporate or not

My question to all of you who have been in the business for a few years is: Has anyone Incorporated or LLC'd their business? Should a person do that or not? I am seeing a BIG profit here and would like to avoid paying all those taxes, but of course, in a legal manner. Do you think the benefits are worth all the paperwork involved or not?

Reply by Nicole_NCali on 6/15/05 6:44pm
Msg #44940

Check out NOLO Law

A good resource to determine if you should incorporate or not is NOLO law. This book is a definite treasure when it comes to how to start a corporation or which one would be a benefit to you.

Reply by stamper_WI on 6/15/05 8:30pm
Msg #44969

Re: Check out NOLO Law

Also check out the Rich Dad, Poor Dad series...the very first book talks about the benefits of LLC, Partnerships incorporations etc. Its and easy read as well. Opens your eyes to a whole new way of thinking

Reply by John_NorCal on 6/15/05 9:01pm
Msg #44979

Re: Incorporate or not> Think about it first

One BIG thing that you need to consider is that when you incorporate, you will then be subject to corporate tax as well as your personal income tax. Do you really want to pay two sets of taxes. Incorporating as an individual/sole proprietor is in my opinion warranted when you want to keep liability off of yourself and onto a corporate shell. I would definitely look long and hard, speak with a good corporate attorney and/or CPA before you make any move. It may not be what you think or have heard of.

Reply by Ernest_CT on 6/15/05 9:20pm
Msg #44988

Re: Incorporate or not> Think about it first

Your personal liability may not be limitable just because you form a LLC. The company is not a notary.

Please do a search for previous threads. This topic has been discussed.

Reply by John_NorCal on 6/15/05 9:28pm
Msg #44989

Re: Incorporate or not> Think about it first

This is true, as a notary you undoubtedly will not have a limited liability. A bad notarial act will not be defended because a person is incorporated or has formed an LLC. That's why a person has to consult with a knowledgeable attorney. Do not rely on word of mouth or from something that has been read somewhere.

Reply by Susie/OH on 6/15/05 9:30pm
Msg #44991

Re: Incorporate or not> Think about it first

Go to the website www.sourceoftitle.com and in their search enter the name Kevin Ahern. He would be more than happy to answer your questions. I have tried to search under LLC, but nothing comes up. So, just enter his name. He is an attorney from CT. Or, just read the forum (Source of Title) and you will see his name and click the name to send him an email.

Reply by Kevin/Ct on 6/16/05 7:26am
Msg #45077

Re: Incorporate or not> Think about it first

I am here, Susan. When you incorporate or form an LLC you also need to keep e&o insurance in place that covers both the corporation/LLC and you personally. They protect you against different liabilities.

Generally speaking it is an excellent idea to either incorporate or form an LLC when you are active in the commercial world. It is a method by which you can limit your liability and shield your personal assets.

There are a number of considerations when pondering a business form (corporation or LLC).
There are considerations of liability for contract problems, tort problems and tax problems.
With respect to federal tax problems the double taxation problem is easily dealt with through an application for Subchapter S status. A Subchapter S corporation is only taxed once rather than twice. You can file this application with the IRS when you form the corporation. An LLC is usually taxed as a parnership/sole proprietorship rather than a corporation unless you ask the IRS to tax it as a corporation. In so far as state taxes are concerned, you will need to review this with your accountant. There are states in which you can incorporate which do not have state corporate taxes, but it is more expensive to set up the corporation this way because you incorporate in the no tax state, but then will probably have to appy for a certificate of authority to do business in your home state as a foreign corporation or LLC. There is an application fee for both.

The protection provided by incorporating or forming an LLC against contract breach is excellent. You have to make certain that you sign all contracts and documents on behalf of the corporation/LLC in your representative capacity. The signature on the document/ contract needs to clearly identify the full and exact name of the corporation/LLC and your title in connection with the corporation or LLC.

In so far as improper notarial acts are concerned, it is your commission that will be invalidated for improper notarial acts. The corporate shield or LLC will not protect you.

In so far as Connecticut is concerned, the corporate shield or LLC does not protect corporate officers/directors and LLC managers/members who involve themselves in tort liability either personally or in their representative capacity. You will need to check your state's law to see if the same is true there. Negligence is a tort. Although the corporate shield may not help you to limit your liability for negligence, e& o insurance will. In so far as intentional torts are concerned, neither e & o insurance nor incorporating nor forming an LLC will help you.

Reply by Kevin/Ct on 6/16/05 7:35am
Msg #45080

Re: Incorporate or not> Think about it first

Just wanted to clarify something. If you set up a corporation or LLC in a state that does not tax corporations or LLC's, you may or may not be taxed by your home state when you apply for a certificate of authority to do business in your home state as a foreign corporation.
You need to check with your accountant on this matter. I am willing to bet that you would have to pay the tax in your home state, but I don't know which state in which you wish to set up. Your accountant could give you a fast answer on this.

Reply by HisHughness on 6/15/05 11:52pm
Msg #45020

If you incorporate a small business such as an NSA practice, especially one that has few physical assets and does not require a state license, such as an attorney or physician, you would almost surely do so as a Subchapter S corporation, which passes through the revenues and tax liability to you individually. No lender with any sense is going to limit the liability on a loan or other obligation to the corporation; you will be personally liable.

For the non-professional with a no-asset corporation, there is no advantage to incorporating that I know of, and several disadvantages.

Pay your damned taxes like everybody else. I wanna be sure my Social Security checks keep coming.

Reply by Barry on 6/16/05 1:53am
Msg #45046

I have answered this one a few times. The best place to ask this type of question is with a CPA you choose, or an attorney who specializes in taxes. They should know the correct questions to ask you regarding your finances, etc. In a situation like this, always get advice from the experts.