PDA

View Full Version : PLEASE HELP!!! NEW HERE.. GOING LEGIT.. LLC or S-CORP? SO MANY QUESTIONS!


ccproperties
03-17-2013, 10:55 PM
HELLO EVERYONE! I'm new on this forum although I have been reading the posts for a while now without posting anything. I would appreciate some guidance if possible.:eek::eek:
I am currently running as a DBA. I have gotten much advice about changing to an LLC or an S-Corp but am really unclear what I should do. I am currently my only employee except for some "off the books" workers such as family and friends from time to time for a few hours and my wife that runs the behind the scenes aspect of my company. I am in NY. Some tell me that an LLc is the way to go because its not as complicated and others tell me that an S-Corp is the way to go because I will than be treated as an "employee" of my own company and that has many benefits. I am ofcourse a small business and have been in business for about 3 years now but want to go Legit and do the right thing...but also dont' want to be left poor by the IRS doing so. I feel like I have so many questions...after I set up either entity...
Do I cut myself a check?
How much should I figure on paying myself and how often?
Should I take on an employee other than myself? or if i do so I will than have to worry about paying other expenses
Will I actually be looked at as an employee of my own business?
Should I transfer the business into my wifes name so she can than put ME as the employee?
Once the entity is established will I 1099 myself or W-2 myself??

I would appreciate any advice you can give me! :D
Thanks!!!!

SNethercutt
03-17-2013, 11:08 PM
You gonna get a bunch of I did and I woulds. And I will give you mine.

Talk to an attorney and accountant. They can give you the best options to protect yourself. Costly now, better off later.

MBLC
03-17-2013, 11:49 PM
make sure that the attorney you retain is a business lawyer and also not a schlub- made a big mistake on that one that took many a call to the IRS to fix.

dpld
03-18-2013, 07:51 AM
in most cases a LLC would be suffice and i have been in business for 23 years and i started out as a DBA but changed over to a LLC about 19 years ago.

LLC gives you the best of both worlds, you get the protections of a corporation and the freedoms of a DBA.
as previously mentioned you will get a lot of do this or do that suggestions but one thing i will say to absolutely not do is a S corp, either do a straight up INC, LLC or remain a DBA.


from the sounds of it you are small and starting out and as a result i am sure your income is probably up and down.

although most incorporate for protection purposes, you are small and starting out and the biggest thing you can do to protect yourself is make sure you have commercial auto, general liability and workers comp.
even if you rarely have help the workers comp is based on a dollar amount of payroll revolving around a particular rate per $100.00 in payroll.

in my state and because i have not had any claims my rate is about 6.00 per hundred and it is based on my average yearly payroll.
if i exceed that amount i pay the difference and if i by chance had less payroll then i initially anticipated then i will be credited and the amount will be forwarded to next years policy.

lawyers are good sources for information but they are expensive and will not always give you the best advice from a financial and tax perspective and the most overlooked person in seeking advice on this matter would be a good professional accountant.
accountants can also file for you and get that done for you as well and it would be cheaper.
the cheapest way to doing it would be to do it yourself and you don't need a lawyer or a accountant to do so but you will need to at the very least seek advice from one of the two prior to doing so in order to aid you in making the right choice and as i said, my preference would be the accountant.
by accountant i don't mean a H&R block cut rate accountant but a real quality independent accountant.

good luck.


P.S. why did you use such large and obnoxious text in your post?

grass guru
03-18-2013, 11:27 AM
An LLC does not offer the protection you think it does. If hou cause damage/kill someone, and insurance isnt enough, a judge is not going to deny a "civillian" monetary damages because your lack of coverage. They can sue the business, and if there is nothing there, they can, and will, file a civil, or wrongful death suit against you as the owner.

I was am LLC, but changed to S-corp. My accountant suggested it. He explained it this way. As an LLC, you pay all taxes on ALL business income. Then, if you pull out 40k a year, you pay all taxes on that too. Double taxed.
As an S-corp, you only pay income taxes on business.(no fica, social security, medicaid, etc). You can then take a "draw" from the business, and you would pay all taxes on that draw only. If you make around 50k, it mivht save you around 700 to 1,000/year. You are protected as much as an L LC.
Definately to talk a certified accountantant, and have them do your taxes. Skip the H&R Block, or Jackson Hewitt guys, and go to a local guy.

Steve
03-18-2013, 02:58 PM
I am currently running as a DBA. I have gotten much advice about changing to an LLC or an S-Corp but am really unclear what I should do

What is your push now to make a change from a dba?

have been in business for about 3 years now but want to go Legit

What do you feel about your operation is not legit and how are you thinking an llc or scorp will change that?