Has anyone here ever created an S Corporation?

4/11/2008 10:48:08 AM

probably

4/11/2008 10:50:57 AM

Great. Maybe one of them will respond with some useful info.

4/11/2008 10:54:12 AM

yes, i have.

[Edited on April 11, 2008 at 10:54 AM. Reason : d]

4/11/2008 10:54:19 AM

just non-profits

4/11/2008 10:54:39 AM

yeah but Limited Liability Company is the way to go nowadays

my brother is a lawyer

[Edited on April 11, 2008 at 11:00 AM. Reason : .]

4/11/2008 10:54:43 AM

What do I have to do to create one and maintain an S corp?
Why llc?

4/11/2008 10:56:45 AM

i dont know all the specifics, but supposedly Corp-S vs. LLC...LLC is a little more tax friendly which is always a good thing

http://www.selfemployedweb.com/s-corp-vs-llc.htm

[Edited on April 11, 2008 at 11:00 AM. Reason : basic link]

4/11/2008 10:59:28 AM

1) file notarized paperwork with the dept. of secretary of state (like a 2 page form).
2)insert $250 fee (or something like that)
3) wait for EIN number.
4) profit

I don't know about maintaining it as I only needed mine for a year. That is as much as I remember.

4/11/2008 11:03:16 AM

Quote :

" Limited Liability Company Self-employment tax on total net income"

No thanks. I'll stick with S.

4/11/2008 11:05:11 AM

If it's anything like an LLC, you'll just have to pay about $200 bucks to the Dept. of the Sec. of State every year to keep it going.

4/11/2008 11:05:32 AM

So, just pay a fee every year. Nothing additional is required?

4/11/2008 11:07:21 AM

paging adumb

4/11/2008 11:12:47 AM

first you will need to make sure your corporation wil qualify to be set up as an S corp (google it or go to the IRS website).

Then, to create your Corporation, you need to prepare & file one original and one copy of the Articles of Incorporation with the Secretary of State's office (you can get the form off of their website). I think the filing fee is currently $125. They will send you the filed copy and then you can order your ownership certificates & corporate seal (I use Blumberg and order off their website).

THEN you need to fill out IRS form 2553 to be taxed under Subchapter S.

I would recommend hiring an attorney to do all the paperwork and also to advise you on tax ramifications.

4/11/2008 11:16:52 AM

I created one. I paid my lawyer $500 and he did all the filing for me.

LLC's are not more tax friendly... with an S-Corp you can pay dividends which are exempt from a portion of the SS tax.

But LLCs are easier... I had a hell of a time paying payroll and annual income taxes... Learned a lot... but it was a bitch.

[Edited on April 11, 2008 at 11:18 AM. Reason : .]

4/11/2008 11:17:53 AM

Shop smart, Shop S - Mart.

4/11/2008 11:29:50 AM

LLCs ARE more tax friendly if you allocate all your shit properly, which is why you need to holler at a lawyer instead of thewolfweb

4/11/2008 11:46:35 AM

This was in the link you posted.

Quote :

"Mary owns a print shop. In keeping with the industry standard, Mary decides that a reasonable salary for a print shop manager is $35,000 and pays herself accordingly. Mary’s total earnings for the year are $60,000: $35,000 paid in salary and the remaining $25,000 paid as a distribution from the S Corp . Mary’s total employment tax is $5,355 (15.3% of $35,000). If Mary were the owner of an LLC , she would have to pay employment tax on the entire $60,000, equaling $9,180. But as an S Corp , she realizes savings of $3,825 in employment tax."

4/11/2008 11:47:22 AM

well that link was for reference but i'd still recommend talking this over with a lawyer as i'm sure they could tell you a lot more than we could...i know our company used to be a corp-s and we changed to an llc because the owner was having to pay less taxes with the llc

4/11/2008 11:49:02 AM

Can I still rent my house out to my business if I create an LLC?

4/11/2008 11:50:17 AM

^ I don't know about that, but THERE ARE TAX SAVINGS AVAILABLE TO AN S-CORP THAT ARE UNAVAILABLE TO AN LLC

However, you probably will save money with an llc by reduced tax preparation and paperwork. Do the math and see which end you come up positive on.

4/11/2008 11:53:23 AM

Employment tax savings is only one aspect of this issue. One must consider tax deductions.

4/11/2008 11:56:12 AM

yes, one must consider that. But what legitimate tax deduction would be available to an llc and not to an s corp?

4/11/2008 12:05:20 PM

Quote :

" Can I still rent my house out to my business if I create an LLC? "

I have 5 rentals. The first was an LLC, the rest were all started as S-Corps. I converted the first to an S-Corp after seeing first hand the tax benefits. There are advantages to both, but unless you have enough employees to have to pay workman's comp, S-Corp is how you should go (there are exceptions to everything - I'm not a professional Wolfwebber, don't semantic me to death).

FYI - If you have more than one rental, setting up each as individual S-Corps means that the others can't be used as assets if someone comes after one.

If you had more than about 10 rentals, you would probably need to look into LLC'ing as you would likely have a couple of employees and you can deduct a lot as a business with properties like that.

4/11/2008 12:24:04 PM

I was unclear. I want to rent my primary residence to my yet to be formed business for 14 days each year.

4/11/2008 12:32:06 PM

Just call my brother.

4/11/2008 1:37:30 PM

Seriously.

Ask 10 accountants.

Five will say LLC.

Five will say S Corp.

My $0.02 and experience. Keep doing your homework, though. Just be ready for that.

4/11/2008 1:47:36 PM

^^ Why? He doesn't live in NC.

[Edited on April 11, 2008 at 1:47 PM. Reason : ]

4/11/2008 1:47:39 PM

Quote :

"with an S-Corp you can pay dividends which are exempt from a portion of the SS tax. "

but isnt the corp taxed as an individual entity. i remember reading (before we decided LLC) that if you pay yourself dividends, you're being double taxed.. so the corporation files a tax return (like an individual) and is taxed.. and the employee/owner is taxed on his recorded income/salary. so both the corporation and the individual are both taxed when you pay yourself dividends..

i'm not 100% sure of the details on it.. anyone know?

other than that, the only real difference i could find was that corporations require a little more paperwork than LLC..


[Edited on April 11, 2008 at 3:58 PM. Reason : .]

4/11/2008 3:57:21 PM

^ i believe that's one of the key reasons some people choose LLC

Also, about this renting the house to your business for 14 days out of the year? I'm confused... if you're "working" from home there are certain percentages of your mortgage you can deduct on tax returns but look into the SBA's Small Business Advocacy website for more on that... it got messy this past year I believe and they lobbied for clarification.

4/11/2008 6:52:19 PM

corporations do require more paperwork than an llc but s corps do have much greater tax advantages. pm me for more details- i do this every day 8 am to 5 pm.

4/11/2008 7:17:39 PM

Quote :

"Seriously. Ask 10 accountants. Five will say LLC. Five will say S Corp."

completely depends on what you are setting up in the first place and the likelihood of having taxable income

anyone choosing 1 of these choice without knowing all the facts likely does not know what they are talking about

4/12/2008 12:48:38 AM

http://www.legalzoom.com S corps are great depending on what you do in NC. Saved me a shitbrick ton on taxes over the years.

4/12/2008 2:23:30 AM

Quote :

"I'm confused..."

see:

http://articles.moneycentral.msn.com/Taxes/HomeMortgageSavings/StrangerInBedroomTaxBreak.aspx

4/12/2008 10:47:38 AM

So to hijack this guys thread, I want to expand and give a specific scenario.

I have a full time job ... and make good money, so my income bracket is high.

I also have some websites that pull in over 15k per year now, but I dont actually spend much time at all on them. (havent made a change in 8 months, and only have to process big payments when advertisers are interested in buying some ad space.) I dont really need the money, so dont really feel like I should HAVE to pay myself a salary if I organized this as a Corp.

Taxes sucked this year, because I had to pay income and self employment tax on all that, at my regular income tax rate.

Anyone know a way to get out of paying those taxes, and just keep them "in the company" to be used for future growth and expansion? I would rather not touch the money at all, and have the least amount of taxes taken out on it.

[Edited on April 12, 2008 at 11:41 AM. Reason : .]

4/12/2008 11:31:55 AM

A S-Corp is a pass through entity, meaning all income or loss passes to the shareholders in the corporation. Anyone that sets up an S-Corp for rentals got some bad advice. Rental income is not subject to self employment tax so what exactly are you avoiding by having a S-Corp.

Also, its not dividends its distributions, and more specifically AAA Distributions.

4/12/2008 11:44:33 AM