Incorporation questions

[Will Truitt]

Geoff - I don't qualify as an expert on these things - I have prevailed upon
the advice of my accountant and a lawyer in the past as pertain to my own
set of circumstances for business and personal.  I can only encourage you to
get enough advice from knowledgeable professionals to make an informed
decision on your own behalf.  As for the tax advantages over being
incorporated over sole proprietorship, unless you are making a lot of money
( a lot more than most of us piano techs make), I doubt that the savings are
worth the additional trouble and expense of being an S Corp.  Your
accountant is the only person who can tell you that in real dollars and
cents values.

 

Will Truitt  

 

From: pianotech-bounces at ptg.org [mailto:pianotech-bounces at ptg.org] On Behalf
Of Geoff Sykes
Sent: Wednesday, March 19, 2008 4:59 PM
To: 'Pianotech List'
Subject: RE: Incorporation questions

 

Will --

 

As I understand it, with the exception of liability protection an LLC is
little better than sole proprietor. ALL income to the company is taxed
exactly the same way as if all income were coming to you directly. In other
words, there are no tax advantages to becoming an LLC. 

 

-- Geoff Sykes, RPT

-- Los Angeles

 

 

 

 -----Original Message-----
From: pianotech-bounces at ptg.org [mailto:pianotech-bounces at ptg.org] On Behalf
Of Will Truitt
Sent: Wednesday, March 19, 2008 3:19 AM
To: 'Pianotech List'
Subject: RE: Incorporation questions

Hi Geoff:

 

One question I would ask of your accountant  is why would he would recommend
an S Corp over an LLC for your situation.  I am going to assume that you are
a one person business without employees.  You should be aware that you will
be required to fill out three returns each year as an S Corp - first, the
corporate return; second, the state return; and third, your personal return.
No matter how simple your business may be, the preparation of the corporate
return is sufficiently daunting that most people have an accountant do it
for them.  To complicate matters further and, depending on how you set
things up, you may have to do payroll taxes with monthly tax deposits and
quarterly reports and so on.  

 

An LLC confers the same liability protection and most of the other
advantages of incorporation, yet you would have to file only two returns -
your state and  the LLC return that combines the personal and business into
one return.    But I would ask the question of myself - what compelling
reason do I have other than liability to change my corporate status from
sole proprietor?  If liability is the turning point, then it is proper to
ask what would you perceive your real world vulnerabilities to be in the
context of your individual business?  If you need help on that, a lawyer is
a better expert to ask than your accountant.  

 

Further, it is appropriate to ask why good insurance coverage would not be
sufficient to cover your liabilities.  You would need insurances either way,
and probably to the same levels with either status.

 

I think it all goes back to the KISS principle - Keep It Simple, Stupid.
Why make your business life any more complicated than it has to be?  It will
definitely be more expensive every year once you have incorporated.  

 

My thimbleful of knowledge comes from the my own S Corp status for the past
13 years, which is a carryover from my days as a piano dealer  with several
employees.  

 

Will Truitt

 

From: pianotech-bounces at ptg.org [mailto:pianotech-bounces at ptg.org] On Behalf
Of Geoff Sykes
Sent: Wednesday, March 19, 2008 12:47 AM
To: Pianotech at Ptg. Org
Subject: Incorporation questions

 

Greetings all --

 

I have gone through the archives and found the subject of Corporations and S
Corporations has come up a couple of times. But those discussions were brief
and didn't really delve into the process. For a number of reasons my tax guy
has strongly advised me to go the S Corporation route.

 

Today's questions are directed to those among you who have actually gone
through the process of starting a corporation and then converting it to an S
corporation.

 

: What, exactly, is the process?

: Did you do it yourself, or did you hire an attorney? 

: Changing from Sole Proprietor to Corporation, how do you cover the
question of stocks and board meetings?

: What about creating a business "name" that ends in Inc., Corp., or Ltd.?
To whom do your tuning clients write their checks to?

 

I've found all the forms. And even though there are only about three really
basic items being asked for on them, I find myself overwhelmed with
questions and procedures regarding the process of actually acquiring and/or
creating those items.

 

So I guess my only real question is: How did you do it?

 

-- Geoff Sykes, RPT

-- Los Angeles

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