RE: [taxchat] Re: LLC or S or C-Corp

The environment in TX is pretty much the same as Janet described for OK; there is no cost attached to being an LLC.  I rarely find a significant reason anymore to recommend any entity other than an LLC.  If liability is the paramount concern, I refer them to a lawyer and recommend they follow legal advice.  Most lawyers that I know feel that LLC protection is almost as solid as Corp protection.

 

Election to be taxed as an S Corp doesn’t mean that you *are* an S Corp in Texas; it’s just a tax election, like electing Sec 179 or deducting IDC.  State margin tax is calculated the same way for all limited liability entities.

 

Of course, I am an SP myself, in order to employ my wife and have a Sec 105/106 medical reimbursement plan.  It saves me considerable $ in SE tax and the 7.5% medical expense haircut every year. A limited liability entity affords a CPA no protection (in TX) from professional malpractice.  I’m not worried about anyone tripping over the carpet, I carry insurance, and any self-respecting plaintiff’s attorney would take one look at my net worth and decline the case anyway.

 

Chuck Warman,  CPA
Wichita Falls, TX
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From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Arnold M. Socol
Sent: Friday, October 24, 2008 11:14 AM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] Re: LLC or S or C-Corp

 

The equipment were already in the owner's name, actually mostly vehicles, earth moving equipment and the insurance and registrations, so we kept everything in the owner's name, but not the operating company which we went to the SO-Corp.

 

I'm not sure why one would choose an LLC and be taxed as an SO-Corp.  Wouldn't that be two registrations with the State? How does that work.  Wouldn't the LLC have to file a State Corp return and wouldn't the state require Incorporation?  I know every state is different - but just in general. I realize the Feds will accept.

 

Arnie

 

 

 

----- Original Message -----

From: Robert Lukey

To: taxchat@yahoogroups.com

Sent: 10/24/2008 11:56 AM

Subject: Re: [taxchat] Re: LLC or S or C-Corp

 

Great advise, or better yet setting an LLC up to own the equipment and rent it so there is no personal liability related to the equipment.

On Fri, Oct 24, 2008 at 8:43 AM, Arnold M. Socol <waymeans@verizon.net> wrote:

I always advise being concerned with the "Liability" first and not the cost, and not the taxes.  Obviously the sole proprietor is the easiest and least expensive to setup and maintain, but not good advise for most situations especially where the owner has personal assets that could be needlessly lost in a business law suit.  Even when a sole proprietor is ready to accept "limited liability" is the way to go, I keep the assets in the personal name and charge the corp or LLC rent for these assets.  Such as a part time landscaper, excavator with nearly $200,000 of equipment/vehicles and less than $50,000 of annual revenues, because he has a full time job with the town.  We file a Sch E for the $200k of equipment / vehicles to capture the depreciation expense.  We set up an S-Corp that owns nothing and can't lose what it doesn't have and of course there is insurance.

 

A sole proprietorship I advise is only a temporary stop until the new business can afford and knows it will stay in business for some time to come.  I never advise SPs, only as a temporary situations.  I explain all of this to the client. 

 

Arnie

 

 

 

----- Original Message -----

From: mjsanders2

To: taxchat@yahoogroups.com

Sent: 10/24/2008 11:22 AM

Subject: [taxchat] Re: LLC or S or C-Corp

 

Dear Arnie,
In Oklahoma we don't have the same requirement as NYS. I advise new
small businesses to either stay a sole proprietor (based on size) or
go to an LLC with S-Corp election. I was told in a meeting that S-
Corps have to do all the annual meetings, corporate meeting minutes,
etc that C-Corps do. But an LLC does not have that requirement.
Therefore an LLC with S-Corp election gets the preferential tax
treatment without all the required meetings and minutes recording.
The small businesses I have encountered want to operate decision
making wise like a sole proprietor - "I decide". They aren't
interested in having a corporate board of directors or annual
meetings. If they are just an S-Corp, it leaves them open for the IRS
to disallow their S-Corp status on the basis of not having the
corporate board of directors, meetings, etc.
Janet

--- In taxchat@yahoogroups.com, "Arnold M. Socol" <waymeans@...>

wrote:
>
> I gave a couple of classes this past month at an adult education
school. I contributed to a 10 week program towards a complete
business plan as the accountant. As part of my material I was asked
to discuss the different "entities", sole proprietor, LLC, Corp,
PTRs, etc. I have always felt more comfortable with the Corp and S-
Corp for small businesses. One student said her research concluded
an LLC was best for her. Her reason - simplicity. I advised that
here in NYS the cost to become an LLC doubled with the cost of
running classified ads in 2 newspapers for 13 weeks. For these
startups every nickel and dime matters. After thinking about it it
is less costly if they file as a single member disregarded entity on
Sch C and not having to file an 1120 series return. The tax prep fees
would be considerably less over time. Any thoughts on how you
recommend the best entity for small startups.
>
> Arnie
>

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