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Incorporated [or] Sole Proprietor ?

Discussion in 'Polls' started by Replicator, Dec 8, 2006.

  1. Replicator

    Replicator Major Contributor

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    Nov 19, 2006
    Sun City, AZ
    Just wanted to find out how many are Incorporated vs Sole Proprietor ?

    And give some reasons if you would ! :signs101:

    Sorry ! Should have put a voting thing here, maybe Fred can fix that for us !
     
    Last edited: Dec 8, 2006
    Tags:
  2. Chad.

    Chad. Active Member

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    Feb 24, 2006
    Just made the switch from Sole to LLC ... to get everything off my social and hire some people.
     
  3. Billct2

    Billct2 Major Contributor

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    Mar 12, 2005
    New England
    LLC, simple and offers a measure of protection of personal assets
     
  4. High Octane

    High Octane Active Member

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    Mar 27, 2005
    Fenton, Michigan
    LLC Here too.
     
  5. Geary

    Geary Very Active Member

    LLC is cool, but you can't just do it alone. Get a true partner, your spouse will do. That is, the IRS will look at you as "questionable" if you do it solo.

    Sole proprietorships are the easiest to do. Basically, just open up shop and fly. However, there are not NEAR the tax benefits plus, again, the fricken IRS likes to pick on the "soles" because they're easy targets. Plus, there's this mindset that SPs are lazy, sloppy bookkeepers and thus get themselves into trouble more often than those taking the more expensive route (timewise and legal fees) to set up and become incorporated.

    Me? At this point in my life (after 35 years and a heart attack) I'm the sloppy, lazy bookkeeper. :thumb: hehe.....
     
  6. Fred Weiss

    Fred Weiss Merchant Member

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    Olympia, WA
    Inc. with sub-chapter S election.

    • Personal asset and liability protection
    • More liberal tax writeoffs
    • Generally better treatment by government and lenders
    • No double taxation as with straight corporations
    • Easier to sell when you get to that point
    • In some cases, a better appearance to the public
     
  7. Jillbeans

    Jillbeans Major Contributor

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    Dec 24, 2003
    Butler, PA
    I'm a DBA, and I did register my business name with the state.
    Heard there was some other broad named Jill doing signs near Pittsburgh!
    Love....Jill
     
  8. Buddy

    Buddy Member

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    Dec 2, 2006
    INC here.....sub S........recently was told LLC is the latest 'craze' in business world b/c better personal liability protection - dunno the ins and outs of corporate.....prbly never will
     
  9. gnemmas

    gnemmas Active Member

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    Nov 7, 2006
    CA
    From SP to LLC, finally Inc. Chapter S.

    LLC- charges a annual fee plus a percentage of your purchases of goods ( or sales, I forgot which one) regardless of profit or loss.

    S Corp. - $800 /yr (in Cal), profit or loss is passed on to your personal return.
    An INC. can dba any amount of different business, is a separate entity than yourself. You can sell dba ABC Signs, and keep ABC Inc.
     
  10. threeputt

    threeputt Very Active Member

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    Mar 10, 2006
    washington state
    Incorporated. Wouldn't dare to do business any other way. Too many crazies out there looking for a target.
     
  11. ChiknNutz

    ChiknNutz Major Contributor

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    Currently a sole prop, but am considering the sub-s corp as suggested by my accountant.
     
  12. iSign

    iSign Major Contributor

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    Nov 29, 2003
    Kahului, Maui
    9 years as a sole proprietor, 11-1/2 months as an LLC filing as an S Corp.

    The LL part of the LLC is "Limited Liability" which was not an issue when I moved here 10 years ago, as I had no assets, only debt... but now, this business structure protects me from law suits should my business ever draw fire from some legal problem.

    I have paid myself $1000 per month on salary, which is taxed at the higher overall rate that includes self employment taxes (unemployment tax, soc sec/medicare)

    ...then my business has profited another $80K that whatever I don't spend in the next 3 weeks :Big Laugh will be available as stockholder distributions, & taxed at a lower rate excluding self employment tax. (actually... most of those "distributions" have been "distributed" already... to IRA's, & 2 new roof's on my house & rental) ...and draws throughout the year. (no, can't really live on $1000/month)

    On that last note, I should add... I will meet with my CPA next week. I'm not sure if sole proprietors are really the most likely target for the IRS... I think because of the "loophole" mentioned above... my structure is among the likely suspects for IRS scrutiny... but what I understand is that one should show "reasonable compensation" as their salary. You never know how well you will do in the beginning of the year, but now, my salary looks pretty chintzy compared to my profit... so I might have to write myself a few more pay checks... with all those pesky deductions, so I don't become a blatent red flag. I was advised that in my first year as an LLC... a cautious and conservative $12K salary would be understandable... but in light of an outstanding year... I want to see if my CPA advises me differently.
     
  13. Bigdawg

    Bigdawg Just Me

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    Jun 8, 2005
    Sunny Florida
    Sole Proprietor for 5 years. It works well for me since I don't pay myself a salary - just take draws from the business (which probably isn't the right way to do it). I **gasp** still do my own taxes, but use QuickBooks for my bookkeeping so it is pretty straight-forward.
    I am starting to get the assets that would push me into changing to an LLC or incorporating... haven't looked at either too deeply but probably will this coming year.
     
  14. Gino

    Gino Premium Subscriber

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    Jun 7, 2006
    PA
    Sole for years and went parntership about 15 years ago.

    No particular reason, my wife is an accountant [among other things] and does that end of the business stuff [Hi-Tech term].
     
  15. Checkers

    Checkers Very Active Member

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    Jul 24, 2003
    "S" Corp here, similar to Fred and the others.
    How you set up really depends on your financial health, business plan and personal goals. If you're serious, you need talk to your accountant and attorney.
    The SBA website has some good info about the different types.
    Also, from an unbiased attorney's point of view, stay away from partnerships unless you got money to burn or a spouse as a partner - who will take half of what you're worth anyway if things don't work out :smile:

    Checkers
     
  16. Replicator

    Replicator Major Contributor

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    Nov 19, 2006
    Sun City, AZ
    BUMP ! - - - Sorry !

    By the way, I also am - L.L.C. S-Corp . . .

     
  17. Gino

    Gino Premium Subscriber

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    Good one Checkers. :thumb:

    Problem with that thinking is… she can have half of all the bills too. Half the headaches and half the house and whatever else, because I don’t need it and won’t miss it without her. That sounds screwy, but I’m just that way. Not turning this thing spiritual by any means, but all I really need in this world is my health. With an $8.00 can of 1-Shot and a few brushes... I can start over anywhere my feet take me. I don’t need any fancy tools, computers, LLC’s, S Corp’s or anything else. That’s the difference, I’m really not afraid of hard work… it’s laziness I fear and full blown retirement.
     
  18. threeputt

    threeputt Very Active Member

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    Mar 10, 2006
    washington state
    Doug, I understand your compenation plan. I'm doing something similar. But $1000 per month? Me thinks, and this is only a lay opinion, that you could easily be targeted by taxing bodies.

    I draw $60,000 per annum, but use the stock distribution method to round out my salary. Also pay my wife $20,000 salary to be here as well.

    We also use a Certified Public Accounting firm. One final thing, for anyone out there who only takes "draws" occasionally, no defined salary, are you going to be able to show sufficient income when it comes to buying homes, cars, boats, and equipment? Something to think about. My advice is to pay yourself a set amount each week. Even if it's only $500.

    No genius, but cautious in tax matters. Good luck to all.
     
  19. Techman

    Techman Major Contributor

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    Jun 24, 2003
    michigan
    Was a corp with an S title.
    Great for tax benefits.

    But thie biggest payoff.

    I declared myself an employee of the company and paid unemployment taxes on myself. When the hurricane struck I got full unemployment benefits. Whereas other bizz ppl only got a fraction of unemployment benies. This fact in itself was well worth paying a few extra dollars.
     
  20. Doyle

    Doyle Very Active Member

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    Dec 4, 2006
    Michigan
    Could my wife become an employee and collect unemployment in the winter when she's laid off from Oct. to march? Just wondering......
     

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