Incorporated-yes-no?

[flatfloor]

Good idea, bad, not necessary.

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[Terry O'Neill]

flatfloor,
I think the majority of attorneys and accountants would endorse the incorporation of most businesses. I recently went from sole proprietorship to LLC simply for the legal protection and a continued flow through operation.
However it took years to come to this decision because of the comfort level with the sole prop.

[Rob Z]

Terry

Tell us more about the LLC...I have been debating making the switch for some time.

[Terry O'Neill]

Rob,
Off hand I can think of three reasons to incorporate or to switch to the hybrid LLC. Number one, of course, is the limited liability incurred on your personal assets.
Secondly it makes your business a seperate entity. You are no longer your business (certainly more so as a C Corp. or Sub-Chapter S). A third reason is you will no longer file a Schedule C with your tax return. The new form is 1065. This is important because statistics have shown that the IRS is more likely to scrutinize/audit C returns because of the likelihood (in their opinion) of the "blending" of personal use with legitimate business deductions.
It is a rather simple process to become a LLC, and as of last year all it cost was $100 and a stamp (a download and a printout from the website).
And now for the disclaimer. Remember I'm just a mason (the mud kind). Please check with your accountant to make sure I'm not leading you astray.;)

[John Bridge]

I run a sole proprietorship. Patti is the proprietor.

[Brian]

Rob, in our business (full service remodeling) I think LLC is the ONLY way to go. Terry is dead right on all counts, and the pass through part of the taxes is very convenient. There is also practically none of the paperwork and hassle associated with becoming a corporation. Once a year take your wife out to a nice dinner at a fine establishment for your "board of directors" meeting, and you've about met the requirements. It also gives you a lot of flexibility if you're ever purchasing real estate. The guy you'll want to talk with first is your attorney to set it up. In MA is cost about $500. / year, and I'm sure the costs vary. My lawyer also concurs with Terry in that you will want to make pretty sure that you keep your business and personal assets/expenses seperate... in your bookeeping/spending etc. YOU are no longer your business, and for some reason there is an interesting power and flexibility to that in my experience.

Brian

[turracemsar]

The limitation on liability should be enough for anyone to change to an LLC. In most states it is a relatively simple process and should not be too expensive. BTW, taking your wife to dinner may not qualify for a Board meeting. If you don't follow some basic formalities (i.e. board meetings, separation of funds, etc.), it is possible to lose the limited liability protections that an LLC affords.

I am not sure why you would need to pay $500 a year to maintain the LLC. Brian, what are you paying for?

Rob, I would seriously consider an LLC. Of course I can't give you legal advice (my disclaimer) but I'm happy to dust off some old law school text books and tell you what I've forgotten.

Nick

[Terry O'Neill]

Rob,
Another tidbit/experience I feel I should pass along. I was told by my Paychex Rep. that it was necessary to file with the IRS for a new FEIN, and so I did. I was then told by my wife's uncle (a partner in an accounting firm) that my Rep.'s advice was B.S. and this step was not necessary. I looked up the law myself and it seemed to me that he was correct. From memory and paraphrasing it stated that as far as the IRS was concerned the LLC form was a legal issue and not a tax concern. If you do not notify the IRS your tax form defaults to Sole Proprietorship (flow through).
Anyway, to make this long story shorter, I contacted 3 IRS agents and all 3 agreed with this. The chief agent in Utah, however, did not so I gave in and got the new ID#. My point to this is that I think it would be prudent to make the switch at a natural break in your business (end of year, quarter, etc.). Brian, does this sound right?
In some states you need to have a minimum of 2 people to form a LLC (sounds as if Brian may have this constaint in MA), but in VA 1 is sufficient(you can go out for a beer alone:D).
Jim, is your business a C or S?

[Brian]

Just to follow up, Nick is right... which is why we do keep biz/personal very separate and record the "minutes" of the meeting. What does that mean... well, we write up a little form on the computer and stick it in a file. Takes about 5 minutes. In MA we have to pay $500/year to the Sec. of the Treasury for the opportunity to do business in MA. I'm not sure if we actually need two "members" in our LLC or not, but my wife wanted in for a piece so I was stuck anyway :).

It is my understanding that from the IRS perspective it is treated as a pass-through to our -- in our case -- yearly joint return. There is one extra form your account will fill out (K1??) that basically is a profit loss statement that gets sent out to the "members" of the LLC. What ever the profit/loss, that just basically shows up as a line item on your normal return. I can't see why one would need a new Fed ID number, but you will need one if you're currently using your SS#. Anyway, I agree with all who posted, the liability issues alone make it worth it, and the discipline of having the business and personal seperate is good in all respects, IMHO.

[flatfloor]

CementPro Ltd is an S corp. LLC weren't available when we started.

[cory carlson]

LLC are becoming a lot more popular for several reasons you guys have already stated. Ease of filing, pass through benefits, and most importantly limited liability.

The cost will depend on what state you are filing in. There are some benefits to setting up shop in Vegas and some other tax incentive laden areas of the country but it is probably easier to just stay home. Your state laws will also determine whether you can have a single owner LLC or if you need to have 2 people. Filing can be pretty simple really. Depending on the complexity of your business you can likely just file online.

You can find out more here. http://www.bizfilings.com

[Sonnie Layne]

Very informative link, as a sole proprietor with no business dealings with another soul, and no marriage partner, I think the advantages would be slim for the hassle.

[almaz]

It is a rather simple process to become a LLC, and as of last year all it cost was $100 and a stamp (a download and a printout from the website)

Hej,
Would you give me the link ? :bow:

[Davestone]

Go to bizfilings,or legalzoom...Shapiro is on one of em. :)

[stefan]

corp or LLC is a must on long island, we have 9200 lawyers working on long island (more then all of japan :) )

[flatfloor]

Stefan, where are you on this wee island of ours? I looked in your website ( beautiful work)but couldn't see sny location.

[stefan]

hi jim
I'm in south huntington

[Splinter]

Holy Cr*p... Stefan is practically my neighbor.... Northport here...

[JTG]

I recenly was talking with an accountant about this issue and his input was to be a sub-chapter s Corp. He said the LLC laws in the state are not that old and still subject to much interpretation. Especially regarding liability to claims if someone was hurt our worse be it an employee, or an employee being the cause of the accident.

I'm like John. Patti is in charge :bow:

[stefan]

hi alex
my partner (toni tile) is from east northport, right of polaski

[tileguytodd]

Some things to consider
Screw up in a sole proprietorship and you deal with penelties and fines.
Screw up in a corporation setting and someones going to jail.
Just a thought ;)

[flatfloor]

Todd, other than outright fraud, under what circumstances would someone end up in jail?

[almaz]

Go to bizfilings,or legalzoom...Shapiro is on one of em. :)

look guys isn't it the same corporation registration, except that I save $99 ?

https://efile.sunbiz.org/corpweb/efiling/corefile.html?

"add filling" means "create a corporation" ? or no ? :) :crazy:

[tileguytodd]

Jim, tradesmen are not known for thier business skills.
If a very good bookeeping and financial system isnt in place there are some severe and rather stiff guidelines that our judicial system follows to insure that corporate benefits are not abused shall we say.
I'm sure Nick da lawyer could expound on this some.
The benefits to a small business isnt that great since most creditors will still want personal gaurantees anyways. The liability issues can be dealt with in any contract.If you are using contracts and it has been looked over by a good attorney,liabilities can be limited to insured amounts etc.
It would take a dream team to get more if it is properly formatted and even then they would have to get lucky.And who is going to hire the Dream Team when we are talking tilework?? Besides, I carry 600,000/1,000,000.00 in liabilty insurance(riders of 3,000,000.00 when required for specific projects).That should cover the majority of cases i would think ;)
LLC's have thier uses certainly.I would have to triple my business meaning hiring several setters etc before i would see any advantage in my opinion(and that of Mark da lawyer my older brother) ;)

[flatfloor]

Todd, I'm not pro or con for any form of doing business to each his own. I'm just wondering what you could do to end up in jail.

[tileguytodd]

I'll have to ask Mark for specifics if Nick doesnt chime in.

Maybe if you pay yourself too much :D

Corporate CEO pays himself 1.2 mil bonus bankrupting company :D :D :D
That might do it LOL