dhgranstrand

Quote:
On 2005-02-01 22:27:00, Foxy wrote:
How does one become a limited liability corporation instead of sole proprietorship?


HIRE A LAWYER!!! Get one that specializes in setting up corporations.

You should actually (in the U.S.A.) become a Subchapter S Corporation (commonly called an "s corp".

1. Your personal assets are not at risk when someone sues the business (same as a regular corp).

2. The tax savings are huge! Regular corps are taxed twice (once for the profits of the corp and again for any money you receive from the corp). S corps are taxed once on the owners 1040.

3. Any properties or equipment should be leased to minimize the assets of the corp as much as possible (making it even less attractive as a cash cow for lawsuits). For instance, if you own the land and building personally, you lease it to the corp.

We paid a lot of money in the initial setup and purchase of our salon to a lawyer and accountant to do this right (about $3000).
You should too! Worth every penny.

All that said, the lease in the strip mall we're in calls for us to have business continuity insurance in the event of unforeseen damages that prevent us from being able to do business and also liability ins.

JMO

Ezliving_Jim

$3k is a lot of money to incorporate an s-corp, set up books and accounting. Negotiate.

kailani

We are a new salon just started and we paid $450 to our CPA to incorporate under a LLC. Our accountant told us that we will need to become a S-Corp when we start showing profit. As far as insurance, we use Universal and it is costly $3000 annually, but this is required by our anchor tenant Publix Shopping Center. Universal were the cheapest by far?

pam

I just did S-corp last year and it was $1100 through my business attorney. Guess it depends on where you are. As far as insurance, I wouldn't risk it. Check different companies because their rate can vary greatly. Also, I would go for more coverage than is required since it costs relatively little more. I have never had to use mine or my workman's comp but it is part of doing biz.

sunbody1

I setup my LLC on my own for $125 on the NJ Business Gateway http://www.state.nj.us/njbgs/. I assume most states have similar type systems.

missmojorising

becoming a Limited Liability Company when you are/were a SP (in TX)...file articles of organization and transfer assets of SP to LLC.

ALOHATAN

yes that is what i am saying

PHD

Talk to your accountant. We have been sole for over 10 years. When we build our building and move both businesses to the new location then our accountant recommends that we do LCC. But at this point he said it really isn't worth the change.

planatan

Setting up an S-corp can be done by anyone for around $100 filing fee. Check out some websites. Once you have a federal employer tax id # you're on your way. Lawyers and accountants will charge you hundreds of dollars to fill out the same form that you will fill out in 5 minutes.

exectans110

FYI -- can be done on-line in some states for very very little $$. Colorado charges 99 cents. Less than 1 dollar -- and you're an LLC, or a corporation -- file a 2553 with the IRS to become an S-corp.