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tvashtarkatena

Setting up an s corp

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Yes, I've been involved with several over the last 20 years. They've fallen out of favor since Washington enabled LLCs a few years ago. Unless you have very specific tax (want to take huge initial losses) or formation requirements (lotsa people and corps would be shareholders) that would lead you in that direction, you probably want to consider doing an LLC. You can run a LLC as an individual, partnership or corporation and then report on the appropriate for attached to your taxes. Last time I formed a company a couple years ago, I did a one page LLC which provides the liability protection of a corp, but I use Schedule C on my taxes just like a sole prop and my wife reports the income from her partnership LLC as regular partnership income. It's a lot nicer than the Sub S tax forms.

 

Note this isn't legal or accounting advise - just what I've learned over the years.

 

I have my one page formation document (which you keep, don't file) in Word if you want it. PM me.

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I will pm you, just a couple of questions first.

 

I do not intend to have employees or multiple shareholders, nor will I be incurring any losses. I'd like to 1) deduct health care premiums and 2) split revenue into salary and distributions (slated to go back into the business), thus avoiding paying self-employment tax on those distributions.

 

Can you deduct health care premiums with an LLC?

 

I don't think you can do the distribution thing with an LLC, but that's probably less of a big deal, particularly considering the added complexity of an s corp versus an LLC.

Edited by tvashtarkatena

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You have employees. My questions center the tax structure of a solo venture.

 

Get your accountant to log on and spray.

 

 

yes i have employees (on payroll), not as many as i have had in the past. my accountant suggested an s corp primarily to keep more money in my pocket around tax time.

Edited by pink

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i do believe it is beneficial if you expect to experience an initial loss.

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Maybe on the health insurance costs - I don't know. The usual way to do it is just to pay individually, then take the deduction on the front of the 1040. Of course you end up paying SS on that income, but at least it is shielded from income tax. There are a lot of tax angles to a sole LLC (including being able to do a solo 401k) that might weigh in to that decision too.

 

If what you are after is being able to formally retain significant earnings within a company, then I think you would want a corporate structure for a LLC and you would want a really good accountant to ensure that the bases are covered. On the other hand, you can expense just about anything and if you use cash accounting you can probably figure out some ways to do what you want.

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Well, I ain't doin it for a hobby.

 

then get an accountant you cheap mother fucker :wave:

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