Corporation fees in FL?

[mark32]

Hello, I'm ready to start my own business but I only want to do it part time for now, maybe thirty hours a month. Obviously I want to keep the costs down as much as possible. A sole proprietor must pay worker's comp even if it's a one man operation, which is what I want to do. However, someone told me to look into incorporating in order to be exempt from paying the expensive worker's comp bill, but I have no idea what it would cost to run a corporation, I'm clueless. I enjoy doing the work and I want to do the right thing for myself and my customers but I don't want to break even at the end of the month after paying all these fees/bills. Any insight would be appreciated. Thanks.

 

[jeff43222]

I'm surprised you'd have to pay workers comp as a sole proprietor but not as the owner of a corporation. Up here, sole proprietors and corporate owners are exempt from having to pay workers comp for themselves. I'd double check that if I were you.

As for keeping costs down, if you're only doing it part-time, I'm assuming you're working out of your house and don't have much in the way of office/shop overhead. Advertising can get expensive, but you do have to get the phone to ring somehow. Make sure your insurance guy understands you're only working part-time; that should give you fairly low rates for liability coverage.

I have no idea what it costs to operate a corporation since I'm a sole proprietor.

 

[larryl]

you can incorporate on line,,check out being an "s" corp. business,,
thats what i did,,althought my wife takes care of all that stuff,,
there are some benifits to it,,your accountant will know all about it,,
sorry i dont know more about it,,,i was at work when she set it up,,
she tried to explain it to me,but i did'nt care,,,

 

[shelco]

I do not know the laws in fla. but usually you need workers comp if you have MORE than one employee including yourself. Incorporating has nothing to do with wheather you need it or not. Get a a lawyer and a good accountant and they can advise. Do not cheap out on these two corporate partners.

 

[bphgravity]

The business regulation impacting Florida Contractors is one of the primary reasons I got out of contracting to become an inspector. Between the growing cost of insurance and the overregulaion of a contractor's business structure it makes it almost not worth it for the small contractor with less than 50 employees to operate in Florida.

I would follow the advice to get a good corporate/business lawyer to help you with incorporation and any other decisions that will impact your operation.

I threw in the towel right after my insurance premiums went up in 2002 for "terrorism liability". :x

 

[bdarnell]

Florida law defines an "employee" as a sole proprietor as well as all other persons being paid by a contractor for services.

An officer of a corporation can elect to be exempt from the Worker's Comp provisions.

 

[tonyi]

Sole proprietor will force you to pay the whole shot on FICA. As a sub-S you probably can pay yourself a modest W2 salary and take the rest as a capital gain dividend. That lets you beat social security out bonking you on the whole shot.

 

[hardworkingstiff]

My experience is there are two main reasons for being a "S" Corporation instead of a sole proprietor.

1) You put yourself on a salary or reasonable hourly wage and you don't pay any FICA taxes on the money earned above that. Example, let's say you were a sole proprietor and earned $80,000. You would owe $12,240 is FICA taxes. Now, if you were a "S" Corp, and you salaried yourself at $30,000/year, you would only pay $4,590 in FICA taxes. That is a $7,650 savings in FICA taxes. You could invest it. You need to check with your accountant to be sure you are paying yourself a reasonable wage.

2) As a "S" Corp, you're personal assets are shielded from lawsuits against the "S" Corp. Mind you, an improperly documented "S" Corp can have the corporate shield penetrated during a lawsuit.


What may be better is a LLC (Limited Liability Company). LLC's are automatically taxed like a sole proprietor. You may elect to be taxed as a Corporation. If you do, then you need to elect to be taxed as a S Corp so you don't pay taxes as a C Corp. The LLC does not have the paper work requirements a Corporation does.

According to this website "The IRS does allow one member LLCs to qualify for pass-through tax treatment; however, taxation of one person LLCs at the state level may be different."

http://www.bizfilings.com/learning/llcfaq.asp#disadvantages

Good luck.

 

[mark32]

Thank you for all the responses. It's now obvious that I'll have to meet with an accountant and an attorney if I do go through with this thing. Bryan, it's funny that you said "it makes it almost not worth it for the small contractor with less than 50 employees to operate in Florida" because a local plumber told me the exact same thing a few years ago. Also a special thanks to hardworkingstiff for his in depth and educational post.