LLC, taxed as an S-Corp

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acwservices

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Eastern NC
Well, after long meetings with both my attorney and CPA, I'm really confused now. I am currently operating as a sole proprietor, and am considering either incorporating,or forming a LLC. Of course, it's not that simple. My accountant is advising me that the overall best thing for me is to form an LLC, but be taxed as an S-corp. If offers liability protection on my personal assets, and the best tax advantage for me. Anyone else structured like this?
 
Back in the early 90's it was beneficial to form an S-corp for the liability and tax benefits. From what my account friend recently told me is that since the tax laws have changed that is no longer true. My insurance agent just told me that S-corps are also required to pay workmen's comp even if they're have no employees (ie.-just the owner/operator). According to her LLC's don't have the same requirement.

As you have done it's best to check with both an attorney and accountant to find out what suits your particular business the best.
 
My company is set up just like that. An LLC taxed as a S corp. I consulted two lawyers and two CPA's before deciding. I like it fine. You just have to pay $200/ year for the LLC filing.

I believe if you decide to take profits or sell your company you will only pay personal income tax on the sale, about 30 some percent.

If you are set up as a c corp and decide to take profits or sell the company the corporation will pay corporate tax (30-40%) then you will have to pay personal income tax on that. It doesn't leave much.
 
You are correct- a member of an LLC can exempt themselves from wc insurance in NC. As I understand, the benefit to being taxed as an s-corp is the social security tax. An LLC is taxed ust like a sole proprietor- 15% on all earnings. As an LLc, i can designate a portion as a salary- and pay 15% ss on the salary portion, and designate the remainder as a 'bonus" and not have to pay ss taxes on it.
 
acwservices said:
Well, after long meetings with both my attorney and CPA, I'm really confused now. I am currently operating as a sole proprietor, and am considering either incorporating,or forming a LLC. Of course, it's not that simple. My accountant is advising me that the overall best thing for me is to form an LLC, but be taxed as an S-corp. If offers liability protection on my personal assets, and the best tax advantage for me. Anyone else structured like this?
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nice you have that option.... you cannot hold a C-10 in calif. as a LLC....
sole proprietership, or corporation.
 
acwservices said:
LLC can exempt themselves from wc insurance in NC.
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It's not so much how the company is set up but how many employees you have. If you have 3 employees you are required to have WC. It's irrelevant if you do commercial work as the GC will most likely require you to have WC.
 
Fulthrotl said:
nice you have that option.... you cannot hold a C-10 in calif. as a LLC....
sole proprietership, or corporation.
Click to expand...


Wow, thanks for that info...I didn't know that..how about a C-7? (Low voltage license)
 
Im s-incorperated. My understanding is that s-corp dosent pay workmans comp on owner as an employee but if you c-corp you are required to pay workmans comp on yourself as the owner.
 
bth0mas20 said:
Im s-incorperated. My understanding is that s-corp dosent pay workmans comp on owner as an employee but if you c-corp you are required to pay workmans comp on yourself as the owner.
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Brandon, if you don't mind me asking, what percentages do you use to split your salary versus disbursement check to yourself? My account is advising a good rule of thumb is 60/40.
 
infinity said:
According to her LLC's don't have the same requirement.
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That may be correct if you are directly contracting all your work with the end user. However, if you sub-contract for a GC or another EC, someone has to pay the WC. If you don't carry WC then the other party willl have to list you as a regular employee and pay the WC (and they'll be ticked off too). Each year I have to provide certificates of insurance to GC's showing terms of insurance coverage. If you know for a fact that this has changed in recent years here in NJ would you please let me know ?

Thanks,
Phil,
Gold Star Electric
 
goldstar said:
That may be correct if you are directly contracting all your work with the end user. However, if you sub-contract for a GC or another EC, someone has to pay the WC. If you don't carry WC then the other party willl have to list you as a regular employee and pay the WC (and they'll be ticked off too). Each year I have to provide certificates of insurance to GC's showing terms of insurance coverage. If you know for a fact that this has changed in recent years here in NJ would you please let me know ?

Thanks,
Phil,
Gold Star Electric
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Yes, any competent GC will require WC even if the State doesn't. So if you're a guy who is self employed and works directly for specific clients it's my understanding that you will not need WC as an LLC. The GC is just looking to cover his own butt and it's likely that his insurance carrier requires all sub's to have workmen's compensation insurance even if by law there is no requirement to do so.
 
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