Are you incorporated?

[bilchak]

If so, what kind of coporation are you? We will have a 2 man business to start out with and we will both
be equal partners.

One of us has a considerable amount of money he would
hate to lose to a lawsuit, etc.

What are the pro/cons of this process?

How does it affect your taxes?

Thanks everyone,

John

[GrassRoots Lawn Care]

I am in a very similar situation as you. I am a partner in a business and we chose to incorporate with S Corp election.

Here are the benefits...

-Liability protection under the Coproration.

-We pay the 15.3% Federal Self Employment Tax on only half of our income (salary), the other half is listed as dividend income. Savings of about $4000 a year in taxes.

-The Inc. after your business name will attract more commercial accounts.


Here are the cons...

-CPA fees are about $225-250 more per year than sole proprietorships.

-The Inc. after your business name will scare away *some* residential customers looking for more personalized services.

Those are the major pros and cons that I can think of. For us S Corp was the way to go. Hope this helps.

[Fantasy Lawns]

as an officer of the company you may not be required to have workman's comp coverage, depending on your state laws, in fla have more than 3 employees you need wc ...yet the officers are excluded, but we also have blue cross-shield to cover all medical issues

S Corp is NOT for everyone BUT if your in a partnership deal I'd say it's a MUST

there are many other issues .....get an hour of time from a CPA which deals in S Corps & has the ability to get you set up right (knows a bussiness lawyer)cost us about $300.00 to get started an then about $150 each year for the paper work

[bilchak]

Thanks guys. We'll talk to our accoutant tomorrow and
get going on the S Corp. process.

Thanks again,
Jb