Inc....

[yardboyltd]

I'm want'n to incorporate.. It's only 75 in kansas and I'm look'n at the form off the SoS's website on my own. This form is relatively easy I just wonder'n if anyone can answer my questions without get'n legal advice.

FYI: Heres the form I'm using
http://www.kssos.org/forms/cf.pdf

1)What types of values do I put on stock? and how many?
2)Do I need to adopt bylaws?
3)The form doesn't ask s or c-corp... do they need to know i want to be s-corp?

[yardboyltd]

okay i'm gona answer some of my own questions after brows'n the net...

2)bylaws is only an internal document... buy a corporate kit
3)file form IRS 2553 to elect subchapter status

I'm stil try'n to figure out putting a value on the shares.
Oh hey btw: This past year as a sole proprioter I bought $7000 ZTR, at my level of business, it was a huge purchase.. if I write all of it off this year I will have next to nill income taxes(SE is avoided). Now if I incorporate, I plan on the Corp buying the mower from me... THen couldn't the corp write off the mower at a depreciated value... while I personally just pay income tax on the amount the corp pays to me and I don't have to pay Self employment on sell'n the mower right?

[devildog]

See your accountant, consult with a Lawyer of his suggestion. With Regards... devildog

[Equipguy]

Some times you can get free advice or counseling at the SBA or through a local university. Maybe worth cking out.

[Precision Care]

I can only tell you what I did, LLC. But I applied to be taxed as a corp. with the IRS so I would not have to pay self employment taxes. Most attornies will tell you LLC is the way to go. Most accountants will say INC. But you can have the best of both worlds.
Jeff

[dougaustreim]

When all is said and done, there really isn't that much tax savings to incorporate. Once you take the money home for yourself, it will get taxed. Also as you get closer to retiring like I am, you begin to realize that saving money on SS tax reduces the amount of SS you get to draw when you retire. If you find ways to avoid SS tax, make sure you invest that money somewhere else so that it builds for your retirement'

The other reason you are told to incorporate is to insulate your personal assetts from the buisiness. Unless you have a corporation that is well established and has a large net worth of its own, you really can't separate anyway. Most creditors will insist on personal guarantees anyway for any newer smaller company. The same goes for taxes. As the owner or officer of the corporation, you are personally responsible for all those things anyway.


Doug
Austreim Landscaping

[yardboyltd]

I understand the whole inc benefits vs disadvantages.. spare me.
I have a friend who is a lawyer. One night while conversing with him, he said I should go LLC or s-corp, preferabbly LLC simply bc less paperwork. However s-corp is cheaper here to register. Anyways next time I'll see him I'll ask.. I just figured maybe someone on here knew about figuring shares and values. Also, I kinda feel like should be pay'n him for his legal advice.. but idk.

[paponte]

Get an accountant!! They will do all of it for you... the RIGHT way. There is a LOT more than just incorporating.

[yardboyltd]

well i've decided to go LLC now... 75 more but I figure thats my time doing my "directors and shareholders meetings" lol. Everything an accountant knows can be found on the web... Not only can you save your self accounting fees but also learn the law inside out to maximize savings in the field.

[paponte]

Well i guess you didn't know there are legal ways around corporate meetings, other than going LLC. Oh well... to each ther own!

[yardboyltd]

If your famaliar with them, I'd like to hear them? And I assume your familiar with Kansas statutes also

[bruces]

Originally posted by yardboyltd
well i've decided to go LLC now... 75 more but I figure thats my time doing my "directors and shareholders meetings" lol. Everything an accountant knows can be found on the web... Not only can you save your self accounting fees but also learn the law inside out to maximize savings in the field.

Probably everything a doctor knows can be found on the web also, are you going to start doing brain surgery?

No offense, but the tax laws are too complicated for most people to understand and apply correctly. If you can handle it more power to you, if you don't interpret them right, you are probably going to cost yourself money or subject yourself to possible liabilities for preparing your taxes improperly.

[devildog]

"buy'em books, send'em to school, and they still eat the pages" Its a chronic problem throughout the trades and life for that matter. The DIY types will always be with us. But there is a silver lining in that dark cloud, they create more work for the rest of us. With Regards... devildog

[paponte]

"If your famaliar with them, I'd like to hear them? And I assume your familiar with Kansas statutes also".

No, I am not. I don't have time to deal with that BS. And I will be the FIRST to admit I do not know EVERYTHING about inc. and all my taxes and shi@t. If you looked at my first post, I advised you to get a good accountant. You can read all you want, it's just not the same as someone that does it for a living. My acct. has taught me more, and knows more than I need to know. That's why he is on my payroll, to keep my @ss out of trouble. There are ways around corporate meetings, ways to make your signature mean "president" without signing "Pres." and alot more. If I wanted to know all the ins and outs, I would have become an accountant. But since I am a business owner, I just hire one... it's alot less chance to take. But you do whatever you want, since you seem to know it all. Oh yeah, and why post questions if you don't head to anyone's words? Heh, you'll be the next Willy Nelson... they'll take everything except for your lawnmower!! but hey, it will all be worht it cause you saved SOME money!

[yardboyltd]

I don't care how you sign your signature. In Kansas, whether you are sole shareholded, director, employee, and officer or not, your are still bound to have "meetings" regardless of how you sign your name. Basically you hold the meeting with yourself, not too hard, but thats still time that you have to sit down and take the minutes of the meeting with yourself. You have to have minutes of regular meetings to prove the existance of the corp... no way around it.

When you said you don't know everything about taxes and legal affairs, you are most definently right, you dont' seem to have a clue except for what your accountant told you.

[paponte]

LOL!! Your a funny guy!! your the one with the decision... not me. I'm incorporated already. You asked for advice, and that's what I gave. You do whatever you want since you know it all. It doesn't affect me in the least bit!

"your are still bound to have "meetings" regardless of how you sign your name" ...One thing has nothing to do with the other, i was just listing examples.
:dizzy: SMACK!! PAY ATTENTION!! :dizzy:

[SprinklerGuy]

Couple of things here


Yard Boy: Paponte has a good point. I'm sure you are an intelligent man, you can do research just like the rest of us, but, aren't you better at running your business? A few years back, I decided to let people do what they do best, and I will do what I do best. So....I hired a payroll service and let them make all my tax deposits...that saved me at least 1 hour per week, probably more, plus I hated doing it. Then I hired an accountant for my monthly sales tax reports and to get incorporated.....that saved me countless hours per month and money. I filed as an S-corp. Guess what? My accountant fills out the paperwork about the annual meetings etc. All that I do is go on vacation with my VP..(wife), and write it off.

Yes, this stuff costs money, yes I am intelligent enough to figure it all out....but I hated doing it. Plus it took me away from the other stuff that I dont hate doing....talking to my clients, getting them to do more work with us, playing golf, seeing my family.

Now Paponte: Be nice, don't feel like a guy can get under your skin that much on an internet forum. I do the same thing, but usually by the time I hit Post Message I have gone back and edited my post, being nice. This forum has been known for the dedication of most of the people on here to a place without conflict for the most part. If you want to fight, email me, I will send you a link to a place that they fight all the time dude!

Now Doug Austreim: What you said about wanting to put more money back in the SS system so you can draw a larger check at retirement: I guess I am a little cynical. I don't think our social security will provide me with much of a life, therefore, I put as little into it as possible, using the savings from my SE tax to invest in other ventures. In 15 years, God willing, a lot of my stuff will be paid off....rental house, other business ventures, at that point I will consider selling my Sprinkler Biz and slowing down......SS will not help me then! I for one, will not allow the Government or anyone else, to scare me into thinking SS is my saviour, because I don't believe that it is. Just my 2 cents.

[dougaustreim]

Sprinkler Guy, I agree with you basically about the value of Social Security. However, it is a common fact that many small businesses don't put anything aside for retirement any place else either. They dump all their money back into the business, and then find out when their ready to retire that they don;t have a lot to sell. Equipment depreciates and in many cases the business is so tied to the owners personality etc. that it has little value for anyone else. More money invested in the business real estate would be much better than iron, but that's not what most do.

So in many cases, the business man avoids the SS and then does little else for retirement investment and ends up with nothing.

Doug
Austreim Landscaping

[paponte]

SprinklerGuy... Now there's my type of businessman. Know's where his priorities are, and where to draw the line and hire a professional. My points exactly. As far as putting away for the future, my acct. set me up with SS, 401K, and some other Oppenheimer fund thing that comes out of my check every week. I have to agree on the feeling that I do not like the government "holding" my money for me. With my luck when I am ready to retire, they will say there's no more money left in SS we paid out too much.

As far as fighting, I don't want to fight anyone. Just don't tell a person that has been around the block a couple of times that they are clueless. I am a businessman just like everyone else, and to me that is just ignorance. If someone is not willing to listen to people's reply's, then why post the question? No harm done here. As I had stated, it doesn't affect me in the least. I've been established for over 10 years now, just here to help & learn!
:D

[SprinklerGuy]

paponte
Do what you do best, let others do the rest! Right?

Doug
You are right, I was giving my 2 cents about the way I run my life.
My business isn't tied to my personality at all....thank goodness otherwise it would be in trouble!!!!!

[yardboyltd]

My original question was in three parts, with a implication of no professional, two of which I answered shortly one after. I simply wanted advice on "part one". However, I thank you for your thoughtful contributions. Yes I do believe professionals are great for people who want to use them. I prefer not to depend on them. A lawyer had already suggested LLC for me. I do have an "accountant", in fact I provide computer services for her parttime like designing databases, modifiying spreadsheet designs, etc.. She offered last year to do my taxes for free, but I still payed her what it would have cost in software, but nowhere in regular accountant fees. I don't depend on her much though, just use her creativity in deductions and keep me straight. I like to understand things for myself, thats not an inhuman feat.

Paponte, I didn't ask anyone advice on whether I should get an accountant or not, so I'm not "guilty" of asking a question and not "heading" it. I rather asked if anyone knew how the values of stocks etc... was calculated. No one answered to that question. Theres alot of smart people on these forums with expierence in such matters. If they could tell me, why shouldn't I ask instead of an accounant who may not be completely familiar with calculating the value of uncommon assests like lawnmowers, mowing agreements.. Not saying they couldn't, but always nice to hear the advice of people who the industry first.

If you prefer to farm out accounting because you don't like it, don't have time for it, don't get it... that's alright. That doesn't mean it's the right thing for everyone though. The accounting doesn't bother me; I like it... Its my own personal conclusion after lots of thinking that a full time accountant wouldn't save me any more time or money. Thats in my situation though, remeber.

Anyways, for many unstated reasons, LLC is my chosen business structure. Thanks.

[dougaustreim]

You are correct in that no one addressed your initial question. I guess the answer most people were giving you is to have an accoutant or lawyer do it. When we went throught the process with the assistance of both of the above professionals, we simplly listed all of the assests that the corporation would initially own and set a value for them. Rather arbitrary with no outside appraisal or anything since it was all in house transaction. They then picked a rounded number of shares to be the initial group. The net value of the assetts at that time was almost 300,000. The charter authorizes the corporation to issue up to 5000 shares with a par value of 100.00 each. They actually only had us issue 2000.

From what I can tell, these numbers were quite arbitrary. Like any other stock, the value can go up or down as conditions change.

I still think you should have an attorney do the actual paper work, but thats my opinion.

Doug
Austreim Landscaping

[bruces]

Originally posted by yardboyltd

Paponte, I didn't ask anyone advice on whether I should get an accountant or not, so I'm not "guilty" of asking a question and not "heading" it. I rather asked if anyone knew how the values of stocks etc... was calculated. No one answered to that question. Theres alot of smart people on these forums with expierence in such matters. If they could tell me, why shouldn't I ask instead of an accounant who may not be completely familiar with calculating the value of uncommon assests like lawnmowers, mowing agreements.. Not saying they couldn't, but always nice to hear the advice of people who the industry first.




When valuing assets put in to a business, if you are transferring assets from an individual to a corporation in a "tax free transaction" (exchange the assets for stock in the corporation) the assets are valued at your tax basis.

In other words, if you bought the assets for 10,000 and you have deducted depreciation in prior years of 6,000, you would have a value of 4,000 in the corporation. Whatever "par value" you place on the shares would not really matter, your tax basis will still be 4,000.

If you decided the value was higher (say 7,000) and want to transfer the assets at that figures, you would have a taxable gain of $3,000 and pay tax on that on your personal return.

If you are simply going from a sole proprietorship to a one person LLC, you are still taxed as a proprietorship (unless you elect to be taxed as a corporation). In that case, the basis of the assets does not change, as you have not really changed the tax status of your business, and the values are irrelevant, the only thing that matters is the "tax basis" (cost less depreciation taken).

[yardboyltd]

Thanks guys, that's what I was look'n for. One of the reasons I decided to go with LLC is because I don't have to issue shares and I'm given alot more flexibility in changing assests over in my Operating Agreement. I still have to figure up some number to put in the agreement as my "contribution".

[dougaustreim]

Your contribution is the net value of the assetts that your putting in.

Doug