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View Full Version : How many of you guys(and gals) are or were sole proprieters and changed to LLC ?


dogdad
04-08-2003, 10:56 PM
My accountant told me the other day that i am making to much money and paying alot of self employment tax,,and that I should consider becoming a Limited Liability Corporation. She says my taxes will drop which sounds great. Any of you guys doing this ?Any comments of good or bad would be appreciated. I will say to you that I do mostly large corporations and get the 1099's.

CBB
04-08-2003, 11:29 PM
I am not in business for myself. I do know about an LLC somewhat because my dad changed his from sole propietorship to LLC.

From what I know about an LLC is that it consolidates your business away from your personal assets (meaning, for example if a lawsuit was brought against your company, your personal belongings, house etc... cannot be touched). That alone would be enough for me to want to change.

As far as taxes, I am not sure, but I do remember him mentioning gaining some benefits.

Hope this helps somewhat.

bastalker
04-08-2003, 11:40 PM
CBB is absolutely right... I am a sole proprieter, and I do not pay taxes under my buisness name, but in my own name. For me it is just easier. Sales tax, federal, all capital gains under my name. It is the simplest way to do it. I have considered the possibility of a lawsuit effecting my personal assets, though I really dont see anyone filing a law suit against me for any reason. If they do, I have liability insurance to cover that end. I just like simple....

If you get alot of 1099's LLC would probably be the way to go. Myself I do mostly residentials, so I dont get the 1099's. It is the best way for me right now. Hope this helps..:)

Greens Keeper
04-09-2003, 01:09 AM
I would first find a reputable lawyer and sit down and figure out what is best for you. I talked to many accoutants and with making too much money and they suggested deductions. Eg. Trucks, mowers trailers, anythig associated with money. I am very much with the two previous posts. Those are the exact same reasons why I went to LLC. My accountant and my tax preparer dont get along for my having an LLC. They dont see eye to eye over it. But I'll tell you I do sleep better knowing that what I have is mine and some one else can sue me for the rest of my buisiness and can have it. My advice, find a lawer who knows corporation law and leave the numbers to the accoutants.

Rhodester
04-09-2003, 06:48 AM
My lawyer just setteled a "one eyeball" case for 1.5 million.

If you're insured for 1 million and a sole prop., where is that extra half million dollars that YOU are personally liable for, going to come from?

Just something to think about.

Dave

rodfather
04-09-2003, 10:04 AM
I went from sole proprietor to LLC 2 years ago...best thing I could have done.

Henry
04-09-2003, 10:12 AM
I also switched a few years ago but I don't think it did much for tax savings.

bruces
04-09-2003, 10:59 AM
Originally posted by dogdad
My accountant told me the other day that i am making to much money and paying alot of self employment tax,,and that I should consider becoming a Limited Liability Corporation. She says my taxes will drop which sounds great. Any of you guys doing this ?Any comments of good or bad would be appreciated. I will say to you that I do mostly large corporations and get the 1099's.

I assume you don't have partners. Unless you elect to have your LLC taxed as a corporation, you will report your income on a Schedule C on your individual return just like you do now.

If that is the case, you won't save any tax in any way that I know of.

If you elect to be taxed as a corporation, you still have to deal with payroll taxes, but from an employer and employee standpoint. As your accountant for more details about how you will save money.

By the way, making too much money isn't all that bad a problem.

:D :D

philk17088
04-09-2003, 01:40 PM
Originally posted by rodfather
I went from sole proprietor to LLC 2 years ago...best thing I could have done.

What are the benefits that you got out of it? I've been advised by lawyer and acountant that I should consider it, but I still don't understand any direct savings to my bottom line. I like the piece of mind that the limited liability would give but tax wise I don't see the big tax advantage at the revenue levels I'm at now.

williamslawn
04-09-2003, 09:09 PM
Just picked up my tax return today. This was my first year as a S Corp. My accountant saved me over $5000 in taxes. He advised me to become and S Corp. Only draw back I have seen is I had to pay $625 to prepare corp return and $200 for individual return.

John Allin
04-10-2003, 08:58 AM
Personally.... I would take Bruce's advice to the bank. He is by far and away the most knowledgable poster here on such topics.

C & T
04-10-2003, 11:20 PM
My lawyer friend and accountant said it would be wise to change to an LLC. It cost me only $30.00 for the filing fee. There was a good thread on this last year.

GreenQuest Lawn
04-10-2003, 11:53 PM
I was just informed by my accountant that I should switch from an LLC to an S corp. She said I would have saved over $1500.00 this year.

This is one thing I really know nothing about so I am glad to have the professional help.