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  #1  
Old 09-26-2002, 08:01 PM
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So how is everybody else in business

This is a general question about how everybody else has their business registered:

Sole Proprietorship
A sole proprietorship exists when a single individual operates a business and owns all assets. A sole proprietor is personally liable for all debts, and business ownership is nontransferable. Under a sole proprietorship, the life of the business is limited to the life of the individual proprietor. The sole proprietorship makes no legal distinction between personal and business debts, and it does not require a separate income tax return. A sole proprietorship is often operated under the name of the owner. Whenever operating a business under a name other than the sole proprietor, an Assumed Name Certificate must be filed with the county clerk. Assumed Name Certificates are discussed later in this section.

General Partnership
A general partnership exists when two or more individuals or businesses join to operate a business. Under a general partnership, a separate business entity exists, but creditors can still look to the partnersí personal assets for satisfaction of debts. General partners share equally in assets and liabilities. A general partnership requires an annual partnership income tax return (separate from the partnersí personal returns). A general partnership may be operated under the names of the owners, or a different name. In either case, an Assumed Name Certificate must be filed with the county clerk.

Limited Partnership
A limited partnership is a partnership formed by two or more persons or entities, under the laws of Texas, and having one or more general partners and one or more limited partners. General partners share equally in debts and assets, while limited partners have limited debt obligations. A limited partnership must be registered with the Secretary of State. (See next section for details on the business name.)

Registered Limited Liability Partnership
A registered limited liability partnership is a general partnership that has been registered with the Secretary of State. A partnerís liability in a registered limited liability partnership differs from that of an ordinary partnership. In a registered limited liability partnership, a partner is not individually liable, under some circumstances, for debts and obligations of the partnership arising from errors, omissions, negligence, incompetence, or malfeasance committed in the course of business by others in the partnership.

Corporation
A corporation (Subchapter C or S) is created when two or more individuals, partnerships, or other entities join together to form a separate entity for the purpose of operating a business in the state. A corporation has its own legal identity, separate from its owners. The corporation offers protection to the business ownersí personal assets from debts and liabilities relating to the operation of the corporation. Taxation of the corporation varies depending on the type of corporation formed. A corporation must be registered with the Secretary of State.

A Subchapter C Corporation is taxed at a higher rate than an individual. The owners are not taxed personally for profits; however, the owners do pay personal taxes on any salaries and/or dividends, and the corporation is also taxed on the profits.

Owners of Subchapter S Corporations may deduct business losses on personal income tax returns, similar to a partnership. The Subchapter S Corporation also offers alternative methods for distributing the business income to the owners.

Limited Liability Company
A limited liability company is an unincorporated business entity which shares some of the aspects of Subchapter S Corporations and limited partnerships, and yet has more flexibility than more traditional business entities. The limited liability company is designed to provide its owners with limited liability and pass-through tax advantages without the restrictions imposed on Subchapter S Corporations and limited partnerships. A limited liability company must be registered with the Secretary of State


This is a post from the handbook from TX....
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  #2  
Old 09-26-2002, 08:11 PM
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Sole Proprietorship
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Old 09-26-2002, 08:30 PM
Precision Care Precision Care is offline
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LLC is the best way to go. You can still file taxes as a S corp. when you file the proper paper work. It is inexpensive to do 400 to 700 when you use an attorney. But to do it yourself is around 100 dollars. If you operate as a sole prop. than open yourself to all personal responsabilty. For example You do something and get a law suit than they can come after your personal assets {house, car, savings} and anything that has your ssn such as your kids savings, no joke. LLC is by far the easiest to be in.
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Old 09-26-2002, 08:39 PM
Nomoslowmow Nomoslowmow is offline
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We are a C corporation. There are a lot of tax and liabilility factors to consider when making this decision. There are also tax ramifications to think about if you think you might ever sell your business (at a profit, hopefully!)

One of the things we were asked to consider is how you will run your accounting of business vs. personal money.

This is a case where your CPA and your lawyer are both needed.

Most of the people I talk to are sole proprietors. I prefered a little more distance between my personal finances and those of the business.

HTH!

Bob
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Old 09-26-2002, 09:01 PM
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How many owners do you have and why did you choose the Corporation Subchapter C. Would this protect you from the suer going after personnel property?
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Old 09-26-2002, 09:17 PM
Darryl G Darryl G is offline
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LLC with the wife. No employess, not even the wife and I. That way you don't pay unemployment comp. or workmen's comp. and OSHA has no jurusdiction. Better protection than a sole proprietorship, which is what I was going to do at first.
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Old 09-26-2002, 09:21 PM
NBLL NBLL is offline
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Sole Proprietor...This is my first full year in business, set up the DBA account, insurance, pesticides license, business license, I thinks thats everything. Might consider going a different route next year but keeping it simple for now.
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Old 09-26-2002, 09:32 PM
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Art Stubbs handy 58 Art Stubbs handy 58 is offline
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LLC Here

Benifits for taxes, Ins, and no way they can take my House, wife, cars, toys...


Well, maybe my wife LOL....
good to go this way all around if you are a small operation..
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Old 09-26-2002, 09:44 PM
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so LLC will provide protection from them going after you house, car, personnel bank accounts? How complicated is the IRS filing do you just roll the business into your personnel earnings or are they kept seperate.

or

you would file jointly with me and the wife and then seperate for the business?
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Old 09-26-2002, 10:05 PM
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JimLewis JimLewis is offline
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I have a good friend who just graduated from a respectable law school, passed the bar, and is now an attorney. He is one of the most intellectually gifted people I know. Straight A's his whole life. Graduated Magna Cum Laude, etc..... This was his specialty. So we were chatting on email recently and below is the text of one of his replies to me. Forgive the loose language - this was a chat among friends.

Quote:
The best business entity to have is an LLC. The sub C corp is the absolute
worst of 'em all, with the sub S a close runner up. Corporations are
archaic, thats all there is to it. Partnerships and sole proprietorships
are the easiest to manage because they dont really have formalities, but
they also dont shield you from certain (and I do mean "certain") liabilities
the way corporations do. Hence, the LLC. It provides ALL the protection of
a corp, with the casual management of a partnership (or probably in your
case, a sole prop.) As far as tax concerns go, again, the corps suck
monkeyballs, and the partnerships and sole props are the best because the
income and deductions "pass through" to you, the individual (i think its a
schedule "c" or something) The LLC is the same way, so you have a liability
shield, ease of management formalities, and pass through tax stuff. Thats
why it was created. (its only been around for a while)

There are several other entities, such as limited liability partnerships
(LLP's) and limited liability limited partnerships (LLLP's) which are also
good, and pretty much just like LLC's, except those are primarily for
existing partnerships and limited partnerships (LP's...are you confused
yet?) that want liability shields and dont want to reorganize as an LLC. So
they just file a piece of paper with the state and they add "limited
liability" to their name. I am not authorized to have an opinion...not yet,
hehe, but these days it is pretty much malpractice for an attorney to
recommend that someone form a regular partnership or LP. Duh, why wouldnt
you want limited liability??

The reason you dont want a regular corporation is because the tax stuff
sucks (yes, even for a subchapter S) but most importantly, the reason one
forms a corporation is for that liability shield, however there are a lot of
corporate formalities that you MUST follow, otherwise if/when you NEED that
limited liability, it isnt going to be hard for opposing counsel to show
that the corporation doesnt exist or is just a sham....called "piercing the
corporate veil." Forming an LLC is easy as pie. Just get yourself a
template or form from any sort of do-it-yourself kit and modify it to say
what you want. Really easy stuff. No need to pay someone else to do it,
thats for sure! Oops, I shouldnt say that...dont want to put me out of
business, hahaha.
Take it FWIW.
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