Thinking of INC.ing & payroll taxes

Discussion in 'Business Operations' started by Crabtree, Feb 6, 2006.

  1. Crabtree

    Crabtree LawnSite Member
    Posts: 20

    What are some of you guys thoughts on incorporating. LLC or other?
    Seen a few of lawn trucks with LLC, not too many with inc.
    Any good books on how to go about it?
    Also have only one employee and he wants me to start taking out taxes on him, where do I start with this?
    He thinks it will be better for him to get a refund from IRS next year...
     
  2. Eclipse

    Eclipse LawnSite Bronze Member
    Posts: 1,149

    FWIW - My attornery charges $600 to do the paperwork to become an LLC.
     
  3. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    invest in an hour with your attorney to determine whether LLC or Inc. is better...we did 6 years ago thankfully.
     
  4. Eclipse

    Eclipse LawnSite Bronze Member
    Posts: 1,149

    Actually you would probably rather talk with your account (I assume you are a sole proprietership now) since the difference between INC and LLC will be more of a tax issue for you.
     
  5. 6'7 330

    6'7 330 LawnSite Bronze Member
    Posts: 1,822

    Firstly, as other posters have commented, talk over your situation with an attorney,or accountant about incorporation.

    Second,your employee wants you to start taking out payroll? If you have paying him cash, the IRS is not going to look on that very favorably.
     
  6. lasher66

    lasher66 LawnSite Senior Member
    Posts: 395

    Unless your employee is showing up with his own equipment and going out to do the job under a subcontract, you have to withhold taxes no matter what. I looked into this pretty good and I found you have to withhold taxes by law. There are stipulations that have to be met to be considered a subcontracted employee and having your own equipment is one of them.

    Jason
     
  7. mad_wrestler

    mad_wrestler LawnSite Senior Member
    Posts: 339

    Go to your secretary of state site. There you should find a link for corporations. It is not rocket science although our lawyers lead us to believe that it is. My first LLC was formed by an attorney at the tune of $500. This year I started another business and formed it myself. First you must reserve your name with the sec. of state($25). Then, just copy the example on your sec. of state site for your articles of organization. Send it in with the information that they require and a check for about $100. And BAM it's done. They will file it and send you your documents and your Federal Tax ID. As for if you should inc or not. This is something I learned just this year from my accountant. LLC and Inc are just what type of entity you are. The advantage of LLC is of course limited liability. The differance is how it is taxed. When filing taxes we chose to file as a S-corporation. This is why. I will pay myself a salary, comprable to the work that we do. On that salary we pay all taxes required. Quarterly I will pay a dividend that of which we are not required to pay Soc Sec tax. Talk with your accountant and he/she should be able to steer you in the right direction.
     

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