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Posted: 1/23/2002 5:42:12 PM EDT
I just picked up a contract job doing some shooting instruction. The pay is good and I stand to make a bunch of $$ over what I normally do, this year. Would it be wise to incorporate to leverage additional write offs? Can anyone point me at a source that explains the process? I normally do a Sked C as a firearms instructor but this thing looks like it's taking off and I want keep as much of my money as I can. Is a sked C good enough or should I actually start a formal corporation? I plan on setting up a seperate bank account and CC to capture the financial aspects. Any advice would be greatly appreciated. Thanks in advance.
Link Posted: 1/23/2002 5:47:25 PM EDT
It would be an excellent idea to incorporate for a liability viewpoint. With everyone being lawsuit happy it is the only way to protect your personal assets IMHO [;)]
Link Posted: 1/23/2002 5:53:30 PM EDT
Link Posted: 1/23/2002 5:57:37 PM EDT
yep. incorporate. then you can buy class3 without the CLEO signature! Gotta be a legit corp though, not just for buying MGs.
Link Posted: 1/23/2002 6:05:23 PM EDT
I've been thinking about inc. myself and drawing up a contract with my employers - independant consultant (read: just doing what I normally do) and then making the corp. run dead even in income and expenses. No taxes that way!!! And I can opt out of Social Security! Would this really work? [):)] NSF
Link Posted: 1/23/2002 6:15:51 PM EDT
PDM, I definitely recommend incorporating because of the tax advantages and liability protection. If you want to incorporate, you can save money by using bizfilings.com -- I used them to set up one of my companies. I also recommend using QuickBooks to manage your corporation's financial information.
Link Posted: 1/23/2002 6:18:36 PM EDT
Originally Posted By VirginiaM4: yep. incorporate. then you can buy class3 without the CLEO signature! Gotta be a legit corp though, not just for buying MGs.
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Not true. Lots of people incorporate for the sole purpose of buying machineguns, usually because they cannot get the LEO signoff in their area. This is completely legal as it conforms to all federal laws. Basically the corp. would be in the business of investing money. Nowdays machineguns are basically an investment just like any other precious metal, except they are a little bit more fun than a bar of gold.
Link Posted: 1/23/2002 6:46:31 PM EDT
Here I am trying to do the right thing and you guys have to put a Machine Gun spin on it! [:D] Interesting idea, though. Instead of coveting $1500.00 rifles I can lust over $6K autos... dmk600, I checked out the web page you mentioned. Do I need all the items?: North Carolina State Filing Fees $255.00 Basic Formation Service $125.00 Expedited State Filing Service $60.00 Corporate Kit and Seal $80.00 Obtain Tax Identification Number $75.00 S Corporation $25.00 Corporate Forms Diskette $35.00 Or can I get by with the bare bones package? I don't mind spending the $$ if it's worth it. Thanks again, this is a big help. Paul
Link Posted: 1/23/2002 6:52:03 PM EDT
[Last Edit: 1/23/2002 6:53:53 PM EDT by hg112]
incorporate in Delaware I also want to know as much as possible about this. Do you have to hae a permanent address. Do zoning laws apply?
Link Posted: 1/23/2002 6:56:44 PM EDT
hg112, Check this site out: [url]http://www.bizfilings.com/[/url] Seems to be pretty turn key. I'm just wondering about the frills and other pitfalls that I may be missing.
Link Posted: 1/23/2002 7:20:32 PM EDT
[Last Edit: 1/23/2002 7:21:38 PM EDT by Observer]
When I was considering incorporating I discussed it with my accountant and what advantages/liabilities it had over operating as a sole-proprietor (as I had been doing for the previous two years) In her opinion and for my particular case it didn't really make a lot of sense until the home business related income got above about $25k per year. Because the costs of doing the necessary S-corp activities (setting up payroll, additional bookkeeping, various fees and state filings, etc.) aren't offset until I started bringing in more than this. But if liability concerns are important to you I would do it immediately (they weren't to me based on my business). The problem from my perspective is that the ongoing bookkeeping and filing requirements for an S-Corp are considerably greater than for a sole proprietor. I really hate the bookkeeping crap, so that's a drag I for me but you might feel differently if you like that stuff. All that said, I wish I had done it sooner because by waiting I ended up getting clobbered on taxes for about 9 months of income that wouldn't have been there if I had done the 'Inc.' sooner. I actually have some questions of my own about deductions, so maybe I'll start another related thread. Good luck pdm!
Link Posted: 1/23/2002 10:05:10 PM EDT
Link Posted: 1/24/2002 2:38:31 AM EDT
Originally Posted By hg112: incorporate in Delaware I also want to know as much as possible about this. Do you have to hae a permanent address. Do zoning laws apply?
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Does anyone know of any pitfalls by incorporating in DE? Will I need an agent there on a permanent basis? The Bizfilings site is good but it seems that they give just enough info to get your money.
Link Posted: 1/24/2002 4:49:23 AM EDT
What is an "S-Corp"?
Link Posted: 1/24/2002 5:10:47 AM EDT
Sub chapter S is the way to go, wife and I are doing it for our martial arts school. It protects you from liability, yet you pay the lower personal Tax rate...ypu the coorporate rate is higher. it is a limited corporation for that reason
Link Posted: 1/24/2002 5:17:06 AM EDT
Seeking to limit liability by incorporation is not a very effective maneuver IMHO. If it's just you and the corporation, any claimant or creditor would simply sue both in order to insure that it got paid. Trust me, when you go to the bank to borrow funds for the corporation, the banker will also insist on your personal guaranty of the corporate debt. If you incorporate to limit your liability to the general public, and you are sued for some act that you did on behalf of the corporation, then you will either be added as a defendant or the first thing that the opposing side will do is to 'pierce the corporate veil' to come after you personally. This would be especially true if the corporation didn't have the funds to pay off the claim or debt, or didn't have insurance to cover the claim. Too 'thin' a corporation will almost invaribly lead to the conclusion that the corporation is simply your alter ego. And insofar as Class III acquisitions are concerned, while a corporation may actually invest in NFA weapons, I would feel that any client who had no business to speak of, whose only legitimate corporate business was the collecting of NFA weapons, and was not taking all the actions that corporations ordinarily took, was a felony-waiting-to-be-discovered-and-charged. Remember, once charged, the amount of money that will be necessary for you to prove your innocence will be staggering! Suffice it to say that whatever pleasure and enjoyment that you received from your NFA collection would soon be a hazy memory. Other attorneys may tell you otherwise, but I'm certain that they will not be spending the night with you in jail prior to your visit with the federal magistrate. BTW, those same attorneys probably have a brother in law who just happens to represent folks charged with criminal offenses, such as .... Eric The(My$0.02,Only)Hun[>]:)]
Link Posted: 1/24/2002 6:01:35 AM EDT
Eric, I fully agree that incorporating purely to cover the liability aspects is poor judgment. Here's my situation: I've been hired by a major corp., as a contractor, to provide instruction to a federal agency. The hiring corporation covers the liability insurance. The issue at hand is that, if all goes well, I stand to approx. triple my gross income this year. Simply put, I am going to get killed by taxes. I simply looking for the best way to leverage deductions and minimize my tax burden. Am I heading down the right road here or is there a better way? As always, thanks in advance. I appreciate the help.
Link Posted: 1/24/2002 7:30:43 AM EDT
I incorperated my business a couple of years ago. I did this for tax purposes and for some liablity reasons. I use two diferent accountants. One does my payroll and tax payments but isn't a lisenced CPA. The other does my taxes and is one of the smartest people I've met and yes he is a high paid CPA but worth every penny. What I did to streach a buck was use my payroll guy to draft up the papers and then use my high priced CPA to proof read his work. This saved me about $1500 or so. I believe that the government hits my Inc. $800. minimum per year just to file. The main reason I incorperated was for taxes. I'm not sold on the idea that you can really shield yourself from liability, but that's just my oppinion. Does this mean I can get class 3 in CA? Boy wouldn't that be nice.
Link Posted: 1/24/2002 1:16:29 PM EDT
Originally Posted By buffman: It would be an excellent idea to incorporate for a liability viewpoint. With everyone being lawsuit happy it is the only way to protect your personal assets IMHO [;)]
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This would be my main reason also.
Link Posted: 1/24/2002 1:35:08 PM EDT
[Last Edit: 1/24/2002 1:42:50 PM EDT by 5subslr5]
Originally Posted By pdm:
Originally Posted By hg112: incorporate in Delaware I also want to know as much as possible about this. Do you have to hae a permanent address. Do zoning laws apply?
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Does anyone know of any pitfalls by incorporating in DE? Will I need an agent there on a permanent basis? The Bizfilings site is good but it seems that they give just enough info to get your money.
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Yes there are some pitfalls to incorporating in Delaware and yes you need an agent - permanent. However, you don't need a physical address and therefore zoning would not apply. Yes there are some advantages to incorporating in Delaware but many of those advantages have to do with such things as how Board Members of public companies are elected, etc. You might consider an "LLC." What you actually need is advice from a trusted and competent CPA and attorney. (Were "I" going to incorporate in Delaware I would do so through "C T Corporation." C T would also act as agent for your corporation in Delaware.)
Link Posted: 1/24/2002 2:17:16 PM EDT
S-Corp means the corporation pays no income taxes itself. Any profits are considered your profits, like a partnership or LLC. As stated above, there no liability reason for incorporating. Also no reason to incorporate in Delaware. The reasons big corps incorporate there has nothing to do with you. You can incorporate in your own state, and your state probably has forms on the web showing you how to do it. The only real advantage to incorporating (either as an S Corp or LLC) for you is that you do not have to declare all of your income as wages. In other words, lets say you are going to make $50K. You can pay youself $3K per month, pay payroll taxes only on that amount, and then take $14K in dividends, which are not taxed at the corporate level. So, while you are going to pay income taxes on $50K, you are only going to pay payroll taxes on $36K. If you operate as a sole proprietorship, you have to pay payroll taxes, on all $50K. As the payroll taxes are about 15%, by incorporating you save maybe $2,100. The disadvantage of incorporating is that there is more reporting hassle to the IRS and the state, and you have to pay unemployment insurance (which is trivial) in case you lay yourself off. [>:/]
Link Posted: 1/24/2002 2:25:39 PM EDT
Link Posted: 1/24/2002 3:39:10 PM EDT
Post from pdm -
Am I heading down the right road here or is there a better way? As always, thanks in advance. I appreciate the help.
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No, the route you're going is the best way to handle the increase in income you expect. First, there will be tax consequences to just about everything I am going to suggest, and you must seek good tax advice that fits your particular situation! You can transfer the title of any motor vehicle into the name of the corporation and, since the vehicle is now owned by the company, any and all expenses, taxes, upkeep, payments, and the like are now 'corporate expenses' and can be deducted from the gross income received by the company. The result - what you used to pay for out of your own pocket with your after-tax dollars, will now be paid by the company with its pre-tax dollars. All those records that you had to keep before, trying to figure out what portion of your vehicle milage and expenses were business-related and therefore deductable, and what was merely for your personal use, and therefore nondeductable, are unnecessary now. If the corporation owns the vehicle, all of its expenses, etc., are deductable from its gross income. And then there's health insurance which your company can purchase for its employees (you!) and which is a legitimate business expense. I could go on and on. There are many reasons to incorporate, and few reasons against it. Always, remember, however, that everything has a cost and with corporations you must dot the i's and cross the t's a lot more carefully. There are also tax consequences for just about everything involving corporations, so be certain that you get good tax advice. BTW, I have a CPA that I pay big bucks to handle my 'Eric The Hun, Attorney at Law, A Professional Corporation' business. If he screws up, well, let's just say I know the direction to the Courthouse! Eric The(LegalBeagle)Hun[>]:)]
Link Posted: 1/24/2002 4:14:10 PM EDT
You may want to look at an LLC (multi member with your kids or wife or something, with you firmly set as manager with 51% of the ownership and majority vote for everything in the world) I don't know NC law, but if they follow the model then you get all the pass through advantages with only 3/4 of the hastle of the S corp. Check with an NC attorney to make sure nothing funny got passed down there, through.
Link Posted: 1/24/2002 4:17:44 PM EDT
Sorry 5subslr5, my eyes skipped right over where you told him about the LLC until I had already posted. Everything else I said stands, but 5subslr5 beat me to the good advice [;)]
Link Posted: 1/24/2002 9:14:56 PM EDT
Originally Posted By Happyshooter: 5subslr5 beat me to the good advice [;)]
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H.S., this will be a first ! [:D]
Link Posted: 1/24/2002 9:32:48 PM EDT
Have you considered "Imbroglioing" yourself?
Link Posted: 1/25/2002 4:56:07 AM EDT
Originally Posted By 1GUNRUNNER: Have you considered "Imbroglioing" yourself?
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Is that where you conduct business under an alias and don't pay any taxes at all? [:)]
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