Armory Sponsor
Posted: 2/1/2006 9:11:47 AM EDT
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I have the paper and have talked to the ATF I'm planning on getting my 07 and the SOT after June. My question for those that might know is it good to start up as a Corp. or a LLC? I have found that the LLC will be viewed no better then a Sole proprietorship in the way I'm wanting to set up the business end. Or should I start as a sole proprietor first and then change to a Corp.? I don't plan on selling anything in the beginning because I have 2 weapons that I have designed that I want to build first, plus a silencer design. I need the SOT to design and build these, I explained this to the ATF agent and he said that should be just fine. I just need to know what would be best for my business entity. |
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Thanks for your response I spoke with 2 attorneys today and in my state the LLC will be seen as a partnership and will give me no protections from liability that a Corp will. I also spoke with my CPA and he said the Tax issues can be worked out so I think I'm just going to Incorporate. |
At the state level, a corporation is a corporation. Your Articles of Incorporation make no distinction between tax status. You make your tax selection with the IRS when you choose between 'C' or 'S' corp. I think 'C' is the default until you specifically file to be an 'S'. An 'S' corp is a financial flow-through entity and all profits and losses transmit directly to your personal tax return. There is no double taxation. |
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I decided to go with the S corp. now I'm just waiting for the state to get back to me. I thought as a Sole Proprieter you had to give up the post samples as well? I have a plan for what I 'm going to try to do with this SOT when I get it all done. My main focus is going to be on Defense contracts and bids with the designs I have. I have just been wanting to do this for a very long time and I'm just tired of talking the talk to everyone so if I fail I fail but I just would rather be trying. |
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Sounds like the corporation route will be best for you. Not being a sole proprietor means all the firearms inventory you purchase/manuf. can not be kept by you personally as with a sole proprietor. A sole prop. can not keep post samples, but neither can a LLC or any other entity if they drop the license and SOT. A sole prop. can keep all other NFA items and any title 1 firearms you bought under your license. |
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