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S Corporation advantages, costs, and complexity.
Bremerton, WA
Viewed 1036 times.
Posted about 1 year ago in Corporate / Incorporation
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I have a small business that I've used for several years as a dba. It started out as basic self-employment. Small companies would hire me as a contractor for short duration jobs (less then 1yr). Last year, for the first time, I hired two contractors to help me complete a job that I was awarded. My expertise is in government or quasi-government acquisition and relocation. I live in the state of Washington.
I am wondering what advantages or disadvantages there would be to convert my business into an S Corporation. I am under the assumption that this would protect my personal assets in the event there is ever a claim against my work (not that there ever has been). I own rental property now and I was thinking about buying additional property and putting them in the business. Does anyone know if this is just a waist of time and money or if there are any benefits to this. Also, is it difficult to set up an S Corp and will it have an impact on how I file my taxes? - Is this your question? Add additional information Answers (4)
Joshua M King
This attorney is licensed in Washington and 1 other state.
Posted about 1 year ago.
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You should really talk to your accountant first about the tax implications in your particular circumstances of converting your business to either an S-corp or an LLC. Then use Avvo to find a lawyer to help guide you on the liability issues and the conversion paperwork. It won't be that complicated or expensive to convert, but you will need to walk through the specifics of your concerns and your business with these professionals in order to make the best decision.
Valerie Ann Farris
This attorney is licensed in Washington.
Posted about 1 year ago.
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You should speak with both an accountant *and* an attorney familiar with corporate formation issues. Ideally, you'd get them talking to each other, too. Chris Engle at Cloutier & Engle has lots of experience in this area of law. 425.275.9456.
John Andrew Myer
This attorney is licensed in Washington and 2 other states.
Posted about 1 year ago.
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In terms of liability, if someone sues you personally for a tort (personal injury claims, for example) then a liability limiting entity (such as a corporation or an LLC) is not all that helpful in limiting liability. That's why you need insurance. However, a corporation or an LLC will protect you from contract liability in that if someone has a claim that exceeds the value of the assets in your business, that is all the claimant can get. Either a corporation or an LLC can file for S-Corp status, and that can have a number of tax advantages. For example, after paying yourself a reasonable salary, the remainder of the income from your business is treated as profit. Your salary is subject to payroll taxes (Social Security, Medicare and self-employment taxes) as well as federal income taxes. Your profit is only subject to federal income taxes. If you would like to talk further, check out the AXIOS Law Group at www.axioslaw.com and then give me a call.
David L. Carrier
This attorney is licensed in Massachusetts and 1 other state.
Posted about 1 year ago.
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Talk to your lawyer and accountant of course, but for most small businesses in your situation, the S Corp or LLC electing S Corp tax status, is the way to go.
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