Operating a Corporation/LLC

Can I cause my corporation to be an S Corp at the end of the year, after I see how my year has been?

You wish. But no. Congress treats this election as a go-forward business decision, not a look-back election. The good news is that it’s easy to revoke, or even “bust”, the election. But be careful about switching back and forth – as in, things don’t work that way.

By | August 10th, 2015|0 Comments

I’m causing my corporation to elect to be taxed as an S Corporation. Does my spouse have to sign?

You’re going to get different answers, depending on the advisor you ask, and the state you’re in. Generally, though, best practice is yes, and sometimes required. PS - If you're keeping this a secret from your spouse, then an S Election is not your biggest problem.

By | August 10th, 2015|0 Comments

Do I need all of the shareholders’ consent for the S Corp election?

Yes. It’s really that simple. Here’s a link to the IRS page that’s chock full of info. PS - Spouses too.

By | August 10th, 2015|0 Comments

Is my business big enough to justify the additional overhead of a corporation or LLC?

“Big” is a relative term. Size isn’t always the only, or even a significant, element to determining whether you should entity-ize your business. If you run a small business, but it’s a high-risk business, like, for example, a liquor store, then an LLC or corporation is probably a good idea, regardless of your revenue.

By | July 12th, 2015|0 Comments

I’ve heard that California has limitations on what type of business can be operated through an LLC. Is that true?

True! California has placed a limit on what businesses can be operated out of an LLC. The general rule is no professionals, and though typically the rules point to any professional named in California’s Business and Professions Code, there are some exceptions. One exception is contractors; additionally, some “professions” that don’t require testing, experience, or certain skills may also be exempt.

By | July 12th, 2015|0 Comments

What does it mean to “file” a corporation?

Actually, nothing. To bring a corporation into existence, you submit your Articles of Incorporation with the government agency responsible for processing that paperwork in your state. By submitting the Articles, or “Charter Documents”, and the act by the agency of approving same, you have formed a corporation. You can say “file”, if you want.

By | July 12th, 2015|0 Comments

Is there a lot of paperwork? Do I have to do it all?

There’s some paperwork . . . corporations tend to have more paperwork, which is why some people might immediately gravitate to LLCs, or nothing at all. And, yes, if you want to maintain your status as a corporation, and maintain your limited liability, don’t cut corners on the paperwork. It’s important.

By | July 12th, 2015|0 Comments

I just put my business into a corporation/LLC. Do I have to file paperwork for that?

If you have an existing business, then its assets and contracts should get transferred to your corporation. This can look like an assignment, or a bill of sale. There are tax considerations regarding contribution of the assets of your existing business. You may also need to notify third parties, such as vendors and landlords. A stitch in time, as they say. Paperwork is king.

By | June 15th, 2015|0 Comments

Is there more paperwork with an S Corporation than, say, with an LLC?

The answer in most situations is going to be yes. One of the virtues of an LLC is its simplicity. Once you choose to form your business as a corporation (and then an S Corporation), or to have your LLC elect to be taxed as an S Corporation, costs for tax returns, payroll, corporate state compliance paperwork, and other accounting items get triggered. You'll need to balance the benefits of an S Corporation against the ease of use that comes with an LLC.

By | March 5th, 2016|0 Comments

Will there be a background check for me to incorporate?

No. You may get background checked as a vendor, even if you put your business in a corporation. But incorporating does not require any background checking.

By | July 12th, 2015|0 Comments