LIFamilies.com - Long Island, NY


RSS
Articles Business Directory Blog Real Estate Community Forum Shop My Family Contests

Log In Chat Index Search Rules Lingo Create Account

Quick navigation:   

LLC: Sole proprietorship. vs. Corporation ?

Posted By Message

MrsYank
She's here :)

Member since 4/07

3238 total posts

Name:
Mrs. Yank

LLC: Sole proprietorship. vs. Corporation ?

DH just became an LLC.

We didn't realize there were so many options available.

Is there a major difference between a sole proprietorship and a corporation? Any positives or drawbacks for either?

Thanks for help in advance Chat Icon

Posted 2/4/10 5:25 PM
 
Long Island Weddings
Long Island's Largest Bridal Resource

Kara
Now Zagat Rated!

Member since 3/07

13217 total posts

Name:
They call me "Tater Salad"

Re: LLC: Sole proprietorship. vs. Corporation ?

An LLC is a distinct entity from both a sole proprietorship and a corporation...

Posted 2/4/10 5:45 PM
 

MrsYank
She's here :)

Member since 4/07

3238 total posts

Name:
Mrs. Yank

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by Kara

An LLC is a distinct entity from both a sole proprietorship and a corporation...




Then how come we got a form from the NYS Dept of Finance asking "How will the LLC be treated for Tax Purposes" and sole prop. & Corporation are both listed as choices?Chat Icon

Posted 2/4/10 6:02 PM
 

Kerie-is-so-very
versatile!

Member since 5/05

13532 total posts

Name:
K

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by MrsYank

Posted by Kara

An LLC is a distinct entity from both a sole proprietorship and a corporation...




Then how come we got a form from the NYS Dept of Finance asking "How will the LLC be treated for Tax Purposes" and sole prop. & Corporation are both listed as choices?Chat Icon



You have to find out which one you can really do. I think the forms are weird and you may not have all those options but they leave it up to you to figure out which ones you can really do for your type of business. My understanding is exactly as Kara posted. I am a P.C. and I had to elect to be treated as an S. Corp. for tax purposes with both the IRS and NY state. I think there was really only one other choice that may have suited a P.C.

Posted 2/4/10 6:31 PM
 

telmah
LIF Infant

Member since 1/10

239 total posts

Name:
Prince

Re: LLC: Sole proprietorship. vs. Corporation ?

You should consult an accountant before you decide on anything, but just briefly...

Is your DH the only member in the LLC? If so, he can either choose to be a treated as a Single-Member LLC or a C-Corp or an S-Corp.

SMLLC is the easiest. No corporate tax returns need to be filed. All he would have to do at year-end is fill out a Schedule C and pay self-employment taxes on the profits of the company.He may also be subject to NYC taxes and pay an annual filing fee to NYS.

As a C-Corp, the company would have to file Federal & State tax returns and pay any payroll taxes if the company has payroll.

S-Corp would be similar to a C-Corp except that the Company would not pay the Corporate taxes. Instead the profits and losses would pass through to the shareholder(s) and they would pay the taxes.

Again, this is just a very brief explanation.

Posted 2/4/10 7:32 PM
 

alli3131
Peanut is here!!!!!!

Member since 5/09

18388 total posts

Name:
Allison

Re: LLC: Sole proprietorship. vs. Corporation ?

also you need to keep in mind the personal liability that comes with a sole proprietorship. If at soem point the business has a bad period and its a sole proprietorship and the company owes money...those creditors can come after your DH personally. If it is a corporation the creditors cannot come after his personal assets.

An S Corp does not come with personal liability.

Make sure your DH looks into all of this. I worked as a collection atty and I had so many people think their personal assets were safe but they were a sole proprietorship.

Posted 2/4/10 8:13 PM
 

MrsYank
She's here :)

Member since 4/07

3238 total posts

Name:
Mrs. Yank

Re: LLC: Sole proprietorship. vs. Corporation ?

Thanks for your responses.

Posted 2/4/10 8:35 PM
 

vicky1125
LIF Adolescent

Member since 11/08

767 total posts

Name:
Victoria

Re: LLC: Sole proprietorship. vs. Corporation ?

Schedule C's also have a greater risk of being audited.

Posted 2/4/10 8:44 PM
 

pinkandblue
Our family is complete, maybe

Member since 9/05

32436 total posts

Name:
Stephanie

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by vicky1125

Schedule C's also have a greater risk of being audited.



true indeed....my dh has an s-corp Chat Icon

Posted 2/4/10 9:11 PM
 

karacg
Babygirl is 4!

Member since 5/05

17076 total posts

Name:
Kara®

Re: LLC: Sole proprietorship. vs. Corporation ?

I am an S-Corp. It seemed to be the safest route -- I personally can't get sued, only the corporation. ALthough I don't forsee ever getting sued in my field.

I consulted with a small business accountant and also the small busi. center at Farmingdale State. My cousin did all the paperwork so I didn't have to pay legal fees.

Good luck.

Posted 2/5/10 11:00 AM
 

telmah
LIF Infant

Member since 1/10

239 total posts

Name:
Prince

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by vicky1125

Schedule C's also have a greater risk of being audited.



This is true, but one could argue that if you're running your business on the up-and-up and you keep proper records, then an audit is not really anything to worry about. KWIM?

Posted 2/5/10 11:03 AM
 

vicky1125
LIF Adolescent

Member since 11/08

767 total posts

Name:
Victoria

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by telmah

Posted by vicky1125

Schedule C's also have a greater risk of being audited.



This is true, but one could argue that if you're running your business on the up-and-up and you keep proper records, then an audit is not really anything to worry about. KWIM?



this is true, but dealing with the gov't is always a pita. plus they have a few years to audit you so if g-d forbid you misplace your records and dont have copies, you're screwed. the burden is on you to prove them wrong. better to avoid them.

Posted 2/5/10 11:15 AM
 

Kara
Now Zagat Rated!

Member since 3/07

13217 total posts

Name:
They call me "Tater Salad"

Re: LLC: Sole proprietorship. vs. Corporation ?

You have FM.

Message edited 2/5/2010 11:26:40 AM.

Posted 2/5/10 11:26 AM
 

pinkandblue
Our family is complete, maybe

Member since 9/05

32436 total posts

Name:
Stephanie

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by telmah

Posted by vicky1125

Schedule C's also have a greater risk of being audited.



This is true, but one could argue that if you're running your business on the up-and-up and you keep proper records, then an audit is not really anything to worry about. KWIM?



it is a headache, even if you are "by the books"...IMHO, no other setup is "better" than an s-corp

Posted 2/5/10 1:44 PM
 

Kara
Now Zagat Rated!

Member since 3/07

13217 total posts

Name:
They call me "Tater Salad"

Re: LLC: Sole proprietorship. vs. Corporation ?

Grr... wrong thread. sorry.

Message edited 2/5/2010 1:46:49 PM.

Posted 2/5/10 1:46 PM
 

telmah
LIF Infant

Member since 1/10

239 total posts

Name:
Prince

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by pinkandblue

it is a headache, even if you are "by the books"...IMHO, no other setup is "better" than an s-corp



There really is no right or wrong answer since each individual's circumstances will be different

Posted 2/5/10 2:10 PM
 

vicky1125
LIF Adolescent

Member since 11/08

767 total posts

Name:
Victoria

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by telmah

Posted by pinkandblue

it is a headache, even if you are "by the books"...IMHO, no other setup is "better" than an s-corp



There really is no right or wrong answer since each individual's circumstances will be different



you're right, but technically, schedule c's still have a higher risk of being audited.

Posted 2/5/10 2:22 PM
 

pinkandblue
Our family is complete, maybe

Member since 9/05

32436 total posts

Name:
Stephanie

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by telmah

Posted by pinkandblue

it is a headache, even if you are "by the books"...IMHO, no other setup is "better" than an s-corp



There really is no right or wrong answer since each individual's circumstances will be different



true, I was givng my perspectiveChat Icon

Posted 2/5/10 2:38 PM
 

pinkandblue
Our family is complete, maybe

Member since 9/05

32436 total posts

Name:
Stephanie

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by vicky1125

Posted by telmah

Posted by pinkandblue

it is a headache, even if you are "by the books"...IMHO, no other setup is "better" than an s-corp



There really is no right or wrong answer since each individual's circumstances will be different



you're right, but technically, schedule c's still have a higher risk of being audited.



as my dad said, "s-corp's have 2 chances of being audited - slim and none and slim just left the building" Chat Icon Chat Icon Chat Icon Chat Icon Chat Icon Chat Icon

Posted 2/5/10 2:39 PM
 

vicky1125
LIF Adolescent

Member since 11/08

767 total posts

Name:
Victoria

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by pinkandblue


as my dad said, "s-corp's have 2 chances of being audited - slim and none and slim just left the building" Chat Icon Chat Icon Chat Icon Chat Icon Chat Icon Chat Icon



Chat Icon Chat Icon Chat Icon Chat Icon

Posted 2/5/10 3:30 PM
 

Beth
The Key to your new home....

Member since 2/06

24849 total posts

Name:
Beth

Re: LLC: Sole proprietorship. vs. Corporation ?

I did this last year and my accountant said s-corp...so I took her advice!

Which reminds me...I have to do my taxes!

Posted 2/5/10 4:14 PM
 

karacg
Babygirl is 4!

Member since 5/05

17076 total posts

Name:
Kara®

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by pinkandblue

as my dad said, "s-corp's have 2 chances of being audited - slim and none and slim just left the building" Chat Icon Chat Icon Chat Icon Chat Icon Chat Icon Chat Icon



I think I love your dad!

And yes, getting audited no matter HOW well you keep records is a HUUUUGE PITA. You lose time, money and possibly clients while having to spend all of your time answering to the auditors.

Posted 2/8/10 11:20 PM
 

pinkandblue
Our family is complete, maybe

Member since 9/05

32436 total posts

Name:
Stephanie

Re: LLC: Sole proprietorship. vs. Corporation ?

Posted by karacg

Posted by pinkandblue

as my dad said, "s-corp's have 2 chances of being audited - slim and none and slim just left the building" Chat Icon Chat Icon Chat Icon Chat Icon Chat Icon Chat Icon



I think I love your dad!

.


My dad IS pretty awesome Chat Icon

Posted 2/9/10 6:33 AM
 
 

Potentially Related Topics:

Topic Posted By Started Replies Forum
If you own a small business (sole proprietorship), what tax forms do I need to file? Mommy2Boys 2/18/08 1 Families Helping Families ™
 
Quick navigation:   
Currently 54896 users on the LIFamilies.com Chat
New Businesses
1 More Rep
Carleton Hall of East Islip
J&A Building Services
LaraMae Health Coaching
Sonic Wellness
Julbaby Photography LLC
Ideal Uniforms
Teresa Geraghty Photography
Camelot Dream Homes
Long Island Wedding Boutique
MB Febus- Rodan & Fields
Camp Harbor
Market America-Shop.com
ACM Basement Waterproofing
Travel Tom

      Follow LIWeddings on Facebook

      Follow LIFamilies on Twitter
Long Island Bridal Shows