Incorporated or not?
- Thread starter greg334
- Start date
I have been a one truck owner and have been incorporated since 1994. There are many tax advantages to being a S Corp or LLC. What I have found is that when you start talking about being a corporation peoples eyes tend to glaze over and they lose interest. Why?? They think your are burried in PPWK which is not true. You need some discipline to maintain things but the write offs and and tax advantages make it worth while. One example is you can have your corporation pay and deduct 100% of the employees yearly medical expenses. The employees are you and your other half. This is a Corp benefit.
I am incorporated in the state of Florida and another advantage is that after a few years every bank wants to loan you money.
I am incorporated in the state of Florida and another advantage is that after a few years every bank wants to loan you money.
On the advice of professional tax advisors that specialize in serving owner operators, we are not incorporated. The day will likely come when we will be. It will occur when we cross over the point where the costs of incorporation (monetary and otherwise) are less than the costs of not being incorporated. Such a cost/benefit analysis can only be done case by case, and is best done with help from an accountant that knows trucking.
arkjarhead
Veteran Expediter
If you are set up as an LLC doesn't that mean if you get sued the person can't come after your personal assets such as home and p.o.v.?
I am not incorporated. My situation with a working spouse, the tax breaks I bring to our joint filing out weigh any corporation benefits. Ark points out that a corporation has more protection from litigation than does an individual. Which is something one should consider.
Greg, check with an accountant or tax attorney to see what is best for you. Everyone's situation is a little different.
Greg, check with an accountant or tax attorney to see what is best for you. Everyone's situation is a little different.
greg334
Veteran Expediter
I should have posted this in the newbie section.
I am going down this path because of all the money I'm making and because of the state's new taxes that they are planning retroactive.
I already talked to my accountant and already have the plan in motion but because it sometimes is a good idea to throw out things to help people, I did just that.
As one thing I keep hearing is the use of an LLC and an S corp but I find that a C corp will also work when it is used right.
As for the limited liability, there are things that you can do that will not protect your assets at all. One thing that I have been warned about is the allege protection of Nevada corps which really does not exist as does bearer shares but that is another long post.
a side bar - I don't get the LLC thing at all, I mean it was to be used for a sort of benefit to small and medium business but Chrysler is an LLC and that company has a lot of liabilities.
I am going down this path because of all the money I'm making and because of the state's new taxes that they are planning retroactive.
I already talked to my accountant and already have the plan in motion but because it sometimes is a good idea to throw out things to help people, I did just that.
As one thing I keep hearing is the use of an LLC and an S corp but I find that a C corp will also work when it is used right.
As for the limited liability, there are things that you can do that will not protect your assets at all. One thing that I have been warned about is the allege protection of Nevada corps which really does not exist as does bearer shares but that is another long post.
a side bar - I don't get the LLC thing at all, I mean it was to be used for a sort of benefit to small and medium business but Chrysler is an LLC and that company has a lot of liabilities.
My tax person in NJ has under contract over 50 trucking companies 1 truck and larger he has been dealing with for 30+ years and upon his advice I incorporated and so far the tax benefits and personal liability protection has been a valuable tool.
This is my first year incorporated and it has been very profitable but according to him all will come out in the wash. So until I find a better system being incorporated is the way to go at least for me.
Finding a tax person with extensive truck tax experience is a valuable tool.
This is my first year incorporated and it has been very profitable but according to him all will come out in the wash. So until I find a better system being incorporated is the way to go at least for me.
Finding a tax person with extensive truck tax experience is a valuable tool.
>On the advice of professional tax advisors that specialize
>in serving owner operators, we are not incorporated. The day
>will likely come when we will be. It will occur when we
>cross over the point where the costs of incorporation
>(monetary and otherwise) are less than the costs of not
>being incorporated. Such a cost/benefit analysis can only be
>done case by case, and is best done with help from an
>accountant that knows trucking.
Phil:
I incorporated myself with the State of Ohio in 2001 as a LLC.
It was a one time charge of $112.00 and is good for a number of years.
It took me less than 20 minutes to fill out the free forms provided by Ohio and less than 2 (two) weeks for the LLC to become official.
While, I surely don't know other drivers' financial capabilities, I suggest if you're in an accident of any type of magnitude, no doubt you'll wish you had spent that $112.00.
Be safe.
>in serving owner operators, we are not incorporated. The day
>will likely come when we will be. It will occur when we
>cross over the point where the costs of incorporation
>(monetary and otherwise) are less than the costs of not
>being incorporated. Such a cost/benefit analysis can only be
>done case by case, and is best done with help from an
>accountant that knows trucking.
Phil:
I incorporated myself with the State of Ohio in 2001 as a LLC.
It was a one time charge of $112.00 and is good for a number of years.
It took me less than 20 minutes to fill out the free forms provided by Ohio and less than 2 (two) weeks for the LLC to become official.
While, I surely don't know other drivers' financial capabilities, I suggest if you're in an accident of any type of magnitude, no doubt you'll wish you had spent that $112.00.
Be safe.
60MPH
Expert Expediter
Yep, I am incorporated a LLC out of delaware they have a flat tax of 200.00 or 250.00 dollars a year. One of the main points is that it is easier for me to keep my business and personal expenses seperate i.e the bank needs you to be a real business to have a business account and a line of credit with them. At least that is the way my bank works. So all the truck expenses come out of my PMV Transportaton LLC account and all my personal come out of my personal account.
60 MPH ALL DAY-EVERY DAY
60 MPH ALL DAY-EVERY DAY
Hey Greg,
We are a LLC in Michigan. Our tax guy advised this BEFORE we even bought a truck. We were still running for an owner. It's very easy in Mich to do a LLC. Can be done online in about 20 minutes and at very little cost. Layoutshooter
We are a LLC in Michigan. Our tax guy advised this BEFORE we even bought a truck. We were still running for an owner. It's very easy in Mich to do a LLC. Can be done online in about 20 minutes and at very little cost. Layoutshooter
Regarding the claimed liability protection a corporation can provide to a small business, no one should rely on that without first familiarizing himself or herself with the legal concept "Pirecing the Corporate Veil." That's for you to learn about from an attorney, not from truck drivers.
People considering incorporating their one-truck or multi-truck small business would also do well to familiarize themselves with the tax consequences of operating a truck in New Jersey, and factor those consequences into your incorporate-or-not cost/benefit analysis. If your accountant cannot advise you about New Jersey, get one that can.
Depending on who you talk to, the paperwork and administrative requirements of operating a corporation can be minimal, quite involved, or somewhere in between. How easy or hard it is is far less impoortant than whether it is done right or not. If it is not done right, and if you undergo a tax audit, disasterous consequences could result in the form if penalties and interest.
As I said above, Diane and I will likely incorporate in the future. But when we do, we will not be doing it for liability reasons, and we will go to great lengths and take great care to make sure we do it right.
People considering incorporating their one-truck or multi-truck small business would also do well to familiarize themselves with the tax consequences of operating a truck in New Jersey, and factor those consequences into your incorporate-or-not cost/benefit analysis. If your accountant cannot advise you about New Jersey, get one that can.
Depending on who you talk to, the paperwork and administrative requirements of operating a corporation can be minimal, quite involved, or somewhere in between. How easy or hard it is is far less impoortant than whether it is done right or not. If it is not done right, and if you undergo a tax audit, disasterous consequences could result in the form if penalties and interest.
As I said above, Diane and I will likely incorporate in the future. But when we do, we will not be doing it for liability reasons, and we will go to great lengths and take great care to make sure we do it right.
>Depending on who you talk to, the paperwork and
>administrative requirements of operating a corporation can
>be minimal, quite involved, or somewhere in between. How
>easy or hard it is is far less impoortant than whether it is
>done right or not. If it is not done right, and if you
>undergo a tax audit, disasterous consequences could result
>in the form if penalties and interest.
>
Phil:
While not trying to be contentious, but I was audited by the IRS the next year. I brought them all my business documents. However, they were concerned with the amount of miles I deducted, or rather, my CPA who always prepares my taxes.
I showed them almost every paper receipt from the fuel pumps and the credit card statements that backed up the paper receipts.
After verifying that all mileage deductions were legitimate, no fines were imposed and I have had no further contact with the IRS.
I am not sure how an S-Corporation works, but one of the features I like about the LLC is that I have never had to send in any type of either quarterly tax estimations, or, any payments as well.
Again, this is just my story and I would never suggest anyone accept legal or tax opinions from those that are not professionals.
Be safe.
>administrative requirements of operating a corporation can
>be minimal, quite involved, or somewhere in between. How
>easy or hard it is is far less impoortant than whether it is
>done right or not. If it is not done right, and if you
>undergo a tax audit, disasterous consequences could result
>in the form if penalties and interest.
>
Phil:
While not trying to be contentious, but I was audited by the IRS the next year. I brought them all my business documents. However, they were concerned with the amount of miles I deducted, or rather, my CPA who always prepares my taxes.
I showed them almost every paper receipt from the fuel pumps and the credit card statements that backed up the paper receipts.
After verifying that all mileage deductions were legitimate, no fines were imposed and I have had no further contact with the IRS.
I am not sure how an S-Corporation works, but one of the features I like about the LLC is that I have never had to send in any type of either quarterly tax estimations, or, any payments as well.
Again, this is just my story and I would never suggest anyone accept legal or tax opinions from those that are not professionals.
Be safe.
>Phil,
>You made a very good point but I am wondering about the New
>Jersey thing. Maybe I am not privy to how my accountant
>handles my millions but I never heard him mention Jersey
>except not to buy a truck there or bet too much at AC.
About "the New Jersey thing," see:
http://www.etrucker.com/apps/news/article.asp?id=59712
>You made a very good point but I am wondering about the New
>Jersey thing. Maybe I am not privy to how my accountant
>handles my millions but I never heard him mention Jersey
>except not to buy a truck there or bet too much at AC.
About "the New Jersey thing," see:
http://www.etrucker.com/apps/news/article.asp?id=59712
greg334
Veteran Expediter
Thanks Phil, but I would not even worry about it. It covers more than corporations because they are going after lost business tax, I would think any business form from DBA to C corp would be covered under their laws.
From my point of view and checking my fuel tax logs, I have only covered 1100 miles in NJ this year and what ever they can hit me with is not an issue. I don't do the OTR thing and I don't do the I95 corridor (or try to avoid it).
Well either way, I am still following my plan.
From my point of view and checking my fuel tax logs, I have only covered 1100 miles in NJ this year and what ever they can hit me with is not an issue. I don't do the OTR thing and I don't do the I95 corridor (or try to avoid it).
Well either way, I am still following my plan.
jasonsprouse
Expert Expediter
No way should you do business as a sole proprietor. My reasoning has nothing to do with taxes, it has to do with shielding your personal assets from the business' liabilities.
My business (a towing company) is set up as an Ohio LLC (Limited LIABILITY Company). I file taxes the same as a sole proprietor.
Be very careful setting up as a Corporation. It is very easy to lose your liability protection as a Corporation because of the record / procedural requirements.
My business (a towing company) is set up as an Ohio LLC (Limited LIABILITY Company). I file taxes the same as a sole proprietor.
Be very careful setting up as a Corporation. It is very easy to lose your liability protection as a Corporation because of the record / procedural requirements.
Broompilot
Veteran Expediter
Just you, you want problems Incorprate. Its a GIANT HASSLE when one can just as easily be DBA.
Tax advantages do not out weight advantages.
If you have more than one truck or do more than 80K in profit than its worth looking into othewise NO. Kevin Rutherford spoke on this last week one night as well. 80K was the figure he tossed out for considering it, I agree.
P.S. really want problems? Have one of these advertisements do it for ya in Neveda or Deleware, the I.R.S. will be on you like bees on honey. Always do it in the state that you live in.
Tax advantages do not out weight advantages.
If you have more than one truck or do more than 80K in profit than its worth looking into othewise NO. Kevin Rutherford spoke on this last week one night as well. 80K was the figure he tossed out for considering it, I agree.
P.S. really want problems? Have one of these advertisements do it for ya in Neveda or Deleware, the I.R.S. will be on you like bees on honey. Always do it in the state that you live in.