To incorporate or not?

[usafk9]

Asking all owners of one truck operations if you have/haven't incorporated, and if so, why?

I believe any attorney worth their salt can discover a pierced corporate veil, so I'm not asking for asset protection purposes.

I'm specifically asking for tax avoidance purposes. Was the savings in payroll taxes worth the trouble? FWIW, we stay on the road more than most.

 

[davekc]

A whole lot goes into making that decision. Everything from your personal finances, how much paperwork are you willing to do, to how much would you actually save. You are right, depending on circumstances, I wouldn't incorporate for the sole purpose of escaping liability issues. A competent tax attorney could help you with your specific situation and whether you are a "do it yourselfer" or using a hired professional.
Some basic reading comparisons.
S Corporation vs. LLC: Which Structure is Right for Your Business

 

[moose]

are you already contributing the maximum allowed into your retirement ?
HSA?
do you have an active investment account of some sort ?
IF am not mistaken you can contribute/invest up to 25%
that'll lower your tax liability, even as a same households team drivers.
a good practice is to have a 3rd quarter business breakdown, for tax liability prediction. if you are going to be paying too mach taxes, simply take more days off during last quarter, that's why they made lots of holidays in early winter.
to answer the OP... no am not.

 

[Fkatz]

that is a large question, to Incorporate or Not If you are trying to avoid the tax liability it would be necessary, but corporate income is taxed separately, and then you would recieve a Corp K-1 for for the profit in the corp.
If you incorporate you would have to do the following

Forming a Corporation- could be DOUBLE TAXATION.

#1. Apply though your state, or any other state
Nevada, Florida, Delware, Tennesse, Washington State, TX do not have State taxes on individuals, but they do on Corporations (Big Time) To form a Corporation. Average cost between $500-S1500.00 depending on state.
#2, Apply for a Employer Identificaiton # or EIN under the corp Name
#3 Apply for a Business Checking Account in the Corp Name
#4 You also must set up a payroll checking Account and draw a payroll every week with Federal and state taxes taken out in the state you live in.
#5 You must carry a Corporate Liability and collision insurance Policy
#6 you must carry Workmen Compensation (average cost upto $4000.00 or more) even for you as the only
emloyee.
#7 All Assets including the Vehicle must be registered in the Corporate Name.
#8 The corporation receives all income and pays all business bills only, cannot use for Personal at any time.
What you pay your self would be for personal
#9 You must have a corporate meeting and keep minutes
#10 The cost involved for a single person Corporation is very costly, Don't know exactly but the tax return only could cost you anywhere between $500 to $2000.00 depending on the complexity of the return.
#11 Payroll is a must and could cost up to $50.00 per month for issueing the Quarterly reports and final 940 tax return. and issuing the W-2 just to you
#12 and finally your tax filing deadline is March 15th every year. With an extension if needed until Sepember 15th. A month earlier then your Personal tax return.

Filing as a Sole propreiter

the only item that is required is the Separate Checking account,

No Payroll, No corp Tax, No workmen Comp, No meetings, No Corp Records, necessary

If your corporation goes under so does everything you own, if used in the corporation assets

Frank

 

[usafk9]

Please tell me where, Frank, in the Internal Revenue code that says I have to maintain a separate checking account as a sole proprietor.

Next, please tell me about single-truck owner-operators whom you have counseled into establishing a corporation outside of their domicile state for tax avoidance purposes. Specifically, which states do they live in, and which states do they register their business entity and their truck.

Posted with my Droid EO Forum App

 

[jjoerger]

In Florida corporate officers can exempt themselves from Workers Compensation. Here's a link:
Florida Division of Workers' Compensation - Employers

But, even if you are exempt most carriers will require you to have Work Accident Insurance.

 

[Fkatz]

To all

Any business no matter what it is can form a corporation in any of the Non-taxable states.

The following states have NO Personal Income Tax

Delware, Florida, Tennessee, New Hamphire, Texas, Nevada

As Far As Corporate Taxes are concerned the following have them. they are considered
Franchise Tax (FT)
yearly renewal (all) and
tax returns (TR)

Delaware (FT),(TR)
Florida, (TR)
Tennesee,(FT) (TR)
New Hamphire, (TR)
Texas ( FT Information Return only)
Nevada from what I see there is no Corp Return required. you would have to go to the nevada state web site to check

All corporations must use an agent within the state they incorporate,

If you form the Corporation in the state you reside in
then the Corporation Can be formed on the Sec. Of States web site only for the filing of the application and payemnt of fees to your state.

Most of the Taxpayers that I council I suggest Delaware as the #1 State,

I cannot under the privacy act tell you by name the cleints that I recommend to Incorporate, but I really do not suggest to incorporate at the present time, wait 2 years, you can alway change entities Then

Pay the tax on your Sch C, (Profit and Loss from Business or Profession)

#1 reason most of all is Social Security Self Employment Tax that you will be paying. Income tax is only 15% for most Truckers

We do not know what is going to happen to the SS Fund over the next 10 years, but if you incorporate, you are not paying into it. And you will not get any Social Security when your 67 years old.

Other Question; Why do I have to have a Business Checking Account, Check out IRS Publications 334, or 535 business Expenes

Answer. If you are audited the IRS will consider all income that is deposited in the one account as personal and not business,
So they will not allow your Cost of Doing Business Deductions.
this is considered Co-Mingleing of funds.
so when you recieve the 1099 MISC that the company sends you. No expenses can be deducted. including your Per Deim, and/or (mileage expense. if in a cargo van)

Easiest way is to just open another account, It does not have to be with a business name, and have all your settlement from the leasing Company deposited there and all business expense payment out of that account.

This way since it is a business it will be the only proof for all your income and expenses for that business for you to show the IRS at an audit.

Make sure your get a Debit Card for the Account and all of your purchase are either paid in Cash or Debit.

I you need money for personal bills transfer it into your personal Account and pay you bills that way, Mortgage, Utilities, Personal Credit Card debit, etc.

Frank