I don't think we have them here in the frozen north.... A buddy in Minneota was asking me for some business advice ....... what's the advantages of a LLC over a proprietorship or a regular corporation? Accounting wise, are you not still creating another taxpayer? Way back another lifetime ago, I was incorporated & any tax savings were negated by the extra accounting costs from having greated another "taxpayer". I can look this up online but I'd rather hear some other's take on it first.
Posted by Dan Sawatzky (Member # 88) on :
We have a corporation (limited company). When we had lots of employees and were doing massive projects it made perfect sense.
nowadays if you have some sort of difficulty the person who is against you will name everyone in a lawsuit including the owners of a company. I do not believe they offer the protection they did in the past.
Each year we pay a lawyer to file papers plus the accounting fees are substantial. We make sure that our company does not actually have a profit so we do not pay taxes twice.
Everything we do as a limited company is more expensive than if we simply had a business. Bank fees, registration of vehicles , and a whole lot more.
I am sure there are benefits but I don't see them personally.
If it were easy I would happily fold the limited part of our company and go back to being a partnership with Janis and it may well be where we go in a year or two.
-grampa dan
Posted by Rodger MacMunn (Member # 4316) on :
Dan, I agree wholeheartedly. As much as I dislike insurance companies, I still wouldn't incorporate myself unless I was making oodles of money. Sharon & I are a partnership ourselves.
I was asking on a friend's behalf. I can't offer any sort of opinion on LLCs in the US & was hoping someone on here can.
Posted by Checkers (Member # 63) on :
Here in the USA, it's generally about how much business you do, the number of investors, how you can raise capital (if needed), taxes and personal liability.
As a sole proprietor or partnership, you and your partners are personally and financially responsible liable for all business dealings and you are somewhat limited in how you can raise capital.
As a corporation, the business assumes the liability (to a major extent). And, generally speaking, the difference between the types of corporations is the number of investors allowed, how you can raise capital and how taxes are paid.
There are many pros and cons to all the business types. So, your buddy is better off speaking to his CPA and attorney and seeking their advice on what is best for his business.
My business is an "S corp" because I bartered for the attorney cost of becoming incorporated.
Posted by Nikki Goral (Member # 7844) on :
An LLC in Wisconsin means that the BUSINESS holds all liability, not YOU personally. So in effect, if a client was ordered a judgment against the BUSINESS (work you did), they CANNOT come after any of your personal assets, capital etc. to satisfy the judgment.
So if you have a nice house, kids that need to have tuition paid and anything of value and are a corporation, partnership, s-corp,and there is a judgment against you, the complainant CAN go after those items.
With the LLC, however, all of your business and personal income/expenses are lumped together. In my case, my husband works for another company and I hold the LLC on the business. All of our income (or lack thereof on my end!) is combined against all the expenses/liabilities of the business.
It really depends on a. the volume of sales you have and b. the probability of lawsuits you may encounter.
And like Dan, I have not shown a profit yet...not really intending that, but it is just how it works out. We usually end up with a refund in the 5 figure range too.
Posted by Rodger MacMunn (Member # 4316) on :
Thanks Nikki So, do you guys have 3 separate tax filings on April 15th or still just two?
Posted by Nikki Goral (Member # 7844) on :
Ours files as one filing, but we have (3) parts; the first is our personal income (my husband's and some of my work for other entities-Town Official, Rescue work etc.) We have another form that is our property company (also a llc) which owns the building my sign shop is in, and finally the form for my sign shop. But each form is just another "schedule" in our main return. One return, one filing, one check.
Some folks will just file a regular return and then file a Schedule C of "other income".
Posted by Checkers (Member # 63) on :
Just a heads-up Nikki and Roger. Nikki is right - to an extent - about an LLC, but the same liability rules (basically) apply to corporations too. With that being said, when compared to an S corp or C corp, an LLC is a relatively new form of business structure in most states and, according to my attorney, has not been fully "tested" in America's courts. And regardless of what business structure you chose, you still can be be sued in court and your personal assets can be pursued and potentially forfeited. Incorporating just makes it a lot harder to happen. Here's an interesting read... http://www.btalawoffices.com/Why_Have_an_LLC_.html But, as I mentioned already, talk to your CPA and a competent attorney for advice on which structure is best for your business.
Posted by Nikki Goral (Member # 7844) on :
Brian, that is true, sort of. In my LLC, I am the only owner, whereas our personal property is shared by a non-owner, and therefore not able to be pursued. Now, if my husband and I were both in the business as an LLC, then it is more likely to be able to add a judgment against the personal property. Wisconsin has pretty strict rules about business/personal/spousal division and seizure of assets. My uncle is a County Judge (mostly capital cases), but previously he was an attorney and advised us this was the most safe route for where I am now. Again, if your business generates a larger volume of $$$ (more than $250,000 per year) an incorporation is definitely a better way to go tax-wise.
Posted by Nikki Goral (Member # 7844) on :
Interesting read. Exactly why the sign shop does not own the building. The sign shop rents from the property company. Being a single member LLC is perfect for me, but again, if you have employees or a large revenue stream, maybe not the best.
Funny how each state is so far apart in filing fees. Ours is $25 year
Also about the division of assets in case of a suit. This one came before my uncle a few years ago. A man owned a sports memorabilia shop and was convicted of selling fraudulent #4 prints (NFL reference there---we do not use his name in Green Bay any more...) All of his business assets were seized (LLC) and attempted to go after his personal assets, but since his wife's name is on the deed and title of their home, they could not touch it. But anything that only had HIS name on it was taken (boat , truck, ATV's, sleds etc). Which is another issue; in WI, it is not required that both parties that "own" the property be listed on the deed and title. Until this last refi, my name was NOT on our property deed, but was on the title of the home. Which means that my husband could sell the property without my approval, but not the house. So in theory, if the house burned down, I would not own the land and he could sell it out from under me. The lending institution was the one that insisted we have it changed, not the title company. So you can see how the business end relates to the personal end in this state.
Posted by Rodger MacMunn (Member # 4316) on :
Nikki, you need to buy some fire extinguishers just in case you **** him off. LOL I wouldn't want to see you living under a bridge ......
Posted by Nikki Goral (Member # 7844) on :
Funny Rodger! I would just live in my shop...with all his toys that are in MY name!
![[Smile]](smile.gif)