posted
we are a small sign shop in new york. And wondering if we should incorporate, What are the benny's/reasons and how difficult? Any info would be of great help.....
posted
You should consult a Certified public accountant first.
One of the primary reasons for incorporation, are to limit your personal liability. An example of this might be a client that sues you over a business project, you may have liability insurance, but if the fees/damages happen to go over your coverage, the client then can go after your personal property.
On the other hand, if your company was incorporated then the client could only collect from the corporation, and or from the assets of such incorporated business.
There are also many other advantages to incorporation, such as dividens verses income, and the tax advantages associated.
Let your fingers do the walking in the yellow pages, once you've called enough CPA's, you'll soon find one that will answer many of these questions. Another way might be to search at the web site of the state, and or provodence that your business reside in, for the information. The Intrernet has many different resources available, but it would be best to work with someone local to you. You can also talk to your clients and ask them for referals. Many local and state colleges have student tax interns, that will research, and or assist answering questions.
Good Luck
------------------ Ron Percell Percell Signs 707-769-0639 Petaluma, California
posted
For us to incorporate would almost double our taxes. The corporation pays taxes as well as the employees.
There are moments that I want to incorporate and shelter everything there, and drop the health insurance and draw medi cal when we need it. Problem is, those without insurance, don't get the same care.
Seems like many start two corporations. One holds the assets, the other rents from the first. Then everyone is employed by the second. I don't have that much to protect.
------------------ The SignShop Mendocino, California "Where the Redwoods meet the Surf"
Posts: 6713 | From: Mendocino, CA. USA | Registered: Nov 1998
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posted
My accountant's advice is the most valuable asset I have. An accountant who is willing to help you is worth more than all the bankers put together. I used to tell myself that I was smart enough to make all the decisions without help. But only after a few years with an accountant could I realize all the mistakes I had been making and how much money I was spending unnecessarily. Bankers and lawyers have helped me with counsel, but their agenda is just not the same. Only my accountant is truly interested in growing my business.
If you are not sure of whether incorporation will benefit you, it would be better to not do it (It's the "When in doubt, leave it out" rule).
Good luck, Brad in Arkansas
------------------ Brad Ferguson 4782 West Highway 22 Paris AR 72855 501-963-2642 signbrad@cswnet.com
Posts: 1230 | From: Kansas City, MO, USA | Registered: Nov 1998
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posted
When you incorporate, there are things you must do to be a "legal" corporation, such as hold annual meetings, keep minutes, and so on. Failure to do so allows an adversary to punch through your corporate shield and get to your personal assets. Many states have another alternative that gives the protections of a corporation without the administration of a corporation. These are called LLC's or Limited Liability Companies.
Whichever way you decide to go, you are going to wind up working with an attorney who will educate you on the alternatives, and you are going to wind up with a legal bill minimum $1,000 and probably closer to $2,000.
California has not allowed LLC's for people like us in the past. I'm told that the law changes on Jan 1, 2000. I'm no expert on this subject, but this is probably the way to go.
------------------ Victor Georgiou Bob Loves Signs Danville, CA email blssigns@verio.com
Posts: 1746 | From: Danville, CA , USA | Registered: Dec 1998
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posted
Also in NY.We use a form of corporation called an LLC(limited liability corp).This is the best of both worlds.Simplified it is that the company is its own entity and you and tohers are members.Unlike Corporations you are not taxed twice.The corp does not pay taxes,the members pay acording to how much money they take from the company.You are afforded the same liability protection as a corporation.It only cost a few hundred dollars to set up.There are no presidents or boards but there can be a manager.Taxes are simpler that a corp. but slightly more complicated than an individual.Keep in mind if you ever look for a business loan or financing it makes it more difficult because the banks aren't thrilled with you protecting your assets from them.Quite often you will be asked to sign a personal guarantee.You can get a packet from the NYS Secretary of State's office(in phone book)that explains it all and has applications.They will do a free name search for your proposed LLC and will hold it for a small fee.Consult your CPA or lawyer if it is right for you,but you can do the work for yourself and save money.Hope that helps.
------------------ Brett Baker candykolor@aol.com "free your mind,the rest will follow"
Posts: 73 | From: Scotia NY USA | Registered: Apr 1999
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From the above posts I gather that incorporation is not that different in Canada. We incorporated about 10 years ago after running without it for 15 years. We are about to incorporate a second company. To shield its assests from the first. And it is complicated. It is expensive to incorporate. Besides the cost of incorporation there are fees every year and accounting is much more as it is just more complicated. If you leave money or assets in the company it pays tax. If you take it out the next year you pay tax on that same money again. But there are benefits too if you have a smart and up to date accountant who can plan things long term. The benefits just have to outweigh the costs.
Basically it is a matter of protecting your personal assets if you have a lot to protect and it also depends what type of business you have. As our work is very public and of large scale we felt it necessary.
Business loans are way more money than private ones and you will probably still have to personally guarantee them anyway.
If we still had a small shop and did "normal" sign work I wouldn't think it necessary. Incorporation is a mixed blessing. Unless you think yourself in the big league or see yourself going there I would think you don't really want to do it.
As the others said talk to your accountant get a second opinion if you aren't sure. It may save you money.
Have fun with your decision!
Been there - done that ... still confused! Only my accountant knows for sure.
posted
You can incorporate in or out of your own state. The state of Nevada has the best thing I have seen yet. No corporate taxes, and no disclosure of ownership. Many more tax saving advantages. Check it out, you can get the info on line, or e-mail me, I have it.
------------------ Steve Estes Sign Studio Calvert City, Ky 42029
Posts: 185 | From: possum trot ky usa | Registered: Apr 1999
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