How much did you pay to get incorporated? And another QB Quest. - Contractor Talk - Professional Construction and Remodeling Forum

Melissa · 06-07-2006, 01:10 PM

I just got a quote for $1,500. Does that sound high?

Also, should we get incorporated before we set up Quickbooks? Someone told me it makes a difference.

Big Dave · 06-07-2006, 01:33 PM

I formed an LLC. It cost me $105.00 dollars and I did it online. Took about 15 minutes. The quicker you incorporate the quicker you can adjust your tax deductions and get the pay taken out of your name and put into the corporation.

I'm not really up on all the tax crap but my cpa told me that when I formed the LLC that a corporation does not have to pay self employment tax. All I have to do is write myself a couple of checks a year to show that I am an employee.

Dave.

**AtlanticWBConst** · 06-07-2006, 01:56 PM

We are based in MA,

Cost us $350.00 to the state and $600.00 to our accountant who did all the paperwork for it. (Incorporation)

mickeyco · 06-07-2006, 02:06 PM

I don't know if this will help or not but in many areas, I don't know about yours, articles of incorporation are public records, you can obtain a copy of a business that's close to your business and see how it's done and do it yourself. Then with the money you save buy us all a beer.

IHI · 06-07-2006, 03:40 PM

The office that handles our insurance and accounting said she could "unofficially" walk me through it for less than $150 to incorporate.

I still have'nt since I'm not large enough yet to want to pay taxes twice on income so keeping it SP for now.

Craig · 06-07-2006, 04:34 PM

Melissa,

$ 1500.00 sounds about right for California. The amount would vary quite a bit from state to state depending on the requirements. I'm no expert on California law, but please note that there's more to incorporation than merely filing articles with your Secretary of State or other state agency. Your corporation should also have By-laws and various resolutions on record athorizing any organic corporate activities (e.g., establishing corporate bank accounts, authorizing stock issues, etc.). Also, depending on the number of shareholders, you may want to consider greater than majority quorum and/or voting requirements for certain fundamental changes in the corporation (these allow one shareholder, usually the principal owner, to permit others to own shares without surrendering control over important corporate decisions).

Another danger to consider is the ease with which someone can "pierce the corporate veil" in your state. This is a legal doctrine that essentially holds that the protection of doing business as a corporation is lost if the corporation is merely a shell - inadequately capitalized, corporate activities inadequately documented, etc. In other words, if you incorporate you must be prepared to do it right and act as a corporation - document meetings, resolutions, etc. Could be important in case of an audit, for example. Believe me that reconstructing documentation for five or ten years worth of annual meetings of shareholders and/or directors, even though the "meetings" occur on paper, doesn't come cheap.

As to Quick Books, the transition from sole proprietorship or partnership to a corporate structure shouldn't tax your accountant (pardon the pun). But if you plan to incorporate sooner rather than later, why set up two sets of accounts in QB?

Gordo · 06-07-2006, 06:07 PM

Quote:

Originally Posted by IHI

The office that handles our insurance and accounting said she could "unofficially" walk me through it for less than $150 to incorporate.

I still have'nt since I'm not large enough yet to want to pay taxes twice on income so keeping it SP for now.

IHI,
You may want to reconsider your double taxation thoughts. By incorporating you pay yourself through payroll as an employee. All "profits" can be "hidden" creatively by your CPA. For example, my Cpa "hid" $40,000 in net profit.

I remember being a SP and that to me was double taxation. Taxed on income then hit with the 15% self employment tax (ouch!).

**Teetorbilt** · 06-07-2006, 06:08 PM

In FL. I used a local atty. and it cost me $600.00. That was a few yrs. ago.

Gordo · 06-07-2006, 06:09 PM

Quote:

Originally Posted by Craig

Melissa,

$ 1500.00 sounds about right for California. The amount would vary quite a bit from state to state depending on the requirements. I'm no expert on California law, but please note that there's more to incorporation than merely filing articles with your Secretary of State or other state agency. Your corporation should also have By-laws and various resolutions on record athorizing any organic corporate activities (e.g., establishing corporate bank accounts, authorizing stock issues, etc.). Also, depending on the number of shareholders, you may want to consider greater than majority quorum and/or voting requirements for certain fundamental changes in the corporation (these allow one shareholder, usually the principal owner, to permit others to own shares without surrendering control over important corporate decisions).

Another danger to consider is the ease with which someone can "pierce the corporate veil" in your state. This is a legal doctrine that essentially holds that the protection of doing business as a corporation is lost if the corporation is merely a shell - inadequately capitalized, corporate activities inadequately documented, etc. In other words, if you incorporate you must be prepared to do it right and act as a corporation - document meetings, resolutions, etc. Could be important in case of an audit, for example. Believe me that reconstructing documentation for five or ten years worth of annual meetings of shareholders and/or directors, even though the "meetings" occur on paper, doesn't come cheap.

As to Quick Books, the transition from sole proprietorship or partnership to a corporate structure shouldn't tax your accountant (pardon the pun). But if you plan to incorporate sooner rather than later, why set up two sets of accounts in QB?

Good word.

Mike Finley · 06-07-2006, 06:17 PM

Quote:

Originally Posted by Melissa

I just got a quote for $1,500. Does that sound high?

Also, should we get incorporated before we set up Quickbooks? Someone told me it makes a difference.

$50.00. I paid a lawyer one time to see how to do it about 10 years ago, since then I've set up 5-6 corporations on my own. The $50.00 is the state filing fee.

I would recommend you contact your secretary of state as quiz them if there is anything out of the ordinary for doing it in CA. If not I would walk you through it and PDF you the articles of incorporation and all you need to do is change about 30 words in it.

Mike Finley · 06-07-2006, 06:20 PM

Quote:

Originally Posted by IHI

I still have'nt since I'm not large enough yet to want to pay taxes twice on income so keeping it SP for now.

No such thing as paying taxes twice because you are incorporated.

C-corp yes. S-corp No. Once you are incorporated you declare yourself a S-corp for taxation purposes with one form filed electronically online with the IRS and you are done. The only thing you will need is your EIN number to do it.

S-corps are flow through entities. All profits flow through to the share holders you pay no corporate taxes.

Big Dave · 06-07-2006, 06:40 PM

I found this online. It might be the answer your looking for.

http://www.amerilawyer.com/index_ca....ce=google_corp

Dave.

Melissa · 06-07-2006, 07:03 PM

Thanks for the info. I just got back from good ol Barne's & Noble. I bought "Incorporating for Dummies"

Really I did. Hopefully this will help me. And we've got a message in to our tax accountant to get some advice from him.

I just found out that my sister-in-law paid only $750 last year to incorporate in CA, so hopefully I can find cheaper than the $1500 quoted to me.

RobertF · 06-07-2006, 07:22 PM

Remember Melissa, here in California, the CSLB won't issue a license to an LLC. It cost me $915 to incorporate here in California, $115 for handling fee to the state and they also charge you the first year of state corporation tax when you file which was $800.

I did all the work myself and the county filing (For me in LA county at least) was about $80 through a local filing company, would've cost me $65 just to have the statement put into the paper but for $80 they published the dba statement and filed the paperwork at the county for me.

Melissa · 06-07-2006, 07:39 PM

Isn't living in CA fun Robert?

RobertF · 06-07-2006, 08:19 PM

Quote:

Originally Posted by Melissa

Isn't living in CA fun Robert?

Yes.... ooooodles!

IHI · 06-07-2006, 08:43 PM

Quote:

Originally Posted by Gordo

IHI,
You may want to reconsider your double taxation thoughts. By incorporating you pay yourself through payroll as an employee. All "profits" can be "hidden" creatively by your CPA. For example, my Cpa "hid" $40,000 in net profit.

I remember being a SP and that to me was double taxation. Taxed on income then hit with the 15% self employment tax (ouch!).

This is where my CPA and I have problems, I ask questions and she goes into technical lingo that I lose any concept of wtf she's talking about, ask her to break it down for an idiot so she'll reexplain then eventually get back into the CPA train of thought and start talking over my head again LOL!! All I know is she's VERY good and has saved me alot and that's why I keep going back naturally.

Maybe like you said she was talking C corp over S corp since the way it was explained to me was you get taxed on inital gross to the company/corporation then when you pay yourself you get taxed again with standard sate/fed,etc... (double taxed per say) where SP it's pretty much a standard 30% roughly give or take.

I need to get time to speak with this other accountant to get a payroll set-up and I will ask him as well...just know being a SP and "shoiwng" x amount for the year

makes it tough to get loans with decent rates since often I have to go with no-funds verification loans which are always 1-2 points higher

Not to thread steal but think it'll be helpful to all wondering about this, but going S-corp and now having the company as it's own entity with no more direct personaly liablity (per say) does it make it easier with banks for purchases (additional homes, large ticket equpiment,etc..)since they're run through a corporation now, or does it still entail the same song and dance as trying to get a personal type loan being self employeed? Naturally being SP you try to show as little as possbile to save on taxes and that hurts loan programs, where as I assume you can "hide" it, but still "show it"?

Mike Finley · 06-07-2006, 08:53 PM

Quote:

Originally Posted by IHI

This is where my CPA and I have problems, I ask questions and she goes into technical lingo that I lose any concept of wtf she's talking about, ask her to break it down for an idiot so she'll reexplain then eventually get back into the CPA train of thought and start talking over my head again LOL!! "

Get used to it, my wife is a CPA, I know quite a bit and I still go through the same thing you go through!

Quote:

Originally Posted by IHI

you get taxed on inital gross to the company/corporation then when you pay yourself you get taxed again with standard sate/fed,etc... (double taxed per say) where SP it's pretty much a standard 30% roughly give or take.

Yep, you have pretty much describe a c-corp and how it functions for taxes.

Quote:

Originally Posted by IHI

Not to thread steal but think it'll be helpful to all wondering about this, but going S-corp and now having the company as it's own entity with no more direct personaly liablity (per say) does it make it easier with banks for purchases (additional homes, large ticket equpiment,etc..)since they're run through a corporation now, or does it still entail the same song and dance as trying to get a personal type loan being self employeed? Naturally being SP you try to show as little as possbile to save on taxes and that hurts loan programs, where as I assume you can "hide" it, but still "show it"?

I have gotten many, many loans and never disclosed being self-employed. I'm an employee of my corporation, on the application where it asks for employer I put the companies name.

In short - yes it makes it much easier to get loans, no 3 years of tax returns and all that crap.

IHI · 06-07-2006, 10:36 PM

Quote:

Originally Posted by Mike Finley

I have gotten many, many loans and never disclosed being self-employed. I'm an employee of my corporation, on the application where it asks for employer I put the companies name.

In short - yes it makes it much easier to get loans, no 3 years of tax returns and all that crap.

That sounds like reason enough, 16 yrs of fighting tooth and nail to get any kind of loan is enough to pizz a guy off, but I can relate to their sceptism also...just frustrating having to pay cash for everything i want...except home of course..also nice not having any bills LOL!!

Hopefully I 'll get some breathing room in the near future to meet with this new accountant guy and I'll run it all past him and get this corp thing going to make things better.

great thread

ApgarNJ · 06-08-2006, 05:23 AM

I'm an LLC and have no problems getting loans for anything. I have excellent credit rating and always pay on time. I thought about going inc. but for the extra money, plus having to file two tax returns at the end of the year, and pay the acct twice, i'd rather just file a sched C and be done with it. you don't get taxed twice. the self employment tax kinda gets canceled half way out by some other deduction for self employed people. i always ask my cpa about having to pay the full SS percentage, and he starts with some CPA talk about it ends up not being 15% but about 8.5% in the end. just looks like it's high to begin with.
to each his own, some like the INC on the end of their name and so that is reason enough for them. i didn't really car. for 125 bucks LLC was mine, well over 1000 for Inc.