LLC. v INC.

[Walter Biscardi]

I’ve been an LLC since 1998, first as co-owner of another business and my own since 2001. LLC gives you many of the benefits of an S Corp, but it’s less expensive and easier to set up than an S. Basically, the company does not get taxed at all, it’s just your own personal taxes that get taken out.

You really want to talk to your tax adviser about S vs. LLC but I can tell you all the freelancers and small shop owners I know are LLC’s.

Walter Biscardi, Jr.
https://www.biscardicreative.com
HD Editorial & Animation for Food Network’s “Good Eats”
HD Editorial for “Assignment Earth”

“I reject your reality and substitute my own!” – Adam Savage, Mythbusters

[Tim Wilson]

We had a two-person company that was incorporated, because it offered tax advantges over LLC in Florida. They also cost the same amount to establish.

That’s why you need to check with your tax adviser. 🙂

[Jason Boucher]

Thanks Fellas… I was hoping to hear from people like you. I just wanted to get a feel for what real people are actually doing. A tax person will give great advice, but you guys give experience.

I appreciate it.

Jason

[Rich Rubasch]

First go buy the book “Inc Yourself” it’s on Amazon.

Another good reason to incorporate is that the paperwork between two corporations is the simplest if most of your clients are themselves, corporations. With an LLC, any work that you bill to a corporate client will require that corporation to issue you a 1099 form at the end of the year. Many corporations prefer to pay another corporation and not an LLC for this reason (there is cost involved in generating the 1099, and a paper trail)….if you are a corporation, the books are cleaner and your corporation is completely liable for paying the taxes….the corporation you bill holds no liability. Since most of my clients are corporations, they prefer this.

An LLC is a little simpler to establish, but being an S-Corp has proven to have advantages to my clients that they prefer.

There are also tax benefits to me as the owner and only shareholder that your accountant, and the book “Inc Yourself” will explain.

Rich Rubasch
Tilt Media Inc.

[Greg Ball]

S corp here. Rich’s comments are right on.

[Walter Biscardi]

[Rich Rubasch] “With an LLC, any work that you bill to a corporate client will require that corporation to issue you a 1099 form at the end of the year. Many corporations prefer to pay another corporation and not an LLC for this reason (there is cost involved in generating the 1099, and a paper trail)…”

That is completely incorrect information. There is zero need for a 1099 form from anyone if you are an LLC. As I noted earlier, I’ve been an LLC since 2001 and have not received or requested a 1099 from anyone.

1099’s are ONLY for individuals and sole proprietors.

Walter Biscardi, Jr.
https://www.biscardicreative.com
HD Editorial & Animation for Food Network’s “Good Eats”
HD Editorial for “Assignment Earth”

“I reject your reality and substitute my own!” – Adam Savage, Mythbusters

[Jason Boucher]

Well I’m glad I asked the question, because no matter where I look or who I ask, I get differnt opinions. Even tax pros don’t agree. It’s obvious that I must do one of the two. Being that I am a sole proprietor, with no current employees, paying quarterly taxes and collecting 1099’s along the way, is there any specific tax advantage to one over the other?

greydogfilms.com

[Todd Terry]

There are going to be different advantages to each… I would talk to at least a CPA in YOUR state and get his or her opinion.

We are an S-Corp and it has always worked out pretty well. There is the occasional disadvantage though, one that you are already familiar with. As was pointed out, an S-Corp pays no income taxes itself, but the tax burden falls on the shareholders of the company. Ergo, one goal is to make sure you make as little profit as possible (I jokingly refer to ourselves as a “non-profit organization). You do that at the end of the year by basically getting rid of cash… buy needed equipment, salary bonuses for employees, or pay dividends to shareholders (which hopefully primarily will be you). We made the mistake in 2005 of “accidently” having a buttload of profit (and I’m still not sure how it happened), so I had to personally write Uncle Sam a very VERY painful check. Our general manager who takes care of all our accounting is efforting to make sure that doesn’t happen again.

Another thing to note… some people can’t decide whether to incorporate as an S-Corp or a “regular” full corporation. If you incorporate as an S-Corp, you can convert it to a regular corp later… but you can’t go the other way around.

Todd

[Tim Kolb]

Keep in mind that legal shelter is part of what most would consider a big part of the advantages of incorporating. The crew burns down a grocery store during a shoot…the corporation gets sued. The owner is a separate entity.

This status is fairly well tested and standardized for corporations, but a few years ago there was some question among legal pros as to how “limited liability” an LLC would actually be when exposed to litigation.

…just another little sub plot to put in the mixture.

TimK,
Director,
Kolb Productions,

Creative Cow Host,
Author/Trainer
http://www.focalpress.com
http://www.classondemand.net

[Rich Rubasch]

Perhaps different here in Wisconsin….1099 is REQUIRED for LLC’s in Wisconsin.

Rich