Whats the point of getting your LLc if you are lease on with a company?? Jus asking

… drive safely and be very, very careful.

 

There are some protection when you operate under a corporate structure, even if you are the only shareholder. I don't necessarily believe that it is right for everyone. You need to do whatever is best for your situation. I have a couple of friends in this business who operate as a sole proprietorship. As I believe that I have mentioned previously, there can be some tax benefits of operating under a corporate umbrella that more than offset any corporate filing fees. Another is that it helps to keep your business and personal finances separate. Should something happen to you, it might make it easier to continue your business, if that is your wish. One way some get into trouble is when they are a sole proprietorship and mix personal money with their business.

 

There is no reason you cannot set up your own LLC or corporation. You don't have to pay a lawyer or service to set it up for you. I set up my first corporation in the early 70's. I think it was in 1971. I paid a lawyer a lot of money to set it up and found out that I did not need to pay someone to do that for me. I have since set up several corporations and all were as good as when I paid that law firm so much back then. In fact, I just filed my required annual report last month. It cost me $20 and did it all on line. I also have to file a franchise and excise form each year. I think I usually pay them about $136. I usually do mine manually, but there is software you can use to file for your corporation for a very small fee. Or you could pay your CPA or accountant to file it for you. I know many people look at using a CPA as a big expense, but if they are good, they can often save you much more money than you pay them and their fees are deductible. Whether you choose to hire someone or do it yourself, it is not that complicated or expensive. One thing that can help is having a good bookkeeping software program. It makes it much simpler and easier to do your taxes each year.

 

All you said about this subject you haven't told any benefit of a single owner operator being inc.

 

I don't know what your even talking about. I didn't say anything about a lawyer sitting up a LLC . I said it cost you more to operate under an LLC with no benefit to you. just filling two tax returns it self cost more money

 

I did mention some benefits to operating under a corporate structure, but I will expand on what I have previously posted. I will address this a using a standard C or S corporate structure. I am not a fan of the LLC. First, it helps keep your business and personal expenses separate. It is sometimes easier to establish a bank line of credit when you have a corporation. Depending on the lender you may still be personally liable for the credit line, but it often makes it easier to establish. Second, are taxes. You could save over 15% on self employment taxes that you pay as a sole proprietorship. Self employment taxes consists of social security, medicare, etc., taxes. These taxes are for "earned" income, which is for wages. When you are a sole proprietorship, you pay that tax on ALL net income. If you operate under a corporate structure, you could pay yourself a smaller salary and the rest as dividends. You still pay income tax on dividends, but any dividends are not considered earned income and not subject to self employment tax saving you about 15.3%. Depending on how much you take as salary, you could save yourself thousands of dollars during the course of a year. You would be considered an employee of the corporation. Another benefit is depreciation. You could purchase a vehicle in the name of the corporation and write it off rather than buying something for personal use that would not necessarily be deductible. You might get a free vacation out of the deal. For instance, you are required to have an annual stockholders meeting. There are no restrictions on where those meetings are held. You could take a nice vacation on the corporation that would be deductible. But, you still need to document the meeting. If you keep good records, doing taxes are not that big of a deal. There is software available to keep your day to day books and then you could either print off your profit and loss at the end of the year and give it to your tax preparer or do it yourself. There are several tax programs you can use. And contrary to what some have posted, there could be some protections should you become involved in a lawsuit, depending on the situation. But, for the most part, I like the corporate structure for the tax savings and that it helps to more easily define my business from personal expenses. To me, it keeps things simpler. The annual fees are not that much for the benefits. If you are happy operating as a sole proprietorship, then stay with it. I am not trying to sell you on setting up your own corporation.

 

And often all at the same time.

And the advice was given based on tax advantages.

Everyone needs to consult a local attorney. Our structure for taxes purposes was different in IL than it is in TN.

Also ask about fees. If you are going to save a couple hundred in taxes but pay $500 in filing fees it may not be worth it.

 

If one thinks there is some legal protection by using an S corp (LLC), then have a chat with the executives at Enron how that works, and that was a C corp which is much more insulated. The primary reason for forming a S Corp is tax advantages. You end up paying the entire income tax on profit, but one can reduce their Self Employment Tax (Social Security) by some margin. One pays themselves a reasonable and appropriate salary based on prevailing wages, which Social Security is taxed on, then later additional profits are passed to owner as bonus which only is taxed as Income and not subject to social security tax. There is no appreciable legal protection in using a S Corp (LLC). Anyone wants to sue the company, they will be suing who runs it, and that is you. Every thing you own is still up for grabs. If you are the one driving the truck and you have an accident that causes a lawsuit, you are still going to get nailed. No S Corp / LLC thing is going to save your bacon.

But for tax advantages....

For instance.... say one had a $1500 truck payment, and for some reason, they still have payments after depreciation has been used up (not a uncommon thing today given the price of trucks and length of loans going on, and the debate is not about whether that is good or bad). Without the depreciation, one is paying a full income tax and social security tax on the money that is going to be spent on loan payments. Sure, one gets to deduct interest paid, but still not a good thing. If one then keeps that money in the S Corp and makes the payments from corporate account, then even though it will be considered income, it will not be subject to social security taxation. For instance, that typical $1500 a month loan payment, over a year, could save $2700 in social security taxes when using a S corp as opposed to being sole proprietor. So you get the interest deduction and save $2700 in social security taxes. I would say that is an advantage for anyone in a situation like that.

There are dozens of examples that could be used to justify why a S corp is a smart move for a lot of people. State specific issues may make doing an S corp not a good thing. I live in Iowa, and my only cost and required filing is bi-annual (even years) report filing for $30. No state filling or fees needed at the initial incorporation. One can set up an S corp for under $100.

Now from the carrier viewpoint, it reduces their risk of the IRS declaring a O/O is actually an employee and not a contract worker if the carrier is dealing with an S corp as opposed to a sole proprietor. And it is not a good thing, usually, for a guy who owns his own truck and now is declared to be an employee. They may actually end up without a contract and having to search somewhere else to put their truck on. And the IRS is going to get their pound of flesh from both the carrier and the guy now declared to be an employee. What a mess.

 

This guy is someone trying to sell this stuff to swift lease operators . There is no need for single owner op. To inc.

 

You have the same protections under an S-corp as you do with a C-corp. A S-corp is nothing more than a form filed with the IRS. It primarily affects how you are taxed. From a liability standpoint, the protections, or lack thereof, are the same. When you incorporate, at least in my state, you go through the same process with a C or S corp. You are somewhat limited on the number of stockholders and a couple of other minor issues, but a corporation is treated the same in a court of law.