Sole Proprietorship vs S Corporation

Prairieboy

Prairieboy

Veteran
Alright folks
Now that I am residing, and working (yes people actually hire me, crazy thought) I have a few questions about my business. Yes a call in to an accountant is coming. But I thought I would toss it out here so I know what to cover with whomever I call. I basically do three things. I work as a producer, completing projects from start to finish( small to medium budgets) I work as a videographer (I own my own gear). And lately I have been taking projects as an editor(I own my own gear) I am in Minnesota, I have clients in Canada and in the States. I need to know at what income level it makes sense here to go from a sole proprietorship to an S Corporation. Insurance here is something else that scares me a bit, so liability is another issue. I have great health insurance through my wife, so no worries there.

This is all new to me, which seems odd, but I am in a new land and want to do it right. I have heard about having to pay taxes quarterly as a freelancer here as well. Help me folks. What are the things I need to aware of. Thanks so much
 
I could go into it, but I would have to charge you $350/hour.

Seriously though, without knowing the details of your finacials that is a broad question. However, the advantages of incorporating are many, as are the hassels. Check with your local Small Bussiness Administration office or Chamber of Commerce and see if you can not find a mentor or advisor.
 
S corp is often overkill for an individual unless you are making serious bucks. For the interm an LLC is easy to manage, usually has a cheap license, and covers your butt liability wise.

LLC structures vary from state to state so check it out with your state commerce office.

Good luck
 
I unferstand it is a broad question. I am going to contact a few accountants and the Small Bussiness Administration office is a grat idea. What I am looking for is questions to be asked, things that I should not miss. Your tax structure is different than what I am used to. And if it anything like Canada when you mention film or video to thse types of people they seem to have even less answers.
I am looking for a few oh you have to do this type things.
 
the main pain with an S or C corp is the bookkeeping. Records, etc. The tax advantages of an S-corp are better than an LLC, etc because it's not a "pass-through" tax situation, meaning unlike an LLC, the taxes are collected from the corporation, not passed directly through to the principals (you). So, you can just collect a "salary" or "disbursements" from the company instead of all the money going directly to you.

Investigate more however, and the SBA is a very good resource for this. Your accountant will be able (should be able) to set all this up for you as well. Some people (many) also incorporate in Deleware due to it's lack of a state income tax law.

Just my few random thoughts
 
Ditto with what they said. An "S Corp" is a business owners dream but it's also a logistics nightmare. I've had both a sole proprietorship and an LLC. The sole p was a business I started which consisted of only me (no employees). It was simple and a great introduction to business ownership. I then opened an LLC with some friends. It was more complicated but the benefits were more. I wouldn't even consider an S Corp if this is your frist time out of the gate.

And Kai is right about Delaware. Black gold, Texas tea, Delaware that is.

Good luck and congratulations. Exciting times.
 
I have been doing thebooks in Canada for 12 years now. It is a pain, but a nessesary one. Thanks for the info folks.
 
You must log in or register to reply here.
Back
Top