S CORP
I really need to defer to you all who have been there and done that on this.
I am getting my stuff together to become incorporated. I was wondering if anyone was familiar with the process in TN? I have written up my articles of incorporation and know I need to send it to the office in Nashville but I want to make sure I am sending it properly are there any forms that have to be filled out? If so where can I get these? Thanks so much for your help!
Craig
Have you written an operating agreement for the S Corp? Have you determined that an S Corp. is your best entity choice vs. a LLC?
I have not written an operating agreement. I am not familiar with that. I just wrote up the articles of incorporation. would you mean something like this?
http://office.microsoft.com/en-us/templates/TC010013871033.aspx
I am open to suggestions about which would be better. What would I gain by using a LLC instead of a S Corp? I will be continuing to sell on ebay and am also getting a tax ID for the corporation so that I can buy at wholesale in addition to buying notes with the profit from ebay so that we can make some money on it while it sits in savings.
Thanks for all your help!
Craig
I thought by using an Scorp I could leave a significant portion of the assets in the corporation and only draw out a minimal salary then when I needed the money to make a large purchase I would just pay myself dividends to avoid the income tax? Will this not work?
You should seriously consider getting legal advice from a real estate attorney before you file that paperwork,. Depending on your objectives an LLC may be better for you.
You still pay income tax on the distributions (but at the personal level). You just avoid the self-employment tax (so you save 15.3 percent). In that regard, I find the S Corp to be superior to the LLC. You can funnel many different activities through one S Corp OR you can choose to form many S Corps and still only have to file one information return (1120 S) for all of them combined. The profit/loss goes right on your 1040.
[addsig]
I agree that you need to seek legal advice. I recently formed an LLC because that was the best entity for me. An S corp may not be your best depending on what you plan on doing.