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The Case Against Becoming Incorporated?

Discussion in 'Business & Tax Advice' started by Winston Wolf, Jul 2, 2009.

  1. Winston Wolf

    Winston Wolf Newbie

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    So I spoke to my accountant today and he said it may not be a good idea to become incorporated. Basically his argument was the main benefit of filing an S Corp or LLC is protection.

    But for an affiliate marketer like myself, I don't deal with the customers or have employees. These are the two areas where business owners get sued.

    Becoming incorporated would simply add an additional tax burden (double state tax, $800 filing fee, ect.) and not really add any protection since I don't have any liabilities.

    Any thoughts? I live in California, FYI.
     
  2. plunge

    plunge BANNED BANNED

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    yes, I have a thought.. if you're making enough for the $800/year not to be a big deal, then fire your accountant or tell him to stfu. he's not an attorney, and that's who you should be talking to.
     
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  3. pavondunbar

    pavondunbar Newbie

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    Plunge is right...

    Tell your accountant to go fuck himself/herself and talk to a lawyer.

    The last thing you need is someone suing you for some bullshit...and having the judgment attach to things you personally own, like your house, your car, your accounts, etc.

    Incorporate. It is for your protection. (dam that sounds like a slogan...LOL)

    BTW...I live in California too...so you know how "sue happy" this state is right about now...

    pavondunbar
     
  4. Winston Wolf

    Winston Wolf Newbie

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    Can you guys give examples of potential liabilities that you can be sued for? I mean of course for those who do not deal with customers or employees.
     
  5. thowell

    thowell Newbie Premium Member

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    As a tax accountant I advise my clients to incorporate not only for legal liability but it is an opportunity to LOWER taxes. You can pay for fringe benefits like retirement accounts, medical insurance and expenses, life insurance, autos, vacations, etc. You can always take your profit as payroll and never have double taxation unless your making millions of $$$ and then your strategies will change anyway. As an S-Corp you will not pay double tax and your payroll taxes can be limited to a small salary. You need to talk with a more proactive accountant.
     
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  6. nerdmoney

    nerdmoney Junior Member

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    goto legal zoom and do an s-corp if you can afford it. don't pay yourself a salary, and just make sure you section off a part of your house with some tape if you work from home. i have this and its good that way, the bad thing is you have to pay that annual fee, but, its pretty easy to claim a loss, in which case you get a nice refund (ca res)
     
  7. rebellord

    rebellord Registered Member

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    They are starting to go after affiliates for false claims on stuff like the acai berry crap. Get incorporated, if you are associated with a product in any way (even marketing it) you potentially have liability for that product.
     
  8. caretaker2007

    caretaker2007 Power Member

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    Your CPA did make a case for being a door knob.

    A single person LLC is about useless, and S-corp, ahh, so-so. Extra paperwork for the S.

    I like the news report about the tunnel collapse in, if I recall, the Boston area. Well, not like like it, but it is an example.
    The corporation that made the glue holding the tunnel together was at fault, and, had the corporation been charged and convicted of manslaughter the corporation would have been fined something like $10k.
    Consider the protections the managers had in this case. It is a worst case, but, the idea is the same on varying scales.

    If Thurston there comes back hit him up over the possible benefits of paying yourself a pay check, including all the tax matching, FUTA, and state unemployment.
    You can lay yourself off for a couple weeks, take vacation, let the auto pilot stuff make money, and collect unemployment.
    ((thowell is Thurston for the younger people here.))
     
  9. IMsocialmedia

    IMsocialmedia Newbie

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    I agree with everybody else. First off, fire your accountant ASAP. He is completely clueless and you are probably paying more taxes than you are supposed to. A Corporation and an LLC provide exactly the same liability protection, the difference is how you are getting taxed. With an S-corp you can have a salary/dividend split. Better get an accountant/CPA specialized in small businesses. Do yourself a favor and get incorporated not only for asset protection but mostly for taxation. Hope that helps.