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Quickest and easiest way to make my business incorporated..I…

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Quickest and easiest way to...
Quickest and easiest way to make my business incorporated..I am a contractor..also would that make my taxes less at the end of the year?
Submitted: 11 months ago.Category: Finance
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Answered in 12 minutes by:
10/14/2017
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 11 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 15,200
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Your options are LLC, S-Corp or C-Corp.

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Really only the LLC and C-Corp are state law corporate entities. The S-COrp is simply an election to be taxed under the S-Corp tax regime for small corporations.

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To set up the LLC, Form LLC-1 can be completed online at the California Secretary of State’s website and then filed by postal mail or hand delivered to the Secretary of State’s office. The filing fee is $70. With hand-delivered filings at the Sacramento Secretary of State's office, you can request expedited filing for an additional fee.

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Here's the form: http://bpd.cdn.sos.ca.gov/llc/forms/llc-1.pdf

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As far as saving on taxes, all passthroughs - sole proprietors, LLC's not electing corporate taxation, partnerships, and even the S-Corp - pass the state and federal income taxes through to the owner, on their personal return.

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And you WON't likely save taxes on the C-Corporation (the classic regular corporation) becasue it pays it's OWN taxes on a corporate tax return, and then if you pull out money via dividends (after the corporation has already paid it's tax) you'll pay taxes at the personal level again - this is the double taxation you hear about with C-Corps.

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There IS one possibility for saving on PAYROLL taxes (social security and medicare). That's by electing S-Corp taxation for the LLC (IRS form 2553). But this comes with some additional administrative overhead (quarterly payroll taxes, setting up a salary for yourself, paying in FICA on yourself at least monthly) and will only save on payroll taxes on the profit over and above that required salary.

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Starting with the LLC and then electing S-Corp by March 15 of 2018 (to get the Jan 1 2018 effective date - too late to do it for 2017) is what I'd recommend ... IF you thing that your profit will be significant (you can always do the election in a future year)

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let me know what questions you have from here.

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Lane

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I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice 1986

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