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Should i form a separate company.

Customer Question
should i form a separate...
should i form a separate company for importing.
Submitted: 2 years ago.Category: Tax
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Answered in 2 minutes by:
8/19/2015
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,867
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi,

...

This could certainly make some sense, ESPECIALLY from a risk management perspective.

...

Have two different companies under the same ownership doesn't necessarily help, tax-wise, (especially when both are passthroughs like LLC's S-Corps, or partnerships)

...

And I can think of one reason you may NOT want to...

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Customer reply replied 2 years ago
My wholesale company is 25 years old. Should I start a separate company for my import venture?
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

Again, it depends on your objectives ... If your goal is to mitigate risk ... keep creditors and lawsuits of the new company from coming after the established company. then all other things being equal YES - but you want to be sure it's an LLC or corporation (which DOES provide that corporate liability protection)

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

On the other side of the coin... if you are an S-Corporation and this will enhance overall profitability, you may save on payroll taxes (SS & Medicare) by keeping everything under the same S-Corp ... Remember, profits that flow to you via the K-1, dont HAVE SS & Medicare charged against it ... that's a 15.3% savings on that EXTRA profit

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

Can you tell me your business entity type? (Sole-proprietor, partnership, S-Corp, C-Corp)? That will help a LOT in providing the right direction here

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

Ok, I still don't see you coming back into the chat here ... I try to give a concise answer that applies, generally.

...

Yes, so that creditors from the new corporation (or lawsuits) cannot attach funds from one company to to satisfy obligations of the other OR YOU, yes, you should form an LLC or a corporation to segregate this risk (in other words, protect one company, and yourself, from the liabilities of the other company)

...

Please let me know what questions you have from here...

...

Lane

...

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago
P.S.
If you like, I can make an additional services offer (I can send out one for $5) so that we can discuss this in more detail.
Again, the liability question (protection of your assets and income, as well as both company's assets and income for each OTHER) is a simple answer, Yes.
But the answer to the tax question is more complicated and I'd need more detail.
Let me know
lane
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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

Hi did you see my answer to your follow up question?

...

If you can give me some detail, I can provide a more specific answer

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

OK just checking back in one more time here so see if you'd like to discuss this further.

...

By again, for liability reasons, YES, you should start a new company

...

Lane

...

If this HAS helped, and you don't have questions, I'd appreciate a positive rating (by clicking the stars or smiley faces on your screen) ... that's how we're credited for the work here)

.

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Lane
Lane
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Category: Tax
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