Incorporating your welding/fab business?

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I'm in the process of trying to start up a small welding/fabricating business. What I'm wondering is if anyone else doing the same thing has incorporated their business for tax advantages and protection. After doing a little research, it seems that the costs to do so are relatively cheap vs. several years ago. Thanks in advance for any help/suggestions.
Reply:absolutely this is a good idea, but you have to run it as a business and keep it separate from you as a person. one lawsuit can wipe you out, get the assistance of an accountant and i'd read everything you get your hands on about running a small business.
Reply:Hey 190,The fellows I know who recently set up their own operation, had their business set up as an LLC. Something that has to do with not losing your personal equity if your business gets engaged in a lawsuit. It is supposedly the best system to incorporate under....maybe check with your attorney & get some more information or do a search on Google to get an idea...Good Luck...DennyComplete Welding/Machine/Fab. ShopMobile UnitFinally retired*Moderator*"A man's word is his honor...without honor there is nothing.""Words are like bullets.... Once they leave your muzzle, you cannot get them back."
Reply:Like rusty said lawsuit could kill you so if you do incorporate make it an LLC company.  (Limited Liability Corporation)  It also takes a number of people to incorporate.  You must hold board of director meetings once a year.  As well keep records of thoses meetings.  The nice thing about a corporation is tax advantages.  Insurance rates  are a little better.  Really a Corporation is like ficticous person which is a group of people.Good LuckLarryM
Reply:Hey LarryM,I owned and operated my own business as an individual proprietorship and was incorporated as a single ownership. This also allowed me to register my business name and keep any other entity from using that business name. You need not have more than one person to incorporate. It is quite beneficial to set up this way.....DennyComplete Welding/Machine/Fab. ShopMobile UnitFinally retired*Moderator*"A man's word is his honor...without honor there is nothing.""Words are like bullets.... Once they leave your muzzle, you cannot get them back."
Reply:Thanks for the replies. I'm still up in the air as to which way I will go, if at all. I will be doing some of this from my home garage and the zoning is not in my favor. Incorporating might cause more headaches in that respect because the info would be available to big brother. But I do know that 1 person can be a corporation, and the same person can hold all offices, according to what I've read so far.
Reply:Lets bring this back to the top. Anybody have anything else to add? I'm interested in doing the same thing
Reply:I do know that the IRS will be taking more time on your taxes.  23% more funding to be dedicated to auditing LLC's.  Seems alot of people have been forgetting to give uncle sam his dues...Still, the limited liability might be worth it depending on the work you see.ThermalArc 185MillerMatic 180 w/ AutosetVictor Cutskill Oxy/AcetyleneThermal Dynamics Cutmaster 38and spite!
Reply:LLC was my choice ($50 to State of MI) As long as I am the only employee  the whole "corporation" requirements are out the door.  LLC means (in theory) the company can only be held liable to an amount equal to it's assets.  Reality is lawyers will look very hard at finding some deep pockets if you really screw up, regardless of your company structure.  The disadvantage to a simple LLC is once you start making real good money the taxation is painful.  The reason is the company finances will transfer to your personal taxes.  To avoid this you would need to invest more in your "setup".  My accountant says the LLC can be later structured as an S Corp.  This gives you a corporation structure, but much more bookkeeping, including those meetings etc.  As to bookeeping, it is absolutely necessary to use true accounting methods.  The easiest way to use approved methods is Quickbooks.  They have a "Smple Start" version thats less than $100 and gives you all thats important. The LLC registration is State specific.  You will also need an EIN # this is your employer identification number.  This is obtained from the IRS website.  This number is needed to get a bank account in the business name.  Good Luck !!  Brian MoyerMoyer Welding & Fabrication       LaSalle MI
Reply:Hi all,There is a lot of good info - but it is laced with a lot of misinformation.An LLC (limited liability company) is not a corporation.  It can limit the liability of the owners.  It is taxed as a partnership and income and losses are reported on your personal tax return.  This is referred to as a "pass-through" entity because the profits and losses pass through to the individual owners.An S-Corp is technically a corporation but is also a flow-through entity, there may be a little more protection but there is also more paperwork.A C-Corp is what most people refer to when they say corporation - a C corp has to file its own taxes and pay tax on its earnings.  If you incorporate as a C-Corp, your company would then pay tax on its earnings, and then you would pay tax on any dividends or wages that it paid to you.  For many people, a C-corp is a bad idea for tax reasons.  If you are serious about creating a useful entity structure for your business you should really consult an attorney and an accountant (or at least a really good tax attorney).  Accountants generally are not allowed to give legal advice about the creation of the entity but are limited to tax and accounting advice.
Reply:Something else to keep in mind is in some states if you go with anything other than a sole prop you are considered a  employee which means a bundle in healthcare and workers comp costs.  Definitely need to check you state regs tho
Reply:I really hate to do this, but the reply from Fubeca infers that I had provided "misinformation".  Seriously, why would that be your reply when you affirm'ed everything I said.  Before you break out your poison pen, why can't we all be supportive of efforts to reply to posts instead of criticizing our fellow members and their efforts.  This forum is a TOP notch effort by 99% of the membership, is it that terrible that I tried to assist a fellow member  ??  Brian MoyerMoyer Welding & Fabrication       LaSalle MI
Reply:Originally Posted by moyersmobileI really hate to do this, but the reply from Fubeca infers that I had provided "misinformation".  Seriously, why would that be your reply when you affirm'ed everything I said.  Before you break out your poison pen, why can't we all be supportive of efforts to reply to posts instead of criticizing our fellow members and their efforts.  This forum is a TOP notch effort by 99% of the membership, is it that terrible that I tried to assist a fellow member  ??
Reply:Hey Brian,I don't think Fubeca was being intentionally demeaning in his response. I know many who have never been incorporated do not fully understand the different applications of a corporation, the advantages/disadvantages of each type of system, and what would best serve their own personal needs. As a tax professional I do believe his response was to clarify the parameters of a business and allow all of those considering doing so, a clearer understanding of the complexities of a corporation. I see, at times, the possibility of misinterpretation of anothers' post, but I personally feel his response was only to give thought to those who want to set up in a professional manner and not create unnecessary headaches for ourselves. I do believe these forums are to promote our love of the welding arena and the entire gamut of our daily operations. I hope hard feelings do not arise from posts that are meant to be helpful to others and all who look for guiding information....DennyComplete Welding/Machine/Fab. ShopMobile UnitFinally retired*Moderator*"A man's word is his honor...without honor there is nothing.""Words are like bullets.... Once they leave your muzzle, you cannot get them back."
Reply:Originally Posted by 190MPHI'm in the process of trying to start up a small welding/fabricating business. What I'm wondering is... protection.
Reply:Originally Posted by FubecaHi all,There is a lot of good info - but it is laced with a lot of misinformation.An LLC (limited liability company) is not a corporation.  It can limit the liability of the owners.  It is taxed as a partnership and income and losses are reported on your personal tax return.  This is referred to as a "pass-through" entity because the profits and losses pass through to the individual owners.An S-Corp is technically a corporation but is also a flow-through entity, there may be a little more protection but there is also more paperwork.A C-Corp is what most people refer to when they say corporation - a C corp has to file its own taxes and pay tax on its earnings.  If you incorporate as a C-Corp, your company would then pay tax on its earnings, and then you would pay tax on any dividends or wages that it paid to you.  For many people, a C-corp is a bad idea for tax reasons.  If you are serious about creating a useful entity structure for your business you should really consult an attorney and an accountant (or at least a really good tax attorney).  Accountants generally are not allowed to give legal advice about the creation of the entity but are limited to tax and accounting advice.
Reply:Thanks for the replies everyone. I will continue researching, and I'm going to speak with an accountant this week about it also.
Reply:I am  in Australia.  I have tendered for an Australia Post contract and if I win it I will have to form a company to service that contract.  So I am very interested in this question.  There's probably big differences between Australian practice and American.  But there's probably many similarities, too.  You may be interested in two websites I have found very informative.   One is the Australian Securities and Investment Commission which is a government body to oversee companies and such, keep everything on the straight and narrow. Their website offers comprehensive information and help about the whole question:http://www.asic.gov.au/asic/asic.nsf...e?opendocument  The other is a sample of the online companies that allow you to form a company right there online - they do all the paperwork for you, take your credit card details and pay themselves right there and then. It's done.  That's the way I'll be doing it. It will cost me about $550 Australian.  $450 of that is government charges. http://www.incorporator.com.au/?gcli...FReHhgod_T_BgQ  I thought you might be interested in taking a look at them.  Here in Aus it seems that my Limited Liability Company  (Mycompany Pty Ltd)  as a seperate entity with me the sole shareholder and director is responsible for its own debts and my own wealth is a seperate thing and not to be touched - UNLESS I DO WRONG.  If I can be shown to have misdirected the company or misbehaved in some other manner my own wealth can be appropriated to pay the debts of the company.  And 'doing wrong' could be almost anything - for, after all, the company wouldn't incurr debts unless it somehow talked someone into lending money one way or other - and I'd be responsible for that talking, for that persuasion.  In other words, the net result is that the disconnection between me and the company is nowhere near as complete or sancrosanct as one might think or wish.  And as a result of that the company will initially - with no history, no wealth of its own, no proven expertise, no 'goodwill', no trading record - find it difficult to raise any kind of financing at all.  All potential financers will be looking to my own personal wealth and history even though they are financing a purchase by the company. I've already found that out because I've had to enquire into the possibility of the company purchasing vehicles to service this contract.  So to get back to the intent of your initial question, if I read it right, here in Australia there'd be no advantage in the early stages of forming a company. Immediate cost up front. Immediate reporting and accounting responsibilities. Extra paperwork.  No easier credit. No 'protection' really.  I'm only doing it because I have to.  But it certainly looks to me that given a choice I wouldn't want to do it until way down the road when business was thriving and I had a good record to trade on and was obviously looking at expansion.  I look around at the businesses trading in my local town and I see that most of them are simply trading under a business name as sole traders and such and that seems to be all they need.  Hope I'm helping and not muddying the waters, inputting info from another company.  regards, ab
Reply:No hard feelings here, all is well.  The info everyone has provided has helped clear up a few lingering questions I had also.  Wow $500 to register a LLC, ouch !!  Brian MoyerMoyer Welding & Fabrication       LaSalle MI