Author Topic: Starting an S-Corp (MN) *Help*  (Read 2381 times)

TheAnonOne

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Starting an S-Corp (MN) *Help*
« on: March 16, 2016, 01:03:50 PM »
Hello,

As another stage in my job transition I am looking to start an S-Corp in Minnesota.

I get the general benefits and downsides of the whole deal (Estimated taxes, solo 401k, a few more deductions)

Though, I am not sure exactly where to start, or what resources are available to help with the taxes and other items.

Any help is appreciated.

protostache

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Re: Starting an S-Corp (MN) *Help*
« Reply #1 on: March 16, 2016, 01:26:28 PM »
Well, first question is why you are forming an entity in the first place. Do you need the liability protection? Or is it because of the benefits? You can form a solo 401k as a sole proprietorship, for example. An entity with S taxation (either an S-corp or an LLC electing S-corp taxation) only makes sense for a somewhat narrow band of income, where you can legitimately pay yourself less than the $118k Social Security wage cap but the business makes enough to justify the extra tax preparation fees/time.

TheAnonOne

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Re: Starting an S-Corp (MN) *Help*
« Reply #2 on: March 16, 2016, 01:30:15 PM »
Well, first question is why you are forming an entity in the first place. Do you need the liability protection? Or is it because of the benefits? You can form a solo 401k as a sole proprietorship, for example. An entity with S taxation (either an S-corp or an LLC electing S-corp taxation) only makes sense for a somewhat narrow band of income, where you can legitimately pay yourself less than the $118k Social Security wage cap but the business makes enough to justify the extra tax preparation fees/time.

We do fall under that zone, the gross income should be around 160-220 a year. Given various amounts of overtime, bill rates, and downtime. That being said, there are various reasons for setting this up, mainly to allow myself to act alone and not need to go through other firms. However, this is a future goal.

protostache

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Re: Starting an S-Corp (MN) *Help*
« Reply #3 on: March 16, 2016, 01:36:52 PM »
Well, first question is why you are forming an entity in the first place. Do you need the liability protection? Or is it because of the benefits? You can form a solo 401k as a sole proprietorship, for example. An entity with S taxation (either an S-corp or an LLC electing S-corp taxation) only makes sense for a somewhat narrow band of income, where you can legitimately pay yourself less than the $118k Social Security wage cap but the business makes enough to justify the extra tax preparation fees/time.

We do fall under that zone, the gross income should be around 160-220 a year. Given various amounts of overtime, bill rates, and downtime. That being said, there are various reasons for setting this up, mainly to allow myself to act alone and not need to go through other firms. However, this is a future goal.

Are you solo or do you have partners? Do you have employees or plan to have any in the future? What sort of product/service do you sell? Are your clients small businesses? Large enterprises?

TheAnonOne

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Re: Starting an S-Corp (MN) *Help*
« Reply #4 on: March 16, 2016, 01:44:42 PM »
Well, first question is why you are forming an entity in the first place. Do you need the liability protection? Or is it because of the benefits? You can form a solo 401k as a sole proprietorship, for example. An entity with S taxation (either an S-corp or an LLC electing S-corp taxation) only makes sense for a somewhat narrow band of income, where you can legitimately pay yourself less than the $118k Social Security wage cap but the business makes enough to justify the extra tax preparation fees/time.

We do fall under that zone, the gross income should be around 160-220 a year. Given various amounts of overtime, bill rates, and downtime. That being said, there are various reasons for setting this up, mainly to allow myself to act alone and not need to go through other firms. However, this is a future goal.

Are you solo or do you have partners? Do you have employees or plan to have any in the future? What sort of product/service do you sell? Are your clients small businesses? Large enterprises?

Solo-
No plan for employees, though I suppose that would be a good problem to have!
Software Consulting- .NET
Large Clients generally-

protostache

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Re: Starting an S-Corp (MN) *Help*
« Reply #5 on: March 16, 2016, 02:13:03 PM »
Well, first question is why you are forming an entity in the first place. Do you need the liability protection? Or is it because of the benefits? You can form a solo 401k as a sole proprietorship, for example. An entity with S taxation (either an S-corp or an LLC electing S-corp taxation) only makes sense for a somewhat narrow band of income, where you can legitimately pay yourself less than the $118k Social Security wage cap but the business makes enough to justify the extra tax preparation fees/time.

We do fall under that zone, the gross income should be around 160-220 a year. Given various amounts of overtime, bill rates, and downtime. That being said, there are various reasons for setting this up, mainly to allow myself to act alone and not need to go through other firms. However, this is a future goal.

Are you solo or do you have partners? Do you have employees or plan to have any in the future? What sort of product/service do you sell? Are your clients small businesses? Large enterprises?

Solo-
No plan for employees, though I suppose that would be a good problem to have!
Software Consulting- .NET
Large Clients generally-

I formed a Michigan LLC for my consulting business and elected S-corp taxation. The S-corp election lets me save on Social Security and the LLC means I don't have to do the corporation rigamarole every year. It's simpler to run than a "real" corporation and gives me all of the tax benefits. Forming the LLC was trivial, it was just a two page form I mailed to the state with a check. Electing S-corp taxation is a one page for you send to the IRS after getting a (free) EIN.

I wrote a short book called Handle Your Business which may help you out. All of the information in it is out there on the Internet, and it definitely doesn't replace talking to a CPA and an attorney. The intent, rather, is to give you a lay of the land and the basic terminology you need to talk to those professionals in a productive way.