[hickory lane]

I was considering incorporating or llc. My attorney told me to check with my tax preparer on the tax implications. My tax preparer didn't advise it. He said the tax consequences were significant and if someone wanted to sue me they could do it anyway as an officer in the corporation. Any thoughts?

[Stonehenge]

Sounds like your accountant is trying to offer legal advice. I'd ask your accountant to stick to the accounting side of it, and let the attorney guide you in legal matters.

For what it's worth, our landscaping company is a subchapter S corp, and GTX is an LLC. From my understanding of each, tax implications of each are about the same, as is the protection, but an LLC has less reporting requirements, making it a bit easier to manage.

There are certain points where you'd want to be a C corp instead of S corp; I don't recall what those points are, but I do know I haven't reached 'em.

[EpicInterlock]

After being in the business for 5 years, I'm definitely incorporating because I need to protect my personal assets (house, truck, car, etc) from sue-happy customers. I've never had a problem, touch wood, but it only takes one crack job to be unsatisfied and sue you for your house.
When you incorporate, you essentially block people from suing for your personal assets, and they can only take your business assets....but of course, that's where insurance comes in.

Good luck with the incorporation....best $250 I will ever spend

[Matt Kulp]

Originally posted by EpicInterlock
After being in the business for 5 years, I'm definitely incorporating because I need to protect my personal assets (house, truck, car, etc) from sue-happy customers. I've never had a problem, touch wood, but it only takes one crack job to be unsatisfied and sue you for your house.
When you incorporate, you essentially block people from suing for your personal assets, and they can only take your business assets....but of course, that's where insurance comes in.

Good luck with the incorporation....best $250 I will ever spend

Make sure that you check with a good attorney about how you set up your corp., just because you incorporate does not mean your personal assets will be protected immediately. If you have been in business over the past 5 years as a proprietor, you will need to transfer all vehicles and equipment into the corp.

$250 is a great deal, when I did it we paid $1200.00 to the lawyer and i think another $2-300 with the accountant.

[hickory lane]

I checked back with the attorney and told him what the accountant said about "they can still sue you as an officer of the corporation or partner in an llc. It just creates more bookwork and taxes". To my surprise, the lawyer pretty much agreed with him. He said many people form a corporation and then drop their liability insurance coverage thinking they can't be sued. That's a mistake. I'm thinking maybe we are too small at this point to jump to corporate status.

[TrickyDick]

This stuff can be pretty confusing but my understanding is that in an LLC each member is only liable up to the amount of thier investment.

[Matt Kulp]

Originally posted by hickory lane
I checked back with the attorney and told him what the accountant said about "they can still sue you as an officer of the corporation or partner in an llc. It just creates more bookwork and taxes". To my surprise, the lawyer pretty much agreed with him. He said many people form a corporation and then drop their liability insurance coverage thinking they can't be sued. That's a mistake. I'm thinking maybe we are too small at this point to jump to corporate status.

Our attorney told us for a couple of years prior to our incorporating that if we are incorporating for liability issues, then we could wait until we felt our insurance would not cover completely. If we were going to incorporate for tax purposes, then do it as soon as you can. Our accountant made the first call to tell us that we should do it for the tax benefits.