To Incorporate or Not?

[edsel_adams]

I asked this one over at ZUGA,the supposed wedding pros,and got no

response.Do most wedding /portrait shooters incorporate?Is there any

reasons to be a D/B/A rather than a corp?I have started to create a

corp for my business,mostly to protect me from personal liability(the

usual reasons one incorporates).What is the concensus?Thanks.

[art_haykin]

Corporation charters vary widely from state to state, and there are usually gross annual sales minimums before it isfeasible. Also, there are usually fees. A good tax attorneywould know. And personal liability laws are changing now in many places, as Enron, et al are finding out.

[donald_brewster]

Even with the liability concern, it's really a tax question as to what would benefit you best. A small business generally benefits most from either an LLC or a sub-chapter S corporation. Check with your tax professional.

[edela_rothman]

Incorporating is a tricky matter. There's a lot of "free" information on the web, but it is often misleading. Do your research. Seek sound advice from professionals. There are lots of options available - C Corp, S Corp, LLPs, LLCs, etc. - each type has its own set of rules and regulations AND ramifications. S Corp in general is easier to manage than C Corp, but you must file to become one by a certain deadline, and if you have missed that deadline than the matter gets trickier. As a photographer you may actually save money as a C Corp, depending on where you incorporate (and you don't necessarily have to incorporate in the state that your business operates), because the corporate tax rates are generally lower than the personal tax rates. BUT you have to deal with payroll and quarterly corporate tax returns. Then there's LLPs (you may be required to have at least two partners here) and LLCs (which is gaining popularity, but rules vary state-to-state). I could go on and on. This is not an easy matter, and the deeper you dig the more confusing it can get. I think the decision varies from business to business. So as far as a "concensus" is concerned, I really doubt that there is one.

[bill_dewberry]

This is an easy matter, and the choices are only two, sub chapter s corp, or LLC, The answer is extremely easy, single member LLC, all the benefits of incorporation, none of the burdens.

[marc_mest]

The liability issue should not be your primary reason for incorporating. As a single stockholder corp it is still possible to be personally sued, and probable if someone has a decent lawyer.

 

The biggest motivator for you should be the tax benefits. And as it goes you should incorporate in either NV or DE. Don't go to an accountant or attorney to incorporate, they will tell you to incorporate in whatever state they are licensed in. However you should talk to an accountant to determine which type of corporation is right for you tax wise.

 

There are a quite a few services that will incorporate for you. www.incorporate.com has some information that will help you, but keep in mind they are selling a service so it is biased information.

[trooper]

Small Corp liability ends up being little different than personal liability in reality�. Corporate debts and liability are normally underwritten by your personal assets anyway (in small, closely held corporations). Much of this decision depends upon the level of profits you experience, whether you need/want to retain earnings and other tax ramifications. Corporate documentation requirements can be daunting for closely held corporations (corporate tax returns, annual meeting minutes, etc).

 

For most every reason that incorporating lures you in, there�s a downside aspect. Corporation structures are really quite easy to get into and a devil to get out of. Once depreciated, corporate assets coming back into personal use can trigger unwanted scrutiny by tax authorities (and taxes!). Most people who have success in their closely held corporations, find that their biggest financial hurdle is in getting their money out of the corporation without excess and double taxing. On the other hand, with good advisors, corporate tax laws allow some creative tax-sheltering, deferral and avoidance.

 

Some of the best money you can spend in this decision is in buying legitimate advice from a credible professional (attorney, CPA or financial planner). You can get some free advice from a CFP who makes their living off of commissions�. Just remain mindful that their recommendations come from a perspective of profiting from the course you select. They can, however, be a great resource and have access to well-versed resources through their broker-dealers and insurance companies. Don�t let the new terminology that gets thrown at you become an excuse to avoid the decision�. Lease-back options and other tools of small business can be very beneficial and are worth a bit of study and understanding. Also, try to think in the �big picture� perspective�. I watched a young pharmacist get financing for buying a successful drug store by virtue of the previous, retiring owner having $200,000 of corporate cash value in a split-dollar insurance plan. The bank was very cooperative, knowing that he had the liquid cushion to fall back on and the retiring owner received that amount and more back in the overall value of the business. A typical photo studio is less likely to sell with lots of �blue sky� perhaps, but I just relayed the example of how creative planning and application of tax law incentives can pay many dividends, both financially and in business transfers and liquidations.

[jon_wilson]

Having practiced law for almost twenty years, I have found that one does obtain a decree of insulation with a closed corporation, i.e., subchapter s or LLC; however, I strongly recommend you obtain the most complete affordable insurance coverage available to you in addition to obtaining the maximum automobile insurance, including underinsured coverage. It is also recommended you have a tax professional assist you in ensuring your records are properly maintained, your business expenses are lawfully maximized/documented and you make a timely election (30 days or less from date of incorporation) with the IRS to be a subchapter s entity. As to obtaining financing, the lender usually side steps the shield provided by incorporating by requiring you to guarantee any business loan. And remember in investigating your options, no question is too dumb ask and hindsight is 20/20.

[dan_sweet]

<a href="http://pdn-pix.com/businessresources/incorporate.html">PDN Article on Incorporation</a>