What kind of business entity are you running?

[Pacun]

I only prepare taxes as sole proprietorship and I am going to register a business this year. I am inclined to an LLC, but an S corporation would be nice. I get 65% from profits and my friend gets 35% as rent, answering the phones and other clerical work. My partner has the local and does some translation and other stuff. I will continue working with my friend and I would like to know what kind of business entity you are running.

[Catherine]

I've stayed a sole prop. Our state EA association has had several attorneys in at various times to talk to us about entities, and from what I gather, neither the LLC nor the S-corp structure will "save" you when what you're selling is your personal expertise. So I have never bothered to spend the money on some sort of more formalized structure -- instead I buy good E&O insurance.

If I were to expand and have employees who provided services, I would want to talk to an attorney to see what protections would then be available through a formal structure. So that would be my recommendation for a place to start. Talk to a couple of folks about your options and what it does for you -- and what requirements your state has, as well. Mass., for example, charges more for the annual LLC "filing fee" than it does for the "minimum tax" on a corporation. But the LLC structure is easier to maintain in terms of annual meeting, record-keeping, and other niggly things that cannot be forgotten with a corp. without possibly breaching that "corporate veil" protection.

One of our speakers made the point that there are folks who pay lawyers lots of money to set up entities when what they really need is just more, and better, insurance.

[Lion EA]

I'm a sole proprietor, an LLC. Although, I formed the LLC before CT added a $250 business entity tax, so not sure I'd bother doing it over. I have E&O insurance. Would like to get off Schedule C since that seems to be one Tax Gap target. Husband retires at the end of the school year, so I was expecting to hire him for pickups and deliveries and bank runs and scanning and filing. (He's a fast typist, but not sure I'd trust him with data entry!) Anyway, I'm considering a partnership as a possibility with him, instead of employer/employee on Schedule C. Probably not an S, since distributions need to be in the same ratio as ownership. And, S-corporations seem to be a target lately, too. Not sure what I'll do.

[imjulier]

I do tax prep, bookkeeping, and some contract work for much larger corporations after tax season is over. I've always been an LLC and stayed that way for many years but last year elected s corp treatment. I just wanted my business and personal to be totally seperate. Good luck!

Julie

[Kea]

I've been a sole proprietor since I started my business. But when my husband retired he became a co-owner. I'll probably file us with 2 Sch Cs this year. But I haven't gotten that far on our return this year.

[mcb39]

I am a sole proprietor LLC. Other than tax preparation and tax planning, I do bookkeeping, sales tax returns and some payroll throughout the year. WI is trying to force all businesses to file every kind of tax report online under a webpage called "My Tax Account". Very secure and very difficult to manage at first. However, now I have access to several clients' accounts as many of them do not have internet access or the knowledge to learn how to use the site. Under "My Tax Account" you can file sales and use tax, payroll tax and any other state taxes that you might owe.

[Catherine]

I am a sole proprietor LLC. Other than tax preparation and tax planning, I do bookkeeping, sales tax returns and some payroll throughout the year. WI is trying to force all businesses to file every kind of tax report online under a webpage called "My Tax Account". Very secure and very difficult to manage at first. However, now I have access to several clients' accounts as many of them do not have internet access or the knowledge to learn how to use the site. Under "My Tax Account" you can file sales and use tax, payroll tax and any other state taxes that you might owe.

Mass. has a similar thing called "WebFile for Business" (this year they're rolling out WebFile for Income, for personal taxes). PITA and not ready for prime time when they started it. The DUA (unemployment) wanted their own site as well to deal with unemp taxes. Seriously not ready for prime time (even MassDOR warned them) and they've had huge problems.

However, WebFile has now been around for several years and I have access to client accounts. Makes lots of things easier for me and way easier for the clients.