LLC Structure /Purpose

USA Discussion in 'General Accountancy Discussion' started by Dominus, Jan 10, 2018.

  1. Dominus

    Dominus

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    Hello,

    Appointment made with CPA but that is a couple of weeks away while our schedules are conflicting. I will be discussing the following with him. I'm looking to be advised on the following, but would like input before we meet.

    I know that I have reached a point where I need to form an organization of some type. Research says LLC or S-Corp.

    I have multiple lines of business under different dba's as a SP.

    These are my main concerns considering I will be doing all of this in Texas:

    Banking and credit - I am looking to keep banking and credit card handling as simple as possible. Ideally I would like 1 corporate credit card to be used across all lines/brands and a single checking account. I can handle multiple checking accounts since I really want to avoid mixing branding and having dba printed on checks should I ever actually write one. Everything is electronic so far. Invoices are almost always paid online or via CC in person. All that deposits into a single checking account. I am somewhat meticulous about records so tracking AP/AR, profit, etc. has never been a problem.

    Taxes - I want to reduce personal and minimize business tax liability. What org type and structure is generally found to be best for this in Texas? LLC or S-Corp, holding w/ sub or dba's?

    Legal - Basically looking to free myself of personal liability and have each line of business stand on it's own. I don't plan on doing anything where this is a problem, BUT I would like each line of business to stand on it's should there ever be a legal issue. If business A get sued I don't want it to impact business B, C, or D. Research says holding company

    Both org types seem to meet my needs, but I want to be sure. Plus there is the issue of each line of business being able to stand on it's own while centralizing expenses and reporting.

    LLC or S-Corp for this? Should I form a holding/parent company with subsidiaries or have the LLC or corp form dba's?

    Thanks for your input and the possibility of new questions & considerations missed.
     
    Dominus, Jan 10, 2018
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  2. Dominus

    Drmdcpa VIP Member

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    Big mess.

    In order to separate each line, they would each need their own entity. Then if you have a holding company for some expenses that cannot be segregated to each line that will be yet another entity.

    From a tax perspective, either entity will work because you can check the box to have them taxed as you see fit.

    S corps traditionally were the way to go to minimize taxes, but with the new tax legislation this may not be the case and would depend on your income levels.

    Be forewarned if you have sales outside of Texas, entities can get very expensive administratively.
     
    Drmdcpa, Jan 11, 2018
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  3. Dominus

    Dominus

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    "Mess"... not a good start. Is there something else to consider or do you simply prefer to avoid holding companies for some reason? Should I be considering (i.e... asking the CPA about) another structure?

    • "In order to separate each line, they would each need their own entity. Then if you have a holding company for some expenses that cannot be segregated to each line that will be yet another entity."

    I take entity to mean each line of business will need to incorporate to meet my goals. That screams Holding company to me and no simple DBAs.

    • "From a tax perspective, either entity will work because you can check the box to have them taxed as you see fit."

    I am assuming you mean the income "pass-through" that I keep seeing when researching LLC's. I had no idea S-Corps had that option as well. OR am I assuming incorrectly here? (Time for more research.)

    • "S corps traditionally were the way to go to minimize taxes, but with the new tax legislation this may not be the case and would depend on your income levels."

    Crap... for lack of a better train of thought at the moment. I hadn't considered that. I'm sure most (if not all) of my points of reference were based on the codes.

    How long does it generally take a good CPA to mesh changes mentally? I want to give the guy enough time to review & think on the new laws before advising me. I can table this for a later date if needed. And just deal with the other things on the agenda since he will be the new accountant.

    I can likely get by this year as a sole-proprietorship, BUT I am really eager to separate personal and business in every aspect. Plus there is the issue of future planning (ownership, management, retirement, etc.) to consider.
     
    Dominus, Jan 14, 2018
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