Should I set up a holdings company (an LLC, taxed as an S CORP that we'll call "PARENT") that owns ownership in other entities I work on?
This might not be best place to ask this question, but I lurk here quite a bit and am in need of serious help (and you guys generally have great feedback.
* I own 100 percent of PARENT
* PARENT owns 90 percent in company A
* PARENT owns 50 percent in company B (unrelated to A)
* PARENT is licensed to publish a book that I own, so profits go to PARENT and then pays me as a distribution
* Other things I work on will be added to PARENT overtime
Reasons for doing this: Possibly more protection, keeping all my assets under one company, and only needing 1 company to pay me a payroll (vs. 3 companies if I do them all separately, probably meaning less Self Employment Tax in the long run)
Possible problems/questions:
* What if Company B gets sued, is PARENT potentially liable? How about Company A, is it liable as well even though it's unrelated?
* What if there wasn't a PARENT company, would the other company be liable since I'm linked to both?
* Is there any unknown tax, or will it simply be a double flow-through entity for my rights in Company A and B? My fear here is that I'll be double-taxed, on the PARENT end and on Company A and B's end.
* Since PARENT owns rights in A, B and my book, can I be on the payroll of only PARENT, with the rest being distributions paid to PARENT (and virtually me)?
Thank you for your help!!!!
Ash
This might not be best place to ask this question, but I lurk here quite a bit and am in need of serious help (and you guys generally have great feedback.
* I own 100 percent of PARENT
* PARENT owns 90 percent in company A
* PARENT owns 50 percent in company B (unrelated to A)
* PARENT is licensed to publish a book that I own, so profits go to PARENT and then pays me as a distribution
* Other things I work on will be added to PARENT overtime
Reasons for doing this: Possibly more protection, keeping all my assets under one company, and only needing 1 company to pay me a payroll (vs. 3 companies if I do them all separately, probably meaning less Self Employment Tax in the long run)
Possible problems/questions:
* What if Company B gets sued, is PARENT potentially liable? How about Company A, is it liable as well even though it's unrelated?
* What if there wasn't a PARENT company, would the other company be liable since I'm linked to both?
* Is there any unknown tax, or will it simply be a double flow-through entity for my rights in Company A and B? My fear here is that I'll be double-taxed, on the PARENT end and on Company A and B's end.
* Since PARENT owns rights in A, B and my book, can I be on the payroll of only PARENT, with the rest being distributions paid to PARENT (and virtually me)?
Thank you for your help!!!!
Ash