Hello
Have been hearing mixed sentiments on this. The scenario: This is a TX based company that owns trucks and employs driver. It works for UPS in transporting freight. UPS pays the company. The co. pays its employees, insurance, fuel charges, etc.
What is the best tax structure for this company while providing maximum liability protection? My initial thoughts were that the owner should create two entities, A and B. A becomes the holding company LLC for all assets. Income (net of depreciation) is passed through to the owner's 1040 return. B (S corp) leases the equipment from A and acts as the operating entity that runs the business day to day. The owner takes a salary draw from the S corp thus reducing SE taxes and takes the remainder as a distribution on his 1040.
Entity B is who files all the 940/941 returns, business income returns, etc. and makes the quarterly tax payment installments to the IRS.
This structure ensures the assets are shielded/protected and as is the operating company while providing maximum tax benefit to the owner.
Do you see any issues with this? or potential violations of the law or regulations?
Thoughts?
Highly appreciate your input
Have been hearing mixed sentiments on this. The scenario: This is a TX based company that owns trucks and employs driver. It works for UPS in transporting freight. UPS pays the company. The co. pays its employees, insurance, fuel charges, etc.
What is the best tax structure for this company while providing maximum liability protection? My initial thoughts were that the owner should create two entities, A and B. A becomes the holding company LLC for all assets. Income (net of depreciation) is passed through to the owner's 1040 return. B (S corp) leases the equipment from A and acts as the operating entity that runs the business day to day. The owner takes a salary draw from the S corp thus reducing SE taxes and takes the remainder as a distribution on his 1040.
Entity B is who files all the 940/941 returns, business income returns, etc. and makes the quarterly tax payment installments to the IRS.
This structure ensures the assets are shielded/protected and as is the operating company while providing maximum tax benefit to the owner.
Do you see any issues with this? or potential violations of the law or regulations?
Thoughts?
Highly appreciate your input