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    12 Replies Latest reply on Feb 17, 2008 9:28 AM by grantsforce

    S-corp two partner consulting business

    ndp125 Adventurer
      Okay,
      Based on these two threads (I do have a bit of bias towards S-corp owing to it's advantage of lower taxation and easily modifyable parternship)

       

      Relevant Thread
      Re: Right form of entity - S-Corp. vs. LLC

      My own thread
      Re: Difference between S-corp and LLC for a consultant

      Now I agree that LLC is simpler however in terms of adding partnership (I am currently setting it up as a 2 partner business) and because of tax benefit I am considering S-corp. I also have an accountant who suggested S-corp. I do also see the benefits of LLC to protect my assets however at this point I do not have any except a Car.

      Nonetheless I would really like to have your comments based on my points of observation.

      Our current business is in terms of IT based consultation, however in the future we are considering other services.

      So in that regards can we change from S-corp to LLC if required ? (Just as we can for C-corp and S-corp) ?

       

        • Re: S-corp two partner consulting business
          Lighthouse24 Ranger
          I'm not aware of a way to "transform" an S-corp entity into an LLC, but an S-Corp can be an LLC member (owner) -- so I suppose you could have your S-corp create and capitalize a new LLC, and effectively accomplish the intended result that way.
          • Re: S-corp two partner consulting business
            LUCKIEST Guide
            125. You have an Accountant. Listen to your Accountant.
            Why are you worried about an LLC if you have no assets except a car.
            Also go to Members page and add a few words about your business.
            LUCKIEST
              • Re: S-corp two partner consulting business
                ndp125 Adventurer
                Hello Luckiest and Lighthouse24,
                Thanks for the responses. I have updated little bit about my business as suggested by Luckiest.

                The reason I am trying to get everyone's opinion apart from my accountant is to better understand the business side of things. Consideering many of you here to be experienced in terms of starting businesses it is definitely reassuring.

                In terms of my personal style I always like to verify and understand facts prefer not to go by word especially not depending on a single person. There are always many creative solutions to a single problem. Having said that..I really appreciate all your comments and help and if there are good resources for my scenario please let me know.

                ndp125
                  • Re: S-corp two partner consulting business
                    Lighthouse24 Ranger

                    The resources that will help you most are specific to your state (S-corp and LLC structures are formed/governed by state law). If you indicate the state in which the company was formed/registered, I'm sure someone can offer authoritative links.
                      • Re: S-corp two partner consulting business
                        ndp125 Adventurer
                        Thanks lighthouse24 ..learning new stuff

                        My state is MA
                        Also since we are at it. I am considering using a P.O Box rather than home address for my business. It seems few people in the forums have recommended that with the obvious reasons for safety.
                          • Re: S-corp two partner consulting business
                            ndp125 Adventurer
                            Added more bits and pieces to my profile

                            Start year 2007 as sole propritorship
                            Revenure range above $10K

                              • Re: S-corp two partner consulting business
                                LUCKIEST Guide
                                Added more bits and pieces to my profile??.
                                Listen to your Accountant. He know you and your business.
                                That is why you are paying him / her.
                                LUCKIEST
                                  • Re: S-corp two partner consulting business
                                    ndp125 Adventurer
                                    Hi Luckiest,
                                    I have got that part of listening to my accountant :) Thanks

                                    If you observe one other posts in my pervious question you will notice that there is a strong recommendation of being careful about accountant's suggestion. My goal is definitely to have the corporation to have more credibility and tax benefits but apart from that I would like to know if there are any other implications (legally, etc. ) It is also my own accountant's suggestion to verify this information and finally if really required go for a legal,etc. consultation

                                     

                                • Re: S-corp two partner consulting business
                                  Lighthouse24 Ranger
                                  ndp125 -

                                  1. I tend to agree with your philosophy -- if it's my money and reputation on the line and I don't know the answer for sure, I want as much intelligent input as I can get. My accountant may be one source, but (no offense to Luckiest) I'm paying my accountant to know accounting -- not to know all the other elements of my businesses that might factor in to a good management decision (and I dare say my accountant would agree, especially this time of year!).

                                  2. A good starting place for authoritative resources for your state is the Massachusetts Secretary of State's Corporations Division. It is a painfully slow website, but the official stuff is there:

                                  http://www.sec.state.ma.us/COR/coridx.htm

                                  3. You have to give the IRS, the state, your bank, and most creditors a physical address when you file paperwork (so they have a place for service of process) -- but it is perfectly acceptable to use a PO Box as a business mailing address for everything else. It's not only "safer," it's also more secure (for you and your customers), and it can often be more efficient, too.
                                    • Re: S-corp two partner consulting business
                                      dublincpa Scout
                                      I am with Lighthouse24. No accountant is perfect regardless of what/how many letters follow their name. You should understand as much as possible about any decision, especially big ones that can have consequences for years to come. As professionals, we have all seen where the prior guy/gal gave bad, incomplete or inapproriate advice. We don't want to be that guy/gal. We have also seen plenty of clients who thought they knew better and ignored their accountants.

                                      You have to know for what knowledge base you are paying any professional. Make sure that you are comfortable with the areas for which you rely on him/her. If thre is an area about which you are not so confident about his/her judgement or knowledge, get a referral for a second opion. I give these out half a dozen times a year. I also get these calls regularly. Most professionals have relationships with others who will discuss the situation for a reasonable fee or none at all. There are plenty of areas in which I will refer/defer to others that I know because they are more knowledgeable. There are areas where I know that I am the "top authority" within my little network and everyone I know will back me up without hearing the question. Those are harder to overcome doubt, but when three people tell you that better advice in an area would be hard to come by you tend to believe.

                                      Trust is critical, but it doesn't have to be absolute.

                                      You may want to consider a Private Mailbox like UPS Store formerly Mailboxes Etc. They will receive packages, cert mail and service of process. I have changed offices a few times in the six years I have been open and it really makes life easy. I also use it for my clients for whom I serve as Registered Agent.

                                      Good luck.
                            • Re: S-corp two partner consulting business
                              grantsforce Adventurer
                              I may me late to reply on this forum - but I was in the same position 3 years ago as you (ndp125) seem to be now. I did set up an S-corp as did several of my associates that are in the consulting business.
                              I do have another area of interest I am persuing. For this I setup a 'C' corp (because of the vision / goals of that new business). These were steps that I now (after 3 years) feel were correct. If you wish to discuss and need help please feel free to contact me. I will be glad to share my experiences.