612.385.6479
jolson@encompassgroupinc.com

Incorporation

WHEN IS ITS TIME FOR A BUSINESS OWNER TO INCORPORATE?    

(The Basics)

  •   If you have an employee or independent contractors working for you
  •  You are doing business with the general public and are concerned about personal liability

  •  If your income is more than $50,000 per year

  •  If you own investment property or have contractors working in the property
  •  If you own rental property occupied by a tenant
  •  When you are considering a partnership or joint venture with someone other than your spouse

                                                                                                          

Types of Corporations

S-Corporation – A favorite with Business Owners – The main benefit is to reduce the amount of Self Employment Tax you pay

  • Profits flow through to your personal tax return and are taxed only once. There are a variety of benefits; however, the main benefit is the ability to take some of your income in the form of distributions, which are not subject to self employment tax. 
  • You should be making more than $120,000 a year to make this worthwhile
  • The main benefit is to participate in a wide variety of corporate employee benefits
  • You can take advantage of “retained earnings” if you are anticipating a high income year
  • When you take money from corporation profits, the money is taxes again as a dividend
  • You never want your C-corporation to own property because of double taxation
  • Flexible entity that is used for liability/asset protection for rental & investment properties
  • You can move properties in and out of it
  • You can change partners and a corporation can become a member
  • Typically, not used for tax benefits, however, your expenses flow through to your personal tax return
  • If you are the sole owner of the LLC, there is no need to file a corporate tax return annually
  • Minimize your professional liability if you hold a professional license with the state.  .
  • Minimize your paperwork.  You will need to keep separate records, have a separate checking account and pay yourself a wage.
  • Exempt you from owing income tax.

C-Corporation – C for Complicated and designed for Creative Strategic tax planning

LLC – Commonly Used for real estate holdings

Incorporating WILL NOT: protect you if you are  licensed with the state as a real estate licensee.  You and/or your Broker are personally licensed with the state and therefore you are personally responsible. 

REMEMBER TO RENEW!!!         DO YOU HAVE A CORP BOOK?         ANNUAL MINUTES

  •  We can help!

           

Cost To Incorporate or form an LLC

$160 to the Minnesota Secretary of State

No Federal Filing Fee

No annual renewal fee

No Federal filing fees

$300-600 which should include:

Filling out & filing of state & federal documents

Obtaining Federal ID, State ID and Unemployment Numbers

Corporate Record Book (important if you are audited)

Annual minutes and book updates

Training to learn how to utilize your corporation for your individual situation for tax & liability purposes

On line and telephone support for ongoing questions

Information

Informational booklet detailing the process (if you want to do it without help) potential tax benefits and the different entity choices. You can also call us if you have tax or incorporation questions.

1st Step – Contact us to arrange an appointment to “tell your story“

  • We will analyze all the components of your business
  • Prepare written recommendations for a plan of action
  • Estimate the cost of each implementation phase
  • We offer package pricing rather than “mysterious never ending consulting fees