What ELSE do you do when you register a business for a client?

[Pacun]

Let's say that you suggest a client to incorporate a business or you ask them to open an LLC, what else do you do for the clients?

Let's say a C corporation filing 1120 with a single owner, do you open an accountable plan? Do you register for online tax payments? Do you open an insurance plan? 401k? If the company has some money on December 15th, what do you suggest them to do? Anything that is a good practice will be welcome.

Let's say that you open a C corporation that will become an S corp, what do you open or suggest?

Let's say that you open an LLC which will be disregarded as a partnership filing 1065, what do you suggest?

Do you suggest an accountable plan for all of them? How do you open an accountable plan? What are

I do understand that money has to do with all these decision but I want to know what the mininum that should be done.

[Uncle Sam]

You can't do anything until such time as you sit down with the client and know what their expectations, needs, goals, and objectives actually are.

When a client comes to me wanting to incorporate or become an LLC, I have to ask how they're going to operate, what they expect to

achieve, what they're really looking for and what specific plans they have to achieve them.

I then advise them to consult an attorney to form the entity they choose. Yes - they can go on the internet for the do-it-yourself kits - but I don't

advise that - because they probably won't do it properly and at least they have some limited protection in covering areas that they aren't knowledgable of.

As far as online tax payments - I see if it's necessary based on their tax liability, and/or if they're comfortable with doing it online (if it's not already mandated). Client may not like doing things electronically.

Then, after the corporation is formed, then I apply for the tax ID#s, then the Sub S or LLC election forms.

Attempting to set up 401ks the day they start I believe is premature.

If it's year end they wish to start - I'll advise doing all the setup in the beginning of the year in order to avoid having unnecessary

filings for the short year.

[TaxCPANY]

At a minimum, Pacun, I do NOT "suggest" - i.e., *advocate* (a synonym for attorney) - any form of entity to a client- as I've got only a CPA & MBA. CYA. But, I DO give them a 15-30 minute 'tour' of the plus/minus of partnerships (general or limited), corporations (S or C), and LLC's (disregarded or not). It MUST be the client's choice!

If he/she opts for a single-shareholder C corp, I instruct how to FIRST incorporate a unique name with the pertinent Secretary of State's office - and I wait for a copy of both the Articles of Incorporation and the SoS' formal receipt. Given those, I instruct how to file SS-4 for an EIN (and bring the IRS ack to a credit union, preferably, or client's commercial bank, to open an account for the biz - MUST install that 'firewall'). Given that, I instruct how to register with the state Dept. of Labor in which they'll incorporate, take 'em by the hand through unemployment insurance & workers' comp in the jurisdiction. And, yes; I do advise them to open not only an EFTPS account but also the charter-state's digital-filing/payment account as well.

If the client's already thinking about qualified retirement plans, I energetically steer him/her toward a CFA/P I trust - as, again, that's really outside my own "certified" expertise. I relate 'anecdotes' &'common-sense' about SEP-IRA's, Single-Participant 401(k)'s, defined-contribution versus defined-benefit qualified plans; but, again, advising someone which is 'best' would jeopardize my license.

Last question of yours I can 'answer,' tonight, only with another question: why would anyone deliberately begin as a C corp if he/she intends to end up as an S corp?

Very truly yours, TaxCPANY

[jainen]

>>advise them to consult an attorney<<

I also advise them to consult an insurance agent, as invariably one of the main reasons for forming a limited liability entity is to limit liability.

As to why someone would start as a C intending to become an S, it often has to do with net income. One of the main disadvantages of a C corp is double taxation, but it is realistic to expect a few years of startup before there are any profits to tax anyway so S-status can wait.

[Jack from Ohio]

Just for my own informaton... Are not all S-Corps established as a C-corp with an election to be an S-corp sent to the IRS. Doesn't the IRS have the ability to say yes or no?

[Lion EA]

You can also organize as an LLC and make the S-election.

[joanmcq]

I will ask why someone wants a specific entity and will go over the tax advantages and disadvantages of each. Oftentimes they've just heard, "I should be an LLC, or I should be an S-corp", without knowing what each entails. I'll ask them how organized they are, and explain how with a corp, especially a single member S-corp, you have to wear several different 'hats' and be able to think with each of these hats on: employee, shareholder, owner. I'll explain the different types of retirement plans available and how they work, taxwise. I'll give annecdotal examples, too. I do not recommend a specific plan, or investments.

With any corp, I do recommend an accountable plan, especially if they use their vehicle in the biz, or travel a lot for biz.

[Pacun]

Jack,

I think you form an LLC and then ask the IRS to tax it as a corporation, then you request S treatment. I am not sure if that will work. You are correct, all S corps are C corporations AND the IRS approves the request for S treatment.

Joan,

It is my understanding that an accountable plan for a C corporation is a no brainer and you just mentioned it. How do you create an accountable plan? Why wouldn't an accountable plan be beneficial for a Schecule C, LLC when the owner or the LLC gives a car or cell phone to an employee?

[Lion EA]

You organize as an LLC with the secretary of state and then file Form 2553 with the IRS to be taxed as an S-corporation.

I do NOT register a business entity. The lawyers in CT have a good lobby and frown upon what they consider practicing law without a license. I might recommend a lawyer to draw up an operating agreement or I might tell someone how to access the forms online. I definitely discuss the tax implications of the various available business entities. I suggest good liability insurance and that they talk with their insurance agent for recommendations based on their business. I tell them to keep me in the loop and that I would be glad to speak with their lawyer, agent, banker, etc. I tell them facts and responsibilities, I relate anecdotes, etc. I talk about taxes and insurance and accountable expense plans and reporting requirements. If more than one owner, I strongly suggest a formal operating agreement via a lawyer, primarily to cover what happens when something goes wrong, someone wants out, someone passes away, disagreements, etc. But, I do NOT tell them the best entity for them nor do the actual registration for their company.

[joanmcq]

Pacun, a Sch C owner can deduct expenses right on the business, but if the owner has employees, yes, an accountable plan is beneficial to the employees. For a corp, since the owner is an employee, the accountable plan keeps the owner/employee from having to report expenses on a 2106. That's why I say for a small corp, it's a no-brainer. The corp gets to deduct the expenses, and the owner/employee gets tax free reimbursement.