Llc, s corp, or c corp?
Any advice here would be great.
I own my clinic in s corp style and I literally get off Scott free with taxes.
Obviously im going to consult my accountant as well but im curious as to how you pros have yours set up, and also why you chose that if you'd be open to talking about it?
An LLC is used for partnerships, but there are disadvantages. Check with an attorney but I dont think you are protected as an individual from lawsuits under LLC (friend of mine is being sued now under an LLC). I filed Corp S to both protect myself from lawsuits and for the tax advantages. Straight Corp has some pretty onerous tax implications.
If you are an individual, starting a haunt, looking for some form of protection - Corp S is the way to go and easy to do. Read up on it though - there are some responsibilities with Corp filings like regular board meetings (they must be documented) and a salary (although it can be minimum).
LLC all the way.
It really depends on what you plan to do, but LLC's are much newer in the legal system and aren't fully understood by everyone yet.
They do separate you from your business, i.e someone can sue your business for damages, and you can claim bankruptcy and the issue almost disappears completely.
It is NOT just for partnerships, it's very good to have even if you're by yourself!
Read up on it, it's easy to understand and possibly the best to do as far as haunted attractions are concerned, also to touch on the s-corp notion, you can choose to taxed as an s-corp with an LLC.
Here's a good article for you that doesn't involve a ton of boring paragraphs, but it touches all the important pieces of an llc
This type of question has Allen Hopps' and Greg Chrise's names written all over it. There's one financial adviser that basically recommends doing all three in some very creative, protective ways, but that also involves protecting your personal assets as well from other various predatory business practices.
A Few Years Ago
When this subject came up there were some on here who explained how LLC's worked, then someone else came on and said different states and Judges see them differently, sometimes offering no protection at all!?
I have noticed that some very large companys are LLc's or at least they were?
Maybe much of this has changed? Maybe it is still all up for interputation?
I went with LLC. Seemed like the best route for a new haunt as assets won't be huge yet, and it is less tedious in terms of board meetings, minutes etc. LLC absolutely protects the individual....this is why it is called a LIMITED LIABILITY CORPORATION...
You can be a sole proprietor and still not pay taxes, that just means you spent all the money except for about $8500 per year on what ever it takes to do business.
You protect what you have with insurance. Good insurance. Filing for some fancy title might be a factor if there truely are multiple people vested equally into something. Generally starting out you start small and spend money on such things when and if you make money. Giving your self and others a title doesn't protect you from lots and lots of things. In fact you just announced to every telemarketer and attorney in the world, every credit register and business magazine that you have arrived into the wonderful world of having money to spend or liabilities to be pilfered and need all these other things that you really can do without.
You have also taken away some of your freedoms about how you are classified with employing people and what the feds say you must provide coverage on them. You've spent thousands to be someone and still do not have a place to make money or the tools to make money or the methods to make money. Bankruptsy never happens if you have insurance that covers what ever happens in proper dollar figures.
And then if you have nothing to begin with, what exactly are they going to take away? Having a company sounds like a thrill but it is like filling out dozens of forms a year to keep current, paying money on everyone of those forms regardless of actual income you are all of a sudden liable for said amount of money. So yes, even the government welcomes you to the world of taxation. Which you really shouldn't claim to be liable for until you have made an actual significant income from some enterprise.
Other fun facts are once you have one company, you really aren't for tax purposes supposed to have a bunch of other corporations or businesses, it is all supposed to be one filing no matter what the trade names of your businesses are unless they get to the point of being publicly traded. I don't know of any haunt group that is cycling a billion a year.
It is all small businesses, under 250,000 per year. Can't be liable for more than it actually makes or holds in assets unless you make it to be that way. If you want attorneys and such, guess what insurance really does, it assesses risks and goes to court for you if there is a problem or they just pay and raise your rates if it is a low amount. Plus on your way to being a millionaire, one thing you can do is mark up the expense you legitimately had by having to buy insurance if there are other parties involved in an event and this is the reason you need to be paid and recieve your mark up in the form of real payment. All of a sudden it seems you made everyone else liable for YOUR expenses instead of set yourself up to feed the world from money you don't have or other people's money you will ultimately owe.
Sure you can file bankruptcy but you are still a loser at that point. If you have no real assets, and a pile of rotting latex and plywood are not assets, then what are they (and who is they) going to take from you.
I will win any game of pool. Not because of my mastering the stick and ball or any skill what so ever. I will push crudely all my balls in front of all the pockets if they don't go in. You can't put your balls in the holes unless you push mine in and you lose the next shot because you did do that. Just by shear math skills and defensive posturing, my balls all go in first and I win. Doing what other people say you should do works the same way. When the time is right I can run the table and put all the balls in the pockets because they are all inches from the pockets. Not until everything is locked up and just in the right place. When the math begins to sway where the other guys numbers are coming down on the table. Then it is time to get serious and use the force. Not show up in the beginning with an embroidered robe and posse of hot chicks chalking my stick for performance value. Winning because there was some real possibility of winning even among people that spend thousands of hours doing that one skill looking for a new sucker.
If you put your two dogs and grandma on there just to be a corporation, everyone loses their kibbles and bits. And another tremendous fun fact is you might also want to research how much it costs in time and energy to close this wonderful entity and you are generally doing this because you went broke or there is no more viable work for you, not because Warren Buffet bought your plywood stash.
Even your insurance rates and coverage will be based on how wide ranging you stuck your imaginary profile out there. Being successful is entirely different than being popular. If financial people know your name you are getting screwed. If attorneys know your name you are being shaked down for $6500. If the government says you declaired yourself to be a corporate entity you probably need to be investigated and tracked for income by about 5 different departments. Each one has hours of forms for you.
No shit, make money first, proclaim to be somebody when you are somebody. In the beginning spend the money on the tools of the trade.
On all my Biz I do an LLC that reports as an S-Corp. My LLC/Scorp pays my wife and I a salary that covers the things that aren't Business expenses. Two separate bank accounts, credit cards etc..... Thats how we roll and it works out well.
....and like Greg says good liability insurance on top of that.
What kind of insurance, specifically?
Originally Posted by Greg Chrise
. . . and actually learn the trade!
Originally Posted by Greg Chrise
I've seen so many people who want to start their own haunt bristle at the idea of working at another pro-haunt to learn the business. "What, work for the competition!?!"
(Fortunately, no one I've talked to has yet adopted this mentality, but, still . . . )
Tongue is right! I just went through a suit as a LLC and they could not touch me at all. Every e mail or document that you use for business should end with your company name and most importantly LLC printed clearly. If a document does not have it printed on it they will hold it against you and try to get the judge to drop the LLC and go after you personally or both.