[Rev.Vassago]

Originally Posted by LOAD IT

Also being a Corporation protects all of your personal assets including your rig which you lease to your S corporation.

This is not necessarily true. If you were to get into an accident, and the person you hit sued both your company AND you (as the driver), then your personal assets would be at risk.

[jackoboyo]

The benefit of the S Corp. is the profit is not taxed as wages. Therefore no Social Security, approx 15.5%, from that amount. As a Sole Proprietor all income after expenses is considered wages. In this case 76k wouls be subject to ss tax and income tax. In an S corp 55k would wouls be subject to ss tax and 76k to income tax, a savings of about $3,250.00. If he lowered his salary to 30k he would save over $7k. The benefit of the S corp is in lowering salary and increasing profit.

[Rev.Vassago]

But with an S corp comes a lot of responsibility and possible expense at maintaining it to the IRS standards.

[jackoboyo]

But with an S corp comes a lot of responsibility and possible expense at maintaining it to the IRS standards

True but for a 1 truck operation $5-$7 thousand in the owners pocket should more than cover the expenses and hassles.

[GMAN]

Originally Posted by Rev.Vassago

But with an S corp comes a lot of responsibility and possible expense at maintaining it to the IRS standards.

The only thing the IRS cares about is if you used the right form. You may have more of a hassle with the state of incorporation than the IRS. As long as you have kept your receipts and records straight, it is only a matter of putting the right figures in the correct place. That is what you need to do as a proprietorship or corporation. The "S-corp" is only a form you fill out with the IRS. It is called a sub chapter S election. It prevents you from being taxes twice. Either the corporation or individual pays the taxes. Essentially, you have the protection of a corporation, but are taxes as a partnership. In a standard "C-corp" both the corporation and individual are taxes. Both offer the same protections. You will never be 100% guaranteed not to be included in a lawsuit. If you operate your corporation as a separate entity, you should keep your protection in tact. If you pay yourself a salary from the corporation, you will need to pay taxes on that money. If you pay yourself in dividends, you should not have to pay Social Security Taxes on that amount. You can also opt out of Social Security and not have to pay anything into the fund. The catch is that you will never be able to collect Social Security benefits.

[RostyC]

I'm set up as an S corp, there's nothing extra in expences that I can think of other than the initial set up and accountant fee's, but you'll have accountant fees no matter how you're set up. It does save you money in SS tax.

[GMAN]

A corporation needs to file an annual report with the state in which you are incorporated. In some states, you also need to pay a franchise and excise or similar tax on the corporations assets. In my home state most small corporations will pay from about $100-300/yr.

[Rev.Vassago]

Corporations also need to have shareholders meetings, and file reports of such. Accountants will do this for you, for a price.

I used to have a corporation (not a trucking corporation), and it is a hassle if it is not really needed. The "protection" that these people who will set them up for you like to advertise (for a price), is not necessarily there.

IMO, a corporation for a one-truck operation is pointless overkill. You will end up paying taxes on the profit anyway, one way or another.

[rank]

Actually, Something I forgot in my earlier post. As a shareholder in a Canadian corp, I beleive you can collect $25,000 in tax free dividends. No need to pay personal tax rates on your salary.

Lets say the trucking company profits $75,000, the shareholder can take a $25,000 tax free and pay 20% corp tax on the remaining $50,000 that's left in the corp.

Total tax bill on $75,000 profit: $10,000.

[GMAN]

It is easier to shelter income when you have a corporation. You need to do some planning, but if you treat the corporation as a separate entity, then you can legally avoid paying taxes you would otherwise have had to pay individually. There are benefits and drawbacks to any company or corporate structure. I prefer dealing through a corporate structure. One benefit is that you can borrow money through the corporation once you become established. If the corporation borrows the funds, it will likely not affect your ability to borrow personally. I am not suggesting that you go out and get heavily into debt, but that is one benefit. It can be a drawback if you over extend. It is best to have as little debt as possible. It makes it easier to survive slower economic cycles like we are in right now.