iSCOOT..................by Steve Duhl 
Thursday, March 24, 2011, 03:17 PM
Posted by Administrator
iSCOOT seems like it is edging out SCOOTOVER of Palm Beach as the eventual name for the scooter company. To avoid liability, the scooters are actually owned and operated by LAYSE, Inc., a Florida corporation. We are in the middle of making our sub-chapter S election and getting a sales tax number.

The question of which corporate entity is best is better answered by accountants than by lawyers. The benefits of a subchapter S include:
-The owners can pay themselves a reasonable salary...and pay FICA and Medicare tax on that then...
-Take the remainder of the profit out as a distribution and not pay FICA or Medicare tax on that (this saves 7.65% X 2=15.30% in taxes).

Distributions in regular (non-S) corporations are called profits-before they are distributed and dividends when the money is sent out to shareholders. Corporate profits are taxed and dividends are taxed, also (there is a line for dividends on the IRS' 1040 form). To avoid double taxation...and only if you are small company...you can elect to be a subchapter S (or you can take all of the extra money out as salary and pay that additional 15.30% for taxes).

My accountant asked me "Why not an LLC?" I asked her what the benefit was. She said "You can avoid personal liability."

"But", I said "you can do that with a corporation. I thought there was a tax benefit to an LLC." "No", she said, "I thought there was some kind of legal benefit."

I saw a lawyer I sort-of know sitting in court a few weeks ago what an LLC was. He said "It is some kind of corporation but the IRS doesn't recognize it."

The scooter business will not be an LLC.

add comment ( 9 views )   |  0 trackbacks   |   ( 3 / 1046 )


<Back | 1 | Next> >>