incorporating - page 2

Does anyone out there have information ab out incorporating as a RN? What are the pros and cons? any personal experiences... Read More

  1. by   Agnus
    The major reason to inc. is to protect your assets. However, if you are a nurse MD or another type of licensed practioner then you have an entirely seperate issue of Malparactice.

    Malpractice is individual that is your personal assets are not protected.

    Additionally if you do not play by the rules of corporations and you mislead people to believe that you own the business (you do not own the business if it is a corporation) then you can be personally sued.

    Structuring is very important. Correct corporate and business documentation are important. All t's must be crossed and i's dotted. Or You can personally be sued. your records become extreemly important in protecting your assets.

    If handled corectly lawyers are foiled at peircing the corporate veil and sueing you directly. However, you must be maticulous in your business structuring and records.

    Double taxation is only an issue if you pay dividends. It is wiser to pay yourself a salary.

    After the first year you should consider changing from an S to a C. Unless you anticipate a significant loss that second year.

    However, if you are say a one man operation and are a personal service company you may have $ reason to stay and S Corp.

    It is true lawyers will sue everyone they can find. However, attempting to do this does not guarentee that they can peirce the corp veil and get to you directly. Most corps. are vulnerable to this as they are not current with documentaion issues.

    A sole propriator is at even greater risk. Nothing is even remotely protected. I would never form an un incorporated partnership as each partner is responsible for the debts and liabilities of the other.

    As nurse we thing of malpractice but it is far more likely that your liability will not be one related to malpractice.

    For example I acidently hit a lamp post of a client and damaged it with the company car. You could knock over a valuable art treasure of a client, or someone elses (who isn't even a client) during the course of duties or while driving a company vehicle or displaying company advertising or name.

    If you have a business you are vulnerable because everyone has it in thier head that having a business = rich.
    Last edit by Agnus on Sep 20, '03
  2. by   indie
    sba.gov gives the basic background on different types of business practices.
  3. by   kvck
    Don't incorporate to try to protect your assets. All you will have is a false sense of security. Here's a link to an article from a law firm that sums it up nicely.

    http://www.rjmintz.com/personal-assets-protection.html
  4. by   Agnus
    Of course transfering personal assets to a corp to protect them is just plain stupid. as the above site talks about.
    That is not what this is all about.

    It is about protecting personal assets from a businsess that may pose a libiality risk for suit.

    Inc in NV without a viable presence in NV will not protect you. Off shore corps and family trusts are part of the structuring needed to protect extensiive assets. However, a second corp p with actual office in NV can help protect assets of both a corp and an individual with the same structuring used in family trusts and off shore.
    Again it is in the structuring and learing to encomber assets to the second corp. This is not something that can be taught over night nor can one effectively even explanin the process on a forum like this.

    Inc, is the first step. You cannont take advantage of any of these stratagies without that first step. No it is not just a matter of incorporating and then sitting back and thinking everything is just fine.

    Additionally these other stratagies are neither appropriape nor necessasry forj every one.

    Yes you you want to discuss this in debth these issues brought up about the above site are appropriate. I think we are talking about some basic information here. and can a corp protect you and how. You are talking calculus to people who need to learn basic arthmatic before they can understand the implications of what this is saying. Without that knowledge is sounds scarrier than it is. It is not rocket science but this has gone way beyond the scope. Layweres would love you because you make this too complicated and too frightning.

    The problem is a little bit of informmation in this is dangerous. As are blanket statements.

    The bottom line is there are a lot of experts who love to keep this complicated and mysterious. It is not. I will exit this discussion because it has gone to redicilous extreems. So knock yourself out.
  5. by   nightingale
    I am grateful for the dialogue.

    I felt, the big motivater for me to incorporate, was to keep a larger chunk of moneys earned. By paying for expenses with pretax earnings and then earning a smaller salary I became more profitable.

    We are all at different levels here in knowledge. Thank you to all who participate.
  6. by   hazydaz
    :roll

    Filed Corp. articles Thursday, first IC hours on Friday, should get articles before end of week, will file the 2553, I think to make S-Corp.

    Wondered how low your salary can go before they start looking at you with magnifying glass.

    By the way all, Go to your Sec. of State, file articles of incorporation, Ohio is $125. Four for five lines to fill out, they will help you get it right. That is all there is to it. If you want S-Corp, file with IRS for approval of that status, that is all, no rocket science! Attorneys are so greedy, they misrepresent the truth. Nothing else to it. Pay yourself lower salary, trying to find the right #, save in payroll taxes, all profit after payroll taxes, corp half of SS payment is personal profit, to filed on 1040 as income. That's it. If S-Corp, Individual can deduct health insurance premiums from that income, S-Corp can pay mileage at .365 cents a mile. Great to get reimbursed well for those of us who do nursing visits. Can deduct cell phone as business line from profit, lessens amount to be put on 1040, just as with mileage, supplies, bank costs, advertising, etc.

    Still looking for a the right salary to claim. Hope someone can help.
  7. by   Agnus
    Originally posted by hazydaz
    :roll

    Filed Corp. articles Thursday, first IC hours on Friday, should get articles before end of week, will file the 2553, I think to make S-Corp.

    Wondered how low your salary can go before they start looking at you with magnifying glass.

    By the way all, Go to your Sec. of State, file articles of incorporation, Ohio is $125. Four for five lines to fill out, they will help you get it right. That is all there is to it. If you want S-Corp, file with IRS for approval of that status, that is all, no rocket science! Attorneys are so greedy, they misrepresent the truth. Nothing else to it. Pay yourself lower salary, trying to find the right #, save in payroll taxes, all profit after payroll taxes, corp half of SS payment is personal profit, to filed on 1040 as income. That's it. If S-Corp, Individual can deduct health insurance premiums from that income, S-Corp can pay mileage at .365 cents a mile. Great to get reimbursed well for those of us who do nursing visits. Can deduct cell phone as business line from profit, lessens amount to be put on 1040, just as with mileage, supplies, bank costs, advertising, etc.

    Still looking for a the right salary to claim. Hope someone can help.
    My arguement was one poster was saying things that are technically true. And was making what seemed to be blanket statements about incorporating and the reasons. There are hundreds of reasons to inc. He was talking about issues of hiding personal assets in a corp etc. which is all way beyond the scope of a discussion here and can only server to confuse. As I said I am researching a book on this and even in that I (at least at this time )I don't plan on covering all that

    In answering above quote (if I understand you correctly) Pay yourself a decient salary. If you are planning to "take profit" that is usually a mistake that is where the double taxation comes in. I know not with an S corp. but you should only be an S if you expect a substantial loss. Pay out the salary otherwise the taxes on uninvested dividends is astromonical. As soon as you are able move to a C corp. Then all kinds of deductions become posible. Find a very good accountant perferably one specializing in corp tax.
    If you are expecting a profit this year you should already be a C. Do everything you can to avoid uninvested dividends. Pay yourself well. Otherwise you will be paying your UNCLE the difference.
  8. by   kvck
    Along with no double taxation, one major advantage of having an S corp is the ability to pay yourself a salary and a quarterly dividend. The dividend is not subject to self employment tax. This is something that doctors do all the time when they set up a corporate practice. Check with your CPA first though.
  9. by   Agnus
    Originally posted by kvck
    Along with no double taxation, one major advantage of having an S corp is the ability to pay yourself a salary and a quarterly dividend. The dividend is not subject to self employment tax. This is something that doctors do all the time when they set up a corporate practice. Check with your CPA first though.
    That is true. But ask yourself why would you pay a dividend to yourself when you can pay the same money out as a salary? Esepecially with all the advantages that a C corp offers you that you do not have with and S corp
    I do not know the answer to this.
  10. by   kvck
    If you pay yourself a salary you and your company pay Social Security and Medicare taxes (15.3% total). If you pay yourself a dividend you DO NOT pay those taxes. Pretty simple. You do not have this advantage with a C corp. A C corp does not have many advantages for a small or one person shop, but on the tax side an S corp has the two MAJOR advantages of no double taxation and the dividend payment to keep the Social Security and Medicare tax payments at a minimum.
  11. by   hazydaz
    :roll

    While the advantages of one corp. form or another can be analyzed and argued, the point is that working for oneself, paying less medicare tax and finally getting the full advantage of pay for expenses, like the car, a big one, is what it is all about. I keep hearing nurses wanting to start agencies but that just continues the process of someone making less and not getting their fair share. I am hoping to do better than that by networking with other nurses and sharing cases, switching back and forth, as has been done, so that driving and hours comes out right for all. I would love to be medicaid and medicare certified and I am looking into that but for now I like the control, the money, the flexible hours and no one profiting while I lose out on expenses! This is what it is all about for me. I also spend more time and attention with the patient and I am loving that a lot!
  12. by   indie
    Hazydaz:
    I am with you. I'm Medi-Cal approved in CA and loving my work and my life.

    I don't worry about the various types of corporation and whether one will make me a few $$ more or less. It becomes so unimportant when the essential autonomy is in place.

    Power to us all - and that means as an independent.
  13. by   randyfranks
    The only main benefit to incorporating as opposed to setting up an LLC is that with the LLC you are not technicall an emloyee. So, you cannot deduct your salar as a business expense. Also, similiar to a partnership agreement, an operating agreement is sometimes necessary

    Unless the LLC has adopted an operating agreement stating otherwise, under Arizona law, the members of the limited liability company have equal rights of management

    Quote from MNicholsonRN
    Does anyone out there have information ab out incorporating as a RN? What are the pros and cons? any personal experiences
    Last edit by nightingale on Jul 4, '04 : Reason: removed site link - potential advertising

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