Forming a business

You're going to get a lot of different opinions on this, but for me a sole proprietorship operating on a cash accounting basis is the way to go.?ÿ A corporation or LLP won't shield you from professional liability (at least in CA), so there's no advantage to incurring the additional cost and paperwork.?ÿ (You do need adequate general and professional liability insurance, but you should have that anyway.)?ÿ Beware of corp or partnership schemes that allow you to take income in a manner not subject to FICA and Medicare taxes; those can be great when you're young, but they start looking pretty bad around retirement time.

You want to minimize your exposure to personal assets.

Also, you also have to investigate how taxes are handled.

Also, your state may not allow a LLC for your profession. A PC might be your only path. (Per the link above as regards "engineers.")

Your best to seek out a tax attorney who also does real estate. Maybe you can barter for advice.

I have a PLLC in Virginia.?ÿ Sole member.?ÿ If I want employees, I will have to restructure.

You only have to work a half a day

You get to pick which 12 hours!!

I work in a small family business out of a personal house. Myself (LSIT), my father (PLS), and my sister as our CAD/drafting person. We have a couple part time and seasonal employees for when we need help doing large projects. After consulting with a lawyer and an accountant, we structured the company as a type of S Corp known as a Professional Association (PA) in Maine.?ÿ?ÿ

The main reason for switching from a sole proprietor to a PA was that he was getting hit with a self employment tax that was substantial.

Definitely more paperwork and accounting after switching, but we still saved a lot of money.

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bama,

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You need to discuss these questions with your accountant and attorney first - then come back here for the feedback from the folks who have and succeeded and/or failed (I've done both). You might consider discussing your business plan with your banker also...

When I started my business, I was steered to the Type S route and was encouraged to take much of the profits home as rents and royalties for which you do not pay self-employment taxes. I was only self-employed for six years. It created a big hole in my earnings record. Now that I am retired, I see that it could have been a disaster. There are many self employed that do something similar and can never afford to retire. They just keep working, if they can. The extra 30K a year from Social Security sure helps out.?ÿ

I believe Mr. Frame said it well... "Beware of corp or partnership schemes that allow you to take income in a manner not subject to FICA and Medicare taxes; those can be great when you're young, but they start looking pretty bad around retirement time."

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Good Luck with your new enterprise.

The idea behind corporate schemes to avoid paying SS taxes is that you never get out as much as you put in to SS. Fund your own retirement with the tax savings, and anything you don't spend before you reach your expiration date can be passed on to your heirs, a charity, or a surveying education scholarship fund. Of course, in either case, your retirement will be more comfortable if you also max out on the tax deferred retirement savings plans.