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    Default s corporations

    anyone ever heard of this? i read through dancerwealth about becoming a corporation to portect myself from being sued, etc. my accountant also talked to me about it and recommended i ask around, so i figured it would be best to ask the smart ladies of sw. any of you girls ever become an s-corporation? if so, was it a good or bad business decision? why?

    if you feel weird answering in the forum, feel free to pm me, i dont bite.

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    Default Re: s corporations

    LLCs enjoy the benefits of a corporation without being a full corporation. More small businesses are becoming LLCs which are really easier to operate, but the benefits changed a bit than when the LLC first came into being. It's a business type that is still a bit ambiguous to most accountants and tax professionals. I would ask your accountant the purpose of becoming just an subchapter S or if they are talking about an LLC with subchapter S.

    From my dealings with doing LLC returns here are a couple of things to consider about becoming one:
    - you can be sued two places now as: you = individual and you = corporation
    - lenders are more savvy now and are requiring more personal guarantees
    - the financial benefit is more for a product than a service now
    - the cost increases from a sole proprietorship as you now have more tax returns to file as well as the fees both from the home where the LLC is legally incorporated and where the company is doing business

    It seems to me that this is more of an advantage for a business with more than one person:
    - sharing business with family or other people which would be the 'members'
    - may bypasses probate for assets
    - pass-through of profits/losses to members

    I found that this site gives a pretty accurate description of things in relation to my LLC books: http://sbinformation.about.com/od/ow...orporation.htm

    Hope this helps you!
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    Default Re: s corporations

    agreed that these days an S corp offers next to no advantages over an LLC from a financial standpoint (where exotic dancing is concerned at least), as both act as 'pass throughs' from a financial / tax standpoint and both partially limit liability. However, a C corp CAN offer some unique financial / tax advantages since it truly functions as a separate business 'entity'.

    The main issue for people in the exotic dancing industry to decide is whether or not their incomes, assets, tax factors and risk factors are sufficiently large to cover the extra costs and extra time requirements of dealing with an LLC/S corp or a C corp versus remaining a sole proprietor business. This obviously varies greatly from dancer to dancer.

    I chose to form an LLC to cover my previous pay website and adult webcam business efforts.

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    Default Re: s corporations

    Quote Originally Posted by Melonie View Post
    The main issue for people in the exotic dancing industry to decide is whether or not their incomes, assets, tax factors and risk factors are sufficiently large to cover the extra costs and time requirements of dealing with an LLC/S corp or a C corp versus remaining a sole proprietor business. This obviously varies greatly from dancer to dancer. I chose to form an LLC to cover my previous pay website and adult webcam business efforts.
    To clarify a bit, it is really a matter of how your business is run more than what kind of business you are in. The type of business is inconsequential. That is the main misconception with the legitimacy of the adult entertainment industry as a business with respect to the financial.

    My clients are across the board and also mixed in respect to they kinds of businesses they run, both adult and vanilla. All of their returns are prepared on a person-specific, not business-specific level. Business is business.

    I thought this was an important point to make as many, like you and I, work mixed businesses.

    This is a good dialog Melonie, I think that there will be much to learn for all from this. Hi, btw.

    Ooh, I just noticed that you are NY Melonie - that state loves to stick it to businesses, don't they! ugh.
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    Default Re: s corporations

    Ooh, I just noticed that you are NY Melonie - that state loves to stick it to businesses, don't they! ugh.
    Hi and welcome yourself ! And yes NY state loves to stick it to all 'middle class' taxpayers ... with NY based small businesses catching a double whammy. That was part of the reason that my LLC was NOT registered in New York ( the other part was a desire for identity protection ) !

    We also appear to be in actual agreement in what we are saying, although we are trying to say it differently. My point was that forming / operating an LLC / S Corp does involve extra costs and extra time, and that forming / operating a C corp involves even more costs and even more time. Thus (as you also pointed out in different words) the suitability of either of these options depends on many factors including
    - the 'dollar magnitude' of a particular person's business earnings thus the 'dollar magnitude' of benefits potentially offered by an LLC / S corp or C corp
    - specific business activities that may or may not find particular benefits from a C corp versus an S Corp / LLC (curses on the retained earnings tax !!!!!)
    - the actual financial risk factors associated with particular business activities (which are actually very low for club dancers) vs the degree of liability protection provided by an LLC / S corp versus C Corp
    - the individual's tax scenario (which as you point out can vary greatly depending on business earnings levels, state / city of residence, other personal factors etc.)


    I guess that my previously unspoken point is that, for many club dancers who work part time or who work at clubs with 'less than Manhattan scale' earnings potentials, the actual advantages offered by an LLC / S Corp and particularly by a C Corp may not justify the extra costs and extra time requirements involved to establish and maintain them. Thus as you have pointed out, any such decision requires a thorough review of that dancer's personal financial situation, work / potential earnings scenario, personal desires regarding such niceties as health insurance, personal work style regarding business travel, and a ton of other variables where the existance of an LLC / S Corp or C Corp would offer varying degrees of benefit.

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    Default Re: s corporations

    thanks for the replies, ladies. i will send this info to my acct and ask him about llcs (i believe he meant just an s corp when we talked) and i will mention a c corp to him.

    melonie, i have been told that with an s corp (not llc) that i would receive tax breaks, but i noticed you posted about a retained earnings tax. what is this? how high is this? does it vary between states? are there any other taxes like this with an llc, s corp or c corp?

    i have thought about expanding to other areas of the adult ent industry (it wouldnt hurt), but for now am just a one-club dancer for right now. would like to do some more travelling if the going here gets tough, but right now, i am very happy where i'm at.

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    Default Re: s corporations

    Re-reading your post I see that you're right, we are in agreement. I'm sorry if I misinterpreted what you said Melonie.

    I guess I'm just a bit sensitive to the clarification of a business as a business period. When I am interviewed in the media I get the same attitude all over that adult entertainment is supposed to follow 'other' rules. I'm sure you know what I mean in regard to adult entertainers of all types not getting the respect as business people that we deserve.

    Part of me wishes the world could see what intelligent, educated, interesting people of which this industry is composed. Then the other part reminds that part that this misconception helps maintain business. sigh.

    Oh well, I'll leave it at: Viva L'Industrie!
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    Default Re: s corporations

    every single one of my friends who incorporated under an LLC has regretted it at tax time. LLC's are useful only if you are a business with more than 2 partners, otherwise, go with a n S corp, which gives the same protection as an LLC, but with better tax ramifications. LLC's are also twice as expensive to file and maintain.

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    Default Re: s corporations

    the 'retained earnings' tax applies to C corps, which are in effect a 'different person' in the eyes of the IRS. One of the more useful 'tricks' of years past was to leave part of your earnings under the umbrella of the C corp instead of paying out all of your earnings to yourself. This had the de-facto effect of lowering your personal tax bracket. However, the IRS has since changed rules such that retained earnings are subject to a special tax to compensate for the lower payout resulting in a lower personal tax bracket.

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    Default Re: s corporations

    I think it also depends on what you really want to use it for. Doing a C corp and paying yourself a salary from that makes you a regular employee to creditors - unless you have a really great credit score, IMO being an employee instead of "self-employed" makes a HUGE difference in regards to the way potential creditors view you.

    C corp also looks better to creditors for business credit, which is a whole 'nother enchilada - different from personal credit. Creditors do not give a shit about LLC - if you apply for biz credit with a LLC they will still want personal guarantees, ie, pull your personal credit report.

    For my money, I wouldn't touch a S corp with a 20 foot pole. bleh

    LLC, IMO, is pointless for strippers whose sole income is from stripping. You don't get the credit benefits of a C corp and the tax and lawsuit advantages frankly aren't enough to make it worth it. The likelihood of a stripper getting sued is next to nothing - what are we gonna get sued for?? If a customer wants to sue for something a stripper did, he'll be more likely to sue the club because they have deeper pockets. I know of only one case of a stripper getting sued and she was hustling some guy for all he was worth OTC over a long period of time - don't do that and you're A-ok.

    Incorporating only protects your personal assets from lawsuits anyway. People can still sue your corp too. Again, I think lawsuit protection for a stipper is at the bottom of the list as far as corp benefits go.

    If my choices were LLC or sole propietorship as a stripper whose ONLY business is stripping, I'd skip the LLC - not enough benefits to justify the extra hassle and paperwork.

    In any case, you have to make sure you're handling it right to get the benefits from either form. Find out all the info you can about each one and make your own decision as to which is best for you and your goals. You can read alot of info online.

    I like C corp myself and that is what I am currently setting up for my businesses. I'm actually getting a WY shelf corp for many reasons

    Quote Originally Posted by pheno View Post
    When you lead a nontraditional life don't try to measure it with traditional milestones.

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    Default Re: s corporations

    Having a corporation whether C or S or an LLC is an expensive process and time consuming process. In addition to creating the entity, your have the on-going expenses of State Filings and Fees. Plus, you will be paying taxes on any assets it has to the local county assessor.

    All of the paper profits on an "S" flow through to you. Unfortunately, because of accounting requirements you may have more paper profits than positive cash flow and this means that you may owe taxes on money you never put in your pocket.

    If you have a "C" corp, you may be able to avoid double tax with corporate profits and then paying personal taxes on the remaining money by making sure that you clean out the "C" corporation each year and pay yourself enough so that the "C" corp is left with zero profit.

    It is possible after several years to build up credit as the company, but 99% of your real creditors will ask or require a personal guarantee. So don't look for much protection from creditors.

    I agree with Bridgette's comment about being viewed as an employee but a sharp lender will ask more questions about your employer and the nature of your employment. So walk a tight rope on this benefit.

    If you think it having a corp or LLC will protect you from being sued, think again. First, you would have to be performing something as a corporation or as the LLC to be sued about. But, even if you are screwing up as a corp or LLC, they will still sue you personally. Even if you win and they don't pierce the corporate veil, YOU... and I mean you, still have to pay the attorneys to defend you. So, you may win the battle but lose the war of paying thousands in attorney fees.

    Now maybe you say, "Well, if the corp gets sued, I'll just walk away and not defend it." So if you do this, they will get a default judgement. With this judgement in hand, the next step is definitely piercing the corporate veil.

    So, if you are really trying to protect yourself from getting sued, what happens if it is because something happened that you are personally responsible for like your vibrator getting stuck in your bud's ass? A corporation won't protect you because this is a personal liability issue." and perhaps a product liability issue if the vibrator doesn't say "WARNING DO NOT LEAVE IN ASS".

    I would suggest either a Personal Umbrella Policy or a General Liability policy if you are worried about getting sued. So, it is easier and cheaper to hide behind an insurance policy than an entity. IMHO... or just be broke with no assets and not worth suing.

    Here is a snip on Corporate Veils.
    Piercing the Corporate Veil

    The lawsuit protection features of the corporation will be available only if the integrity of the corporation as a separate and distinct entity, apart from the individual, is respected by a court and by the Internal Revenue Service. In matters involving a lawsuit by an injured party, especially if a corporation has no significant assets, the plaintiff will attempt to convince the court that the corporate entity should not be respected and that the principals of the company should be personally liable. In these cases, the plaintiff is attempting to pierce the corporate veil in order to obtain a judgment against the principals, who may have personal assets sufficient to satisfy a judgment.

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    Default Re: s corporations

    Quote Originally Posted by JRA33606 View Post
    All of the paper profits on an "S" flow through to you. Unfortunately, because of accounting requirements you may have more paper profits than positive cash flow and this means that you may owe taxes on money you never put in your pocket.

    If you have a "C" corp, you may be able to avoid double tax with corporate profits and then paying personal taxes on the remaining money by making sure that you clean out the "C" corporation each year and pay yourself enough so that the "C" corp is left with zero profit.
    Exactly why I would NOT touch a S corp and I like C better (if you're strictly talking taxes). Allso, incorporate in the right state and your annual state filing requirements and fees will be DRASTICALLY reduced.

    Quote Originally Posted by JRA33606 View Post
    It is possible after several years to build up credit as the company, but 99% of your real creditors will ask or require a personal guarantee. So don't look for much protection from creditors.
    Depends how you work it. It's entirely possible to get all your business credit through the corp with NO personal guarantee

    Quote Originally Posted by JRA33606 View Post
    I agree with Bridgette's comment about being viewed as an employee but a sharp lender will ask more questions about your employer and the nature of your employment. So walk a tight rope on this benefit.
    If you have W2s showing enough income and any kind of decent credit score, all you really have to tell them is your job title and the name of the company you work for. MAYBE a brief description of the business the company is in. What lenders ask for more detail than that? Seriously. I want to know.

    Quote Originally Posted by pheno View Post
    When you lead a nontraditional life don't try to measure it with traditional milestones.

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    Default Re: s corporations

    If you have W2s showing enough income and any kind of decent credit score, all you really have to tell them is your job title and the name of the company you work for. MAYBE a brief description of the business the company is in. What lenders ask for more detail than that? Seriously. I want to know.
    this is how a lender will bust you on this, and it will take an underwriter all of 30 seconds...
    They require a verification of employment. When the underwriter uses lexis nexus, or your states secretary of state website to verify if the company "you are employed" with, they will see that the registered owner is you, and then viola, you are not only outed as self employed, but your loan will be killed due to fraud.

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    Default Re: s corporations

    ^Yeah, I'm well aware it's easy to find out who owns a corp. But WHY would a company do that, exactly? Are most creditors THAT f'in nosy and snoopy? Seems kinda ridiculous Second, how is it FRAUD to simply put your job-title and company name as the employer on credit applications if you are a salaried employee of a coporation with W2s and everything?? That seems a bit far-fetched to me. I can see why a creditor MIGHT turn down your app if they discover the corp is owned by you, but FRAUD? Come on. Third, if you are legally a salaried employee with W2s to prove it, wtf do creditors care if you or someone else happens to own the corp?

    Seriously. Call me naive but I was under the impression most regular credit decisions were done more automatically and not put under THAT much scrutiny...? Obviously they want to minimize risk but if they're scrutinizing ALL credit apps that much, wouldn't that mean they're processed by people rather than software, at a much higher cost? I'm talking common credit stuff, not mortgages - I know mortgages and most bank loans are always going to be scrutinized more and you'll have to be completely forthright about your employment for those, but just common credit stuff?

    Quote Originally Posted by pheno View Post
    When you lead a nontraditional life don't try to measure it with traditional milestones.

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    Default Re: s corporations

    I think that it now boils down to new SEC criteria for tighter lending standards, combined with financial institutions across the board now having to 'eat' significant loan losses tightening their own internal standards. If you're talking about a loan involving any significant amount of money, the 'stability' of employment / paycheck amounts is going to be researched at least to the point of the financial institution pulling a D&B on the 'employer' (if that employer is not already well known - by the financial institution's local branch at least).

    There IS an element of potential fraud involved if a loan applicant 'misrepresents' his status ... as is arguably the case when that 'applicant' is the sole employee of a corporation which they solely own and control, but the 'applicant' chooses not to disclose those facts voluntarily on the loan application.

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