Trust me (and Drew), it will be less than $800 <G> !

It's also important to point out that your corporation will
be subject to the NC tax WHETHER OR NOT you reincorporate it
in NC. It is subject because it is doing business in NC.
If it continues to do business in CA, it will continue to be
subject to the CA franchise tax (measured by income,
presumably zero) and the $800 minimum, regardless of whether
it is reincorporated in NC.

Corporations (including S corporations) are taxed where they
do business, which may or may not be the same as the state
where they are incorporated.

Katie in San Diego

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Gary Goodman <XgaryXg7X[at]yahoo.com> wrote:

- quote -

Or a partner.

- quote -

A corporation doesn't protect anyone from the consequences
of his own negligent conduct. There are also other ways of
imposing personal liability. But none of that has anything
to do with piercing the corporate veil.

- quote -

There are too many lawyers out there encouraging people to
incorporate so they can make a fee, true. And from what
I've seen, most of them don't really understand what it
takes to get a corporation up and running.

I tell people that if you are considering incorporating, a
lawyer is the last person you ask if it's a good idea.
First ask you accountant. Then ask your insurance agent.
And then ask your old uncle Louie, because even he'll
probably give you better advice on this point than most
lawyers.

Stu

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spamtrap[at]lexregia.com says...
- quote -

As to the limited liability, incorporating may not work. If
you are providing personal services (CPA, lawyer, doctor,
yard maintenance, etc.) and you make a mistake, a half-
decent lawyer (insert your own jokes) can make an end run
around the corporate shield. The corporate shield helps if
an *employee* makes the mistake.

IANAL, but used to have several as clients. One of them
used to brag about how easy it was to pierce the corporate
veil.

In all, a lawyer makes money from handling your
incorporation, but makes nothing if you decide to go into
business as a sole proprietor.

Gary
--
E-mail to the above address is rarely read. If you want to
contact me directly, please send an e-mail to: gary at
gdgoodman dot com.

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maks71[at]gmail.com wrote:
- quote -

Income is immaterial to the calculation except as it affects
equity. Then it only matters if equity exceeds the two other
measures I mentioned. Typically if you leave little or none
of the income in a NC Corporation at year end then you will
pay either the minimum or on one of the other measures.

Drew Edmundson, CPA
Cary, NC

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Drew Edmundson wrote:
- quote -

Thanks Drew for detailed answer... One f/wup question, e.g.
I make 100,000 in revenue.. after all eligible expences like
taxes/salary , I leave almost nothing in corp.. What would
be my Franchise Tax...

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aks71[at]gmail.com wrote:

snip
- quote -

For a corporation in NC the minimum franchise tax is $35 and
the minimum annual report fee is $20. There are exceptions
(different rates, means of calculation, etc.) for some
businesses - utilities and such but a small consulting
business will pay under the regular schedule. The franchise
tax is based on the higher of corporate equity, 55% of
assessed property tax value, or net fixed assets plus
inventories. The rate is $1.50 per $1,000 base. So a
company with equity of $100,000 pays franchise tax of $150.

If you form a NC LLC then elect to be taxed as a corporation
there is no franchise tax, at the moment. The annual report
fee is $200. Obviously there is a break-even point.

By at the moment I mean that is the law today and I have
given up on predicting what our legislature will do.

Drew Edmundson, CPA
Cary, NC

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"HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

That seems to be the eternal question. It used to be that
having a corporation allowed someone to save a lot of taxes
by putting more away in qualified plans. But apparently
that difference has been largely or completely eliminated.

Limiting liability is often touted by lawyers who want to
make a fee. But the fact is that having a good insurance
policy is much more useful and effective for that purpose.

For someone who wants to make charitable contributions and
medical expenses and doesn't have enough other deductions to
make them deductible on their Schedule A might benefit from
a corporation's ability to deduct them. But I'd guess
that's not something that the bulk of people would be able
to take advantage of.

Stu

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Katie wrote:
- quote -

Thanks for your reply. What's the minimum tax in NC?
[like $800 in CA].

Moderator:
It does not matter what your costs are to live in the
Promised Land of North Carolina. It is where God went
to rest on the seventh day. Only good things will happen
to you when you live there - unless you're a dookie.

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"Katie" <katiej_1958[at]yahoo.com> wrote:

- quote -

To take this a step further, my question would be:

"What tax benefit does he receive by incorporating in NC
versus doing business in his name and filing Schedule C?"

-HW "Skip" Weldon
Columbia, SC

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maks71[at]gmail.com wrote:

- quote -

If your corporation will still be doing business in CA
(i.e., you'll be doing some of your consulting work in CA),
it makes no difference. If the corporation will no longer
be doing anything in CA, reincorporating in NC will
eliminate the CA filing requirement and the $800 annual
minimum tax.

Katie in San Diego

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I recently moved to NC from CA. I have my CA S-corporation
for my S/W consultancy business.

I got a consulting opportuinity in NC.

Should I Continue with CA corporation after getting
Permission to operate in NC (Certificate of Authority ) or
Should I form new NC corporation and desolve CA corporation?

What's more beneficial from Tax perspective?

-Maks

Moderator:
Once you have been so fortunate to be living in the
"Promised Land of North Carolina", it is in your best
interest to severe your relationships with inferior
jurisdictions.

Heaven is a local call in North Carolina. In Chapel Hill,
God is a button on the intercom - immediately to the right
of Roy Williams.

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