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Daycare and Taxes>LLC and S Corp????
Sprouts 06:20 PM 01-21-2011
Has anyone here started an LLC and file as an S corp?? I am getting my articles of organization ready now using the "LLC and Corporation Start up Guide"...and then plan on hiring a attorney afterwards (save some $).....but trying to avoid unnesesarry expenses when tax season comes around....hopefully anyone here or Tom... =) has had experience with this and can give some much appreciated advice!! =)
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TomCopeland 06:28 PM 01-21-2011
The decision of whether or not to incorporate your business is a complex one. I strongly recommend that you consult with an attorney and a tax professional who both understand family child care. I've written about this at length in my book Family Child Care Legal & Insurance Guide.

In general, I'm opposed to providers incorporating. The primary reason for doing so is to reduce personal liability. However, this is not simple. I believe that purchasing a lot of business liability insurance is the best way to go. Although it may be true that you could get some more liability protection by incorporating, it comes with a price. If you set up a C or S corporation you will lose all home deductions (property tax, mortgage interest, utilities, house insurance, house repairs, home depreciation) for your business. Also, there are additional record keeping requirements as a corporation and additional costs (filing fees, annual fees, tax preparation fees).

There's a lot more to consider. I urge you to seek professional help before you take this step
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Sprouts 09:37 AM 01-25-2011
How much is a lot of liability? 1,000,000? or more?
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TomCopeland 09:52 PM 01-25-2011
I'd recommend you get as much liability insurance as you can. In most cases, this means $1 million coverage per occurrence and $3 million aggregate. If you can't afford this, get what you can afford. However, the difference in cost between this upper limit and lower limits is very small.
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JLangley 01:31 PM 02-19-2011
Tom,
I read your post and it was a proverbial punch in the stomach, but I'm glad I found out now. So the question for us is how much of the FCC record keeping guide is still applicable in our situation? The IRS instructions for form 1120S cites utilities and supplies used/consumed as "other deductions". Any suggestions would be extremely helpful.
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TomCopeland 10:08 AM 02-21-2011
Most of my Record Keeping Guide would be helpful to a corporation because of the details about what is deductible. Chapters 6 and 7 about house expenses and depreciation would not apply to you. I don't know enough about Form 1120S to help you with that.
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Tags:llc, llc incorpiration s corp, s corp, tom copeland
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