Calguns.net  

Home My iTrader Join the NRA Donate to CGSSA Sponsors CGN Google Search
CA Semiauto Ban(AW)ID Flowchart CA Handgun Ban ID Flowchart CA Shotgun Ban ID Flowchart
Go Back   Calguns.net > SPECIALTY FORUMS > FFL's Forum
Register FAQ Members List Calendar Mark Forums Read

FFL's Forum For open discussion between FFLs and polite questions for FFLs.

Reply
 
Thread Tools Display Modes
  #1  
Old 09-06-2009, 11:01 PM
eltee's Avatar
eltee eltee is offline
Senior Member
 
Join Date: Jul 2008
Location: West of the Rockies, USA
Posts: 837
iTrader: 2 / 100%
Default Incorporating, LLC, etc.? How, Why, Why Not, How Much?

How many of you dealers incorporate, form LLC's, etc.? What about small timers / single man operations? Benefits, problems, out of state corporations, etc.? Services used, do it yourself, etc.?
Reply With Quote
  #2  
Old 09-07-2009, 6:35 AM
FortCourageArmory's Avatar
FortCourageArmory FortCourageArmory is offline
Senior Member
 
Join Date: Apr 2007
Location: Simi Valley, CA
Posts: 1,002
iTrader: 6 / 100%
Default

I'm a corporation. -S- corp to be specific. Benefits are all the profits (yeah...all the profits!!) can be passed dirtectly from the corporation to the owners without being subject to corporate taxes. Only have to pay personal income taxes on the $$. Saves being taxed twice on the same $$. Also, in the event of a devistating lawsuit, the corporate barrier will provide somewhat of a shield for personal assets.
__________________
NRA Life Member
Tim & the gang
Fort Courage Armory
1518-B Los Angeles Avenue
Simi Valley, CA 93065
(805) 526-6563
www.fortcouragearmory.com

Last edited by FortCourageArmory; 09-07-2009 at 6:42 AM..
Reply With Quote
  #3  
Old 09-07-2009, 6:54 AM
halifax's Avatar
halifax halifax is offline
Veteran Member
 
Join Date: Oct 2005
Location: Mendocino County
Posts: 4,420
iTrader: 11 / 100%
Default

Quote:
Originally Posted by FortCourageArmory View Post
I'm a corporation. -S- corp to be specific. Benefits are all the profits (yeah...all the profits!!) can be passed dirtectly from the corporation to the owners without being subject to corporate taxes. Only have to pay personal income taxes on the $$. Saves being taxed twice on the same $$. Also, in the event of a devistating lawsuit, the corporate barrier will provide somewhat of a shield for personal assets.
OK, those are the benefits. What are the costs?
__________________
Jim


Reply With Quote
  #4  
Old 09-07-2009, 6:59 AM
fuegoslow's Avatar
fuegoslow fuegoslow is offline
Member
 
Join Date: Sep 2007
Location: Southern California
Posts: 457
iTrader: 22 / 96%
Default

Go to legalzoom.com. Everything you could ever need from a lawyer or Legal firm at a fraction of the cost.
Reply With Quote
  #5  
Old 09-07-2009, 10:00 AM
eltee's Avatar
eltee eltee is offline
Senior Member
 
Join Date: Jul 2008
Location: West of the Rockies, USA
Posts: 837
iTrader: 2 / 100%
Default

Maybe one of the many CGN legal eagles can take some time from the 2A forum and pop over here and offer some insight as well. It would be interesting to see if there were any savings in insurance costs for kitchen table dealers, or what actual level of shielding might be realized from from lawsuits. Specific FFL insurance seems extremely costly, even for those who just do transfers and keep no inventory.
Reply With Quote
  #6  
Old 09-08-2009, 6:03 PM
SDProtection's Avatar
SDProtection SDProtection is offline
Junior Member
 
Join Date: Jan 2009
Location: San Diego, CA
Posts: 94
iTrader: 0 / 0%
Default

Quote:
Originally Posted by eltee View Post
How many of you dealers incorporate, form LLC's, etc.? What about small timers / single man operations? Benefits, problems, out of state corporations, etc.? Services used, do it yourself, etc.?
check out www.lawinc.com I used them and they are cheaper than Legal zoom. They are CA only as well, so they know what they are doing in this chaotic state.

There are too many reasons to go into as to why you should incorporate. However, you need to look at LLC or corporation. LLC may be easier or an S-Corp. Having had my fair share of companies, I can tell you that the liability alone should have you running to the nearest post office to send in your paperwork. Here is one good reason why you should: With a corporation (or LLC) you personally can't be liable so they can't come take your home if you screw up (or someone else screws up but wants to blame you). The liable entity is the corporation, not the employee (which you are regardless of being an owner). The corporation can only be liable up to the amount the corporation has in assets, so there is your limit. Of course you have insurance for these issues, but at least you have a huge bullet catch between your personal assets and your corporations efforts.

just my opinion. Do your homework.

JP
__________________
SD Protection

www.weaponsandgear.com
info@weaponsandgear.com
888-900-4188
------------------------------------------------------
"Never argue with an idiot; they'll drag you down to their level and beat you with experience." ~ Anonymous
Reply With Quote
  #7  
Old 09-08-2009, 9:29 PM
tenpercentfirearms's Avatar
tenpercentfirearms tenpercentfirearms is offline
Vendor/Retailer
 
Join Date: Apr 2005
Location: Taft, CA
Posts: 12,830
iTrader: 10 / 100%
Default

Downside, no more "For Owner's Personal Collection" for long guns. I really liked not DROSing long guns and taking them home with me.
__________________
For superior customer service and good prices visit www.tenpercentfirearms.com. We are Kern County's leader in black rifle sales.

The Calguns Foundation - Board Member. DONATE NOW! Your dollars go DIRECTLY to front-line legal activism in CA.
Opinions posted in this account are my own and not the approved position of The Calguns Foundation
Reply With Quote
  #8  
Old 09-09-2009, 3:39 AM
halifax's Avatar
halifax halifax is offline
Veteran Member
 
Join Date: Oct 2005
Location: Mendocino County
Posts: 4,420
iTrader: 11 / 100%
Default

Help me understand. Why the recurring fee $800/yr? Seems you are just filing a legal document once. Who does the $800/yr go to? Is this a tax, protection money?
__________________
Jim


Reply With Quote
  #9  
Old 09-09-2009, 5:28 AM
SDProtection's Avatar
SDProtection SDProtection is offline
Junior Member
 
Join Date: Jan 2009
Location: San Diego, CA
Posts: 94
iTrader: 0 / 0%
Default

Quote:
Originally Posted by halifax View Post
Help me understand. Why the recurring fee $800/yr? Seems you are just filing a legal document once. Who does the $800/yr go to? Is this a tax, protection money?
It certainly isn't protection money as the state is out to get all of us with an FFL sooner or later. So, let's stick with "tax". The first year fee is waived for an S-Corp.
__________________
SD Protection

www.weaponsandgear.com
info@weaponsandgear.com
888-900-4188
------------------------------------------------------
"Never argue with an idiot; they'll drag you down to their level and beat you with experience." ~ Anonymous
Reply With Quote
  #10  
Old 09-09-2009, 6:38 AM
rkt88edmo's Avatar
rkt88edmo rkt88edmo is offline
Reptile&Samurai Moderator
CGN Contributor - Lifetime
 
Join Date: Dec 2002
Location: Contra Costa County
Posts: 9,513
iTrader: 43 / 100%
Default

Quote:
Originally Posted by halifax View Post
Help me understand. Why the recurring fee $800/yr? Seems you are just filing a legal document once. Who does the $800/yr go to? Is this a tax, protection money?
In a nutshell, it is basically the current minimum fee the state of CA charges to do business.
__________________
If it was a snake, it would have bit me.
Use the goog to search calguns
Reply With Quote
  #11  
Old 09-09-2009, 6:55 AM
halifax's Avatar
halifax halifax is offline
Veteran Member
 
Join Date: Oct 2005
Location: Mendocino County
Posts: 4,420
iTrader: 11 / 100%
Default

OK, thanks guys. If I were to go with business insurance instead for $800/yr and my home/net worth isn't greater than the $1M policy coverage, I should be OK. I think
__________________
Jim


Reply With Quote
  #12  
Old 09-09-2009, 7:26 AM
rkt88edmo's Avatar
rkt88edmo rkt88edmo is offline
Reptile&Samurai Moderator
CGN Contributor - Lifetime
 
Join Date: Dec 2002
Location: Contra Costa County
Posts: 9,513
iTrader: 43 / 100%
Default

Yes, at that point you may be better off as a sole proprietor, but remember, even if you don't have that much in personal assets the legal protection may give you peace of mind and keep you from incurring recourse debts beyond your assets.
__________________
If it was a snake, it would have bit me.
Use the goog to search calguns

Last edited by rkt88edmo; 09-09-2009 at 7:36 AM..
Reply With Quote
  #13  
Old 09-09-2009, 8:31 AM
ojisan's Avatar
ojisan ojisan is offline
Agent 86
CGN Contributor
 
Join Date: Apr 2008
Location: SFV
Posts: 9,427
iTrader: 41 / 100%
Default

The CA $800 per year is just free money for the state.

The LLC was my choice for a small business...yes, the money is only taxed once as part of your usual income like you would get from a regular job.
The LLC also provides some protection from huge judgements in a lawsuit...the LLC name itself tells an attorney right up front that there are no big bucks to be had.
Regardless of the LLC protection, you should always have appropriate liability insurance too, especailly if you manufacture or sell goods.

While I have used Legal Zoom in the past, I did pay an attorney to do all the set-up for my LLC. It was $1,600, but it has to be done right so you don't end up with problems later.
__________________
Reply With Quote
  #14  
Old 09-09-2009, 3:00 PM
eltee's Avatar
eltee eltee is offline
Senior Member
 
Join Date: Jul 2008
Location: West of the Rockies, USA
Posts: 837
iTrader: 2 / 100%
Default

Who is writing FFL policies (insurance) for $800.00 / yr. That seems pretty reasonable, esp. since it is a writeoff.
Reply With Quote
  #15  
Old 09-10-2009, 7:34 PM
halifax's Avatar
halifax halifax is offline
Veteran Member
 
Join Date: Oct 2005
Location: Mendocino County
Posts: 4,420
iTrader: 11 / 100%
Default

Quote:
Originally Posted by eltee View Post
Who is writing FFL policies (insurance) for $800.00 / yr. That seems pretty reasonable, esp. since it is a writeoff.
Sorry for not answering sooner. I've been stuck in San Francisco for two days wrestling with bureaucrats.

The $800/yr quote was for a kitchen table dealer with no inventory.

http://www.guninsurance.com/
__________________
Jim



Last edited by halifax; 09-11-2009 at 3:59 AM.. Reason: changed wording
Reply With Quote
  #16  
Old 09-14-2009, 10:53 AM
Vtgunner Vtgunner is offline
Junior Member
 
Join Date: Jul 2009
Location: Sacramento
Posts: 70
iTrader: 0 / 0%
Default

It really depends on your business which is better. Alot of people run to incorporate without really understanding the process or performing a cost benefit analysis on how or why to create a business entity.
The protection from liability for incorporating is valid but only in some cirumstances.

Are you going to have personally guarantee any contractual liabilities for the business? Unless you put alot of money in a bank account in a business name you will almost always be required to pesonally guarantee any liability.

Are you going to have any employees? If it it just you, then you will be held personally liable for any torts you commit anyway regardless of the business form.

Corporation protection for liability can be pierced for many reasons: inadequate capitalization, failure to act like a corporation, only one owner, commingling of funds.

The easy answer is yes but does really protect you from liability, it really depends on the business.
Reply With Quote
  #17  
Old 09-14-2009, 10:57 AM
El Gato's Avatar
El Gato El Gato is offline
Senior Member
 
Join Date: Mar 2009
Location: Kern County
Posts: 1,574
iTrader: 1 / 100%
Default

talk to your accountant...
ours said go with a C corp and avoid the LLC like the plague... something about Kali not liking LLC's and the fees etc. are too much... She preferred a C corp to an S corp for various reasons that had to do with accounting and that is what we are going with.... has some real benefits for us as a training facility... we get the legal protections as long as we do not pierce the corp. veil ( I don't want some moron shooting themself at our facility.... or shooting another customer and then blaming us and me losing my house due to said moron and yes there are moron's on the shooting world... used to be somebody would just shoot them and be done with it.. or they'd shoot themselves and remove themselves from the gene pool... now, not so much... but I digress)....and the tax benefits brought a smile to the accountants face.... as opposed to the partnership (wife and I) have now...
__________________
Greebo, as a matter of feline pride, would attempt to fight or rape absolutely anything, up to and including a four-horse logging wagon. Ferocious dogs would whine and hide under the stairs when Greebo sauntered down the street. Foxes Kept away from the village. Wolves made a detour. Terry Pratchett

Last edited by El Gato; 09-14-2009 at 11:00 AM..
Reply With Quote
  #18  
Old 09-14-2009, 11:01 AM
ojisan's Avatar
ojisan ojisan is offline
Agent 86
CGN Contributor
 
Join Date: Apr 2008
Location: SFV
Posts: 9,427
iTrader: 41 / 100%
Default

Yes, you must talk to an accountant!
If there are multiple partners, the LLC may not be best.
However, the LLC has much less paperwork and reporting to do compared to a C or S Corp.
Also it depends on if you will offer shares of the corporation for sale, etc etc.
Have fun with the business maze!
__________________
Reply With Quote
  #19  
Old 09-14-2009, 3:36 PM
eltee's Avatar
eltee eltee is offline
Senior Member
 
Join Date: Jul 2008
Location: West of the Rockies, USA
Posts: 837
iTrader: 2 / 100%
Default

Best deal for a one person, kitchen table, no inventory op? S / C corp., LLC, or just an insurance policy. Business is primarily transfers. Owner may not profit enough to hire an attorney, form a corp. AND get insurance w/o raising transfer fees to everyone.
Reply With Quote
  #20  
Old 09-14-2009, 10:01 PM
Vtgunner Vtgunner is offline
Junior Member
 
Join Date: Jul 2009
Location: Sacramento
Posts: 70
iTrader: 0 / 0%
Default

i would go sole prop. You will be paying a 15.3 self employment tax on income. However you will want to make sure your business does not make a profit. It will be taxed at at least 25 % depending on your tax bracket. This is higher than a corp tax rate. To avoid profit deduct: your home office
start-up and operating expenses, vehicles and travel,entertainment and meals, health insurance and medical bills, inventory equipment and any expenses ordinary and necessary. As an aside do me a favor and get a mileage or a cash back credit card to do all of your acquisitions with. You will be amazed how well this works.
Reply With Quote
  #21  
Old 09-18-2009, 6:09 AM
freakshow10mm freakshow10mm is offline
Veteran Member
 
Join Date: Jun 2008
Location: Michigan
Posts: 3,078
iTrader: 15 / 89%
Default

I would never, ever go sole prop for any firearms business. Corp or LLC only.

Personal asset protection is the number one reason for a corporation, especially in this day of liability sharks.

Filing papers is pretty easy IF you can take the time to read. There are many books on the subject as well as local business programs that will help you file your articles of incorporation/organization with your state entity.

I intended for my business to be an S corp, but in Michigan a corporation must have at least 2 officers. My wife wanted nothing to do with it and I trusted no one else to get on board with me. An LLC was my only viable option, since in Michigan an LLC (Limited Liability Company) is treated as a corporation for everything, but can be operated with one member (owner). So I paid my $50, filed my articles of organization, and done. Yearly maintenance fee is only $25.

Another benefit to an LLC is I can elect to be taxed as an S corp or a C corp. An S corp is taxed with "pass through taxation" meaning, as Ft Courage Armory said, all profits are passed through to the officers and recorded on schedule C. An LLC can elect this pass through taxation or choose to file separately from its members, like a C corporation, so the LLC would file its own tax return at the corporate tax rate (same rate as personal income tax) and the members (owners) would file a simple 1040 with no schedule C or SE, since that would be recorded on the LLC tax form and there would be no SE tax due. You are an employee of the legal entity. You get a paycheck, you get a W2 in January like everyone else.

There's benefits to this also. the company pays half of each employee's SS tax for the first $8,000. This is deductible, reducing company profit.

Again, none of this is legal or tax advice. It's worth $500 to sit down with an accountant to wade through this. Be up front, tell them numbers, potential liabilities. Even transfer only dealers have immense liability. You are liable for every product you sell whether you like it or not. We have a legal system, not a justice system. It's not what the law says, it's what you can prove.
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump



All times are GMT -8. The time now is 7:22 AM.




Powered by vBulletin® Version 3.8.9
Copyright ©2000 - 2016, vBulletin Solutions, Inc.
Proudly hosted by GeoVario the Premier 2A host.
Calguns.net, the 'Calguns' name and all associated variants and logos are ® Trademark and © Copyright 2002-2016, Calguns.net an Incorporated Company All Rights Reserved.