Changing from sole prop to corporation during 13

[frustrated51]

Are there any restrictions on converting my sole proprietorship to a corporation during a 13? The business revenue (before expenses) have ranged from $20-$50K per year. I would expect it to be in the 20K range or less although if we do this we might add try to increase it. I am thinking of a few advantages. Most of our debt is IRS and honestly we pay too much because we don't have enough deductions. I think switching to a corporation would allow more deductions (like health insurance, paying the kids for work done) and control of our personal income.

Thoughts?

[mtngirl47]

We have a C Corp and haven't ever owed any taxes. We have a great CPA who emails me for a trial balance in October each year and then he recommends what we need to do if there is going to be a big profit that depreciation expenses won't cover.

As for changing to a corp during your 13-- you should check with your lawyer. I'm waiting to hear from my lawyer right now about dissolving my current corp and starting a new one--as owners of the corp, it is one of our assets and the trustee has to approve it. Does your business have a dollar value assigned to it?

[frustrated51]

We have a C Corp and haven't ever owed any taxes. We have a great CPA who emails me for a trial balance in October each year and then he recommends what we need to do if there is going to be a big profit that depreciation expenses won't cover.

As for changing to a corp during your 13-- you should check with your lawyer. I'm waiting to hear from my lawyer right now about dissolving my current corp and starting a new one--as owners of the corp, it is one of our assets and the trustee has to approve it. Does your business have a dollar value assigned to it?

My business doesn't have a value. It is mostly because some cheap employers don't want to pay employment taxes so they pay me with a 1099. We sell a few handmade items also. The kids are getting old enough to start doing some things and I don't want them to because if the kids bring in money on my sole prop that it becomes my income and our payment might go up. With a corporation it becomes corporate income and I can pay them as an employee. We live in a rural area so finding jobs for them is not only difficult but time (driving them and sometimes waiting because it doesn't make sense to drive home) and cost (gasoline) makes it not worthwhile.