Re: What Part of C-Corp Didn’t You Understand??? - Posted by JPiper
Posted by JPiper on June 02, 2000 at 12:37:53:
Hi JB:
First I?d like to compliment you on the fact that you have handled yourself quite well in light of my verbal bashing last night. That says a lot about you. For my part I was feeling pretty frustrated last night to see the same question asked by you, with my name in it, that I had answered a couple of days prior. I don?t mean that as an excuse, but simply an explanation of where my post came from. I would like to think that I try to handle myself according to a high standard, but unfortunately at times my frustrations get the best of me. You on the other hand maintained a high standard, didn?t permit my frustration to cause you to react, and if you can maintain that trait in all your activities it will serve you well.
In another vein, I recall the words of Mark Twain. I think they go like this: ?Life is the process of drawing without an eraser.?
I mention these words because what I have found in my business career is that I am required to make decisions daily where I unfortunately do not have full and complete information with which to make the decision. I don?t believe I?m unique in that?.I think we?re all at that level at all times.
This comes into play as an example when I acquire a property. Sometimes my idea with a property is that I will flip, and therefore I take title in my corporation. Later, I may find that my view changed, that I don?t really want to flip now?..and now I have the property in the wrong entity entirely. Oops. My CPA gets a good chuckle out of all of this, and of course we go from there and figure out the next gameplan the best we can.
Without wishing to sound arrogant, I think I have developed a significant amount of knowledge over the years regarding a number of different aspects of this business. Most of it was developed through my errors, that is, decisions based on incomplete information at the time which then caused me to have to work through a problem of some type.
The point here is that you won?t ever have complete information on anything in this business. If you think you do, you better look around, because there is undoubtedly something you didn?t think about or overlooked. Nevertheless, you must make a decision?.because trying to develop that elusive complete information will simply lead to indecisiveness?..a trait that won?t work well in this business, or probably any other business. And once the decision is made, life becomes a ?process of drawing without an eraser.?
In this case, as others have already stated, when you incorporate you have an opportunity to designate ?S?. You can designate in the future as well IF at that time you find your circumstances warrant it. But truly there are a myriad of factors that could go into this decision, and then there are unknowns?.like what will the makeup of your business be, and what are the other sources of income available to you. Further, a C Corp is not designed to be a ?be-all-end-all? solution. Rental property as an example would be better held in an LLC. An LLC has an option of being taxed as a corporation rather than as a partnership, which might well be a good design for flipping activities and would carry superior asset protection features to an S Corp. However, a good first move is the C Corp. You?ll figure the rest out as you go along, and circumstances develop themselves, and a picture of your business starts to evolve.
As was mentioned, good advisors are imperative?.advisors that are acquainted with your personal circumstances. I talk with my CPA all the time?.probably at least weekly, and sometimes more often. I talk to my attorney frequently as well?.and have bills with both people to match.
Again, thanks for the high level of your posts, and good luck with your new corporation.
JPiper