[PLUG] OT, sorta..: consulting question

Rich Shepard rshepard at appl-ecosys.com
Fri Aug 23 21:50:08 UTC 2002


On Fri, 23 Aug 2002, Mike Witt wrote:

> Just curious if you guys have had specific experiences where you lost work
> (or whatever) because of not being incorporated. I almost incorporated (as
> opposed to sole proprietorship) a couple of years ago. My accountant
> advised against it at that time just because it made it a little bit
> harder to move money back and forth between me and the business (and he
> didn't see any advantage.)

Mike,

  This cannot be measured. If you don't get a project it's almost impossible
to learn the real reason why.

  Regarding moving money around: that's no problem at all. Set up an account
for your S-corporation distributions and you can write yourself checks
whenever you like. It's very clean -- as far as the IRS and state are
concerned. Functionally, the money's yours, but by keeping it in two
different pockets you can legitimately charge business expenses without
anyone thinking they're personal. Unless, of course, you're from Enron,
Adelphia, WorldCom, ....
 
> I planned to incorporate the first time I actually *lost* a contract
> because of being a sole proprietorship. Even though a number of people
> have told me they wouldn't hire me if I wasn't incorporated, every
> time (so far :-) this has turned out to be *wrong* and the contract
> went through.  The issue generally turned out to be EAO and Liability
> insurance, which I have (1M), and of course a separate Federal Tax
> ID for the business.

  It cost less than $100 to incorporate and get official registration. You
lose the home office deduction on your personal taxes but you gain business
expense and other deductions on that side.

  When you go looking for a professional, can you list all the criteria --
honestly -- that you apply? There's a lot of subjective, emotional aspects
to our decisions and a little thing like an "Inc.", "LLC", "PC" after your
business name may make that difference.

  If you can quantify the number of people who did not call you because you
were not incorporated you'd have a solid basis for making a decision. :-)

> Since business is pretty bad right now, I'm kind of curious whether
> or not there is something to this, and just looking for more info.

  Every edge helps. Ask yourself this question: Why should someone hire me,
rather than a competitor? 

Rich





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