Questions to ask while switching from C to S corp

Check out http://www.businessknowhow.com. Here you will find a wealth of information useful for a start-up business.

Here is a sample of an article written by Janet Attard providing a useful checklist for a start up business.

Business Start Up Checklist

by Janet Attard

The list below is meant to remind you of the tasks you may have to perform to start your business.

Not every business will have to complete each step. For instance, you may decide not to register your trademark with state or federal officials. Or, you may not be required to publish a notice of intent to do business.

Since laws vary by state and by type of business, be sure to check with local authorities to determine if there are any additional legal steps you need to take.

[] Choose a business based on your skills and interests

[] Research the business idea:

- What will you sell

- Is it legal

- Who will buy it and how often

- Are you willing to do what it takes to sell the product

- What will it cost to produce, advertise, sell & deliver

- With what laws will you have to comply

- Can you make a profit

- How long will it take to make a profit

[] Write a business plan and market plan

[] Choose a business name

[] Verify right to use the name

[] Reserve corporate name if you will be incorporating

[] Register or reserve state or federal trademark

[] Register copyrights

[] Apply for patent if you will be marketing an invention

[] Check zoning laws

[] Choose a location for the business or make space in the house for it

[] File partnership or corporate papers

[] Register business name and get a business certificate

[] Get any required business licenses or permits

[] Order any required notices (advertisements you have to place) of your intent to do business in the community

[] Have business phone or extra residential phone lines installed

[] Check into business insurance needs

[] Find out about health insurance if you will not have coverage under a spouse

[] Apply for sales tax number

[] Get tax information such as record keeping requirements, information on witthholding taxes if you will have employees, information on hiring independent contractors, facts about estimating taxes, forms of organization, etc.

[] Call Department of Labor to determine labor laws if you have employees.

[] Apply for employee identification number if you will have employees

[] Find out about workers' compensation if you will have employees

[] Open business bank account(s)

[] Have business cards and stationery printed

[] Purchase equipment or supplies

[] Order inventory

[] Order signage

[] Order fixtures

[] Have sales literature prepared

[] Get adequate business insurance or a business rider to a homeowner's policy

[] Send out publicity releases

[] Place advertising if yours is the type of business that will benefit from paid advertising

[] Call everyone you know and let them know you are in business

[] Other

Copyright 1995 by Attard Communications

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Janet Attard is the author of The Home Office and Small Business Answer Book, published by Henry Holt and Company. She is forum leader of the Business Strategies Forum. For information send email to JanetAC1.

http://www.businessknowhow.com

Best of Luck,

Milton Zlotnick

Plan4Biz

Knowing only what you put in this question, it sounds like the switch makes good sense. As an S corporation, you won't pay taxes on your profits twice (first for the corporation, then for personal taxes). The complete link between personal taxes and business taxes does make sense when you have a single family owning the business, whether or not your son becomes involved.

The downside of going from C to S is that you can't go back to C again for a few years. C is more common for larger companies owned by stockholders, S is more common for companies owned by a family or very small group.

 

Good luck with it.

Tim Berry

experts@paloalto.com