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Cassandra Said:

What is the best legal entity for a small restaurant business, Limited Liability or Corporation Sub. S?

We Answered:

You may want to anticipate what your future needs will be and what you plan on doing with your business and then decide on an LLC or S-Corp. Both have limited liability. One does not hold more protection than the other. There are different rules on the Federal side which is what you should be concerned about. State issues are a concern but for tax purposes focus on Federal first.

Shareholder's normally do go on payroll for an S-Corp and can recieve dividends too but, both are taxed, just taxed differently. For payroll there are the normal withholding (FICA, Federal & State Taxes) deducted from each check. Dividends ARE TAXED at the capital gain rates which is currently 15%. Before you get excited about the 15% on capital gains...keep in mind IRS would not be happy to see a shareholder ONLY taking dividends and not salary. There are special rule the IRS put in place just for S-Corps. There salary can't be to high NOR can it be to low...... Dividends do not have to be taken out of an S-Corp. It's up to the discrection of the shareholder(s).

For an LLC, draws are usually take and quarterly estimated tax payments are paid to the IRS and state. You do have to pay self employment tax. Self employment tax is basically the FICA that would have been deducted out your paycheck plus the amount of FICA your employer would have pay. You do get to deduct one half of self employment tax to arrive at you AGI (Ajusted Gross Income)

One benefit of being an LLC (Single Member) is that it does not need file it's own tax return but can go on your individual tax return on Sch C. That alone with save some accounting fees. There are various differences is what you can within each of the entities. It's not like "well I am just starting out so I will do an LLC and then move up to an S-Corp when I bigger". An S-Corp is not a step up. It would benefit you to consult with an accountant even if it's just for a one time meeting to discuss what would benefit you more. I can you that I am suggesting LLC's to all my clients. I several clients that are fairly large and are LLC's.


And no matter what kind of entity you choose.....Liability Insurance is a must!!! Good luck!!

Louis Said:

How much is reasonable rate for liability insurance of a small catering business?

We Answered:

It depends on: where you are located; what your annual revenue is; how long you have been in business; if you've had any prior insurance and/or claims; is all the food you are serving local or is any of it imported?
I've written liability only policies for $650, I've written liability only policies for $65,000. Without details about your business it's impossible to be more accurate than that.

Terrance Said:

Public Liability Insurance for small business?

We Answered:

It is a Specialty Line of Insurance. I get it to hold Professional Wrestling Matches to protect me and the fans in the event someone gets hurt falling, slipping,etc. Its usually not to expensive. I get my for daily events or in a package. You probably are needing continuous coverage. Make sure you check around because I found good rates from different states. Make sure you find an agent that deals in Specialty Lines.

Alicia Said:

What are the average rates for small business insurances (liability)?

We Answered:

You forgot to mention what your small business will be doing. The rates vary significantly between different occupations. I am sure that you already know that the rates for a small business that replaces roofs will be different than for someone who is going to open a shop selling posters.

You have to call an independent agent in your area to get an accurate premium so that you can build that expense in to your expense planning. If you will be charging an hourly rate you need an accurate figure to build in to the rate you plan on charging. If you are opening a shop you need to build in the cost of insurance as well as other expenses to calculate the mark up you will need to make a profit.

The fact is you need an accurate answer and you won't get it here. An average premium is of no value. You need to call an independent agent in your area to get an accurate estimate.

Check your Yellow Pages or go to this link to find an independent agent - http://www.iiaba.net/agentlocator/findag…

Good luck on your new business.

Rosa Said:

how much and where do i get liability insurance for small cleaning business?

We Answered:

Go to an insurance company that works with commercial insurance.