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Second Business Under Existing S-corp

    • 16 posts
    April 14, 2008 9:07 AM EDT
    Hello. I have a question regarding operating a second business under an existing S-Corp.  My husband and I are 50% owners of an S-Corp which we use for operation of his 1-person electrical contracting business.
     
    I am considering doing some freelance work while I keep my day job. (Note that I am an engineer, but the freelance work would not be engineering related, to avoid liabilities while still a full-time employee for someone else).
     
    If I did any freelance work, would I be able to run that income through the S-corp? Or would it be wiser to keep it separate and just treat that as a separate sole-proprietor business? If I do operate two different lines of business through the S-corp, are there forms to file?
     
    Anyone know of good reasons to perhaps set up a separate corp or LLC? I don`t want to file 3 sets of taxes or pay multiple corporation fees, so that`s my reason NOT to.
     
    I do have an accountant, who will be able to answer specifics for our state,etc., but it is 4/14. . .he may be a little busy today.
     
    Thanks for the input!
     
     
    • 16 posts
    April 14, 2008 3:02 PM EDT
    Thanks for the quick responses. Definitely looks like the consensus is to not add the business to the existing one, at least in the single S-corp form. I agree, and will not go that route.
    • 59 posts
    April 14, 2008 11:04 AM EDT
    The IRS likes to see separate businesses in separate entities.  In addition, in order to protect one business from the other businesses liability (current, future and/or potential) you should keep the businesses separate.

    Since you`re just starting out, having it be a sole proprietorship with good insurance is the best way to go.  Then when you can fairly reasonable predict your income level you can more easily determine the type of entity that would best suit your needs.


    ---
    Gina L. Gwozdz, CPA
    http://GLGcpa.com
    http://TaxTreasures.com

    • 1 posts
    April 14, 2008 10:32 AM EDT
    My former husband and I had a need for multiple business entities and we created a single-owner LLC owned by the S-Corp. That way things were kept separate, but taxes were still filed under the S-corp. Check it out with your accountant.
     
    Eva Norlyk Herriott