PA: Corp-to-Corp and name needed for contracts

[pixelrogue1]

What is the name of your state? PA

Pennsylvania

This year I switched over to independent software contractor (corp-to-corp) (from more traditional W2 consulting).
The s-corp is set up as a DBA, associated with an LLC which I have had for many years for real estate.

Official documents arrived from Harrisburg and everything was going smoothly until today when the company where I contracting has asked me to redo all the forms and modify the names used to include the LLC.
Rather than ZYX Corp Name, they are asking for ABC LLC, DBA Corp Name.

Wouldn't applying the LLC name to the contracts and paperwork defeat the purpose of the DBA?Is this a reasonable request? Would this be advised, or maybe I am taking on more risk than necessary or other vulnerabilities? I am also looking to keep the S-Corp 100% separate from the LLC in terms of tax liabilities.

 

[FlyingRon]

You should keep all this in the same thread. In fact, there's no information added here that changes anything.
Again, your second sentence makes no sense. An "S Corp" is not an entity. A DBA is not an entity. I'm going to guess that what you really did is you have an LLC that you set up a fictitious name (DBA). You also made an S Corp (tax) election for that LLC.

A DBA doesn't create an entity. It's just an alias for an existing one. You have no CORP here. Your only legal entity appears to be the LLC and its name is the one that should appear on all legal documents. In some cases, you can use "MyLLC T/A MyDBA" or similar, but understand there's NO LEGAL ENTITY called MyDBA. While you can do business under that name (and get checks made out to it, etc...), the only legal entity is the MyLLC.

Contracts could legally made to a properly registered fictitious name, though it would probably be safer to use the LLC (by itself or combined).

You seem again to not understand what the fictitious name. It's really just a thing to allow you to operate under a different name. It's specifically NOT designed to hide or segregate the underlying entity it is a name for. In fact, the whole point of registering the fictitious name and the incumbent publication of that information, is to NOT HIDE the fact that the DBA is not the underlying entity.

 

[Taxing Matters]

Your post is confusing. You have had a LLC for many years that you used for real estate investing. I’ll call that ABC, LLC.

Then you mention a S-corporation. So let's clarify that. Did you form a second entity with the state, either a LLC or a corporation? If you did, let's call that second entity XYZ. Who owns XYZ, you or ABC? What kind of entity is it, a corporation or LLC? And did you file a Form 2553 with the IRS to elect for that entity to taxed as a S-corporation? You'd have to file articles of incorporation to form a corporation or file a certificate of organization to form a LLC. Both of those would be filed with the PA Secretary of State. Did you do one of those things to create XYZ?

Or did you instead simply have ABC (or yourself individually) register a new fictitious name to use the name XYZ to conduct the consulting business? That would be done by either you or ABC filing a Registration of Fictitious Name form [DSCB:54-311] with the Pennsylvania Secretary of State. Doing this does NOT create a separate business entity. It simply allows ABC to conduct business using some name other than its own name (e.g. PixelRogue Consulting). Just to give you a well known example, the Subway sandwich chain business is run by a company called Doctor's Associates, LLC. But obviously it doesn't conduct its sub sandwich shop business using its own name — Doctor’s Associates — but instead uses the name Subway. The name Subway is just a trade name/fictitious name. It is not a separate corporation or LLC owned by Doctor's Associates.

So look at the forms you filed with the state. Which one did you file when setting up XYZ?

 

[pixelrogue1]

All: Thank you for your patience as I am new to the corp-to-corp, s-corp etc. Thought a separate post would be appropriate as the question hits a different subject of the DBA. My apologies if the preference is to keep the threads together.

FlyingRon: The LLC is a standard LLC and has remained the same for many years. No plans to change the designation of the LLC itself. Would you mind elaboration on how a contract would be safer with the LLC? I do recognize the DBA is not a legal entity of and to itself. There is no effort to 'hide' per-say and it is more that the two business are very different from one another and (if nothing more than personal book keeping, peace-of-mind) the preference is to keep them separate (though was advised to keep under one umbrella (as to not overcomplicate, LLC already existed (w/no meaningful assets,) more cost effective, simpler, etc.) .

Taxing Matters:
- LLC registered the fictions name XYZ to conduct consulting business. I recognize it is not a separate entity, just allows to do business under a separate name.
- DBA paperwork is recent, nothing yet filed with IRS.
- I filed just the DBA for XYZ.

 

[FlyingRon]

I'm not sure what "peace of mind" you're going to get. You're going to have to resolve the book keeping. The taxes and perhaps other aspects of the consulting business are going to be in the REAL (LLC) name.

You keep saying you were advised and told to do things, but the some of the things you were told seem to make no sense.

I'm lost. If the LLC has no assets, what is it doing? I thought this held title to your rental property (again a good reason to keep it all in one thread).

 

[pixelrogue1]

Yes, I was advised and the reason why I am here is to vet some of that information...as I am question some of that myself.

LLC has no meaningful assets. LLC is used to collect the rents, pay the bills, credit card etc. It does not own property of anything of meaningful value. (title is not held by LLC).

 

[PayrollHRGuy]

That isn't the normal way a person would use an LLC in your situation, but the fact that it has no assets removes my only concern re: using the same LLC for both entities.

All profits both from the real estate and the consulting will be treated the same tax wise.

 

[LdiJ]

All: Thank you for your patience as I am new to the corp-to-corp, s-corp etc. Thought a separate post would be appropriate as the question hits a different subject of the DBA. My apologies if the preference is to keep the threads together.

FlyingRon: The LLC is a standard LLC and has remained the same for many years. No plans to change the designation of the LLC itself. Would you mind elaboration on how a contract would be safer with the LLC? I do recognize the DBA is not a legal entity of and to itself. There is no effort to 'hide' per-say and it is more that the two business are very different from one another and (if nothing more than personal book keeping, peace-of-mind) the preference is to keep them separate (though was advised to keep under one umbrella (as to not overcomplicate, LLC already existed (w/no meaningful assets,) more cost effective, simpler, etc.) .

Taxing Matters:
- LLC registered the fictions name XYZ to conduct consulting business. I recognize it is not a separate entity, just allows to do business under a separate name.
- DBA paperwork is recent, nothing yet filed with IRS.
- I filed just the DBA for XYZ.

I am going to hit on something specific that I do not think is going to be addressed.

Unless you make an S-corp election for the LLC, you CANNOT have an S-corp. The DBA CANNOT be an S-corp. If you feel that you need to have an S-corp for the consulting, you will NOT be able to have it under the LLC, you will have to form a new, separate LLC for that.

Whoever gave you the advice to do that, doesn't know what they are talking about.

 

[pixelrogue1]

That isn't the normal way a person would use an LLC in your situation, but the fact that it has no assets removes my only concern re: using the same LLC for both entities.

All profits both from the real estate and the consulting will be treated the same tax wise.

Yes, not normal. Agree. Fine w/all profits from consulting and real estate being treated the same.

Would you have thoughts on whether or not to use the DBA name, LLC name or both on the paperwork (contracts, W9 etc)?

 

[pixelrogue1]

Yes, not normal. Agree. Fine w/all profits from consulting and real estate being treated the same.

Would you have thoughts on whether or not to use the DBA name, LLC name or both on the paperwork (contracts, W9 etc)?

I am going to hit on something specific that I do not think is going to be addressed.

Unless you make an S-corp election for the LLC, you CANNOT have an S-corp. The DBA CANNOT be an S-corp. If you feel that you need to have an S-corp for the consulting, you will NOT be able to have it under the LLC, you will have to form a new, separate LLC for that.

Whoever gave you the advice to do that, doesn't know what they are talking about.

---
What would be the downsides to making an S-corp election for the LLC? LLC only handles the day-to-day finances
The only reason I need the s-corp is to maximize retirement contributions.

 

[LdiJ]

---
What would be the downsides to making an S-corp election for the LLC? LLC only handles the day-to-day finances
The only reason I need the s-corp is to maximize retirement contributions.

I cannot tell you the downsides because you have been contradictory. First you say that the LLC is for your rental property and then you say that the LLC has no assets. If the LLC owns your rental property it has assets. If it does not own your rental property, then there was no point in opening it.

 

[pixelrogue1]

I cannot tell you the downsides because you have been contradictory. First you say that the LLC is for your rental property and then you say that the LLC has no assets. If the LLC owns your rental property it has assets. If it does not own your rental property, then there was no point in opening it.

Nothing contradictory. The LLC is for the rental business. There are no meaningful assets...it does not own the property. The LLC manages the day-to-day finances (rents collected, bills paid) plus a credit card, paperwork (not the mortgage, not the deed etc). Balances are never much once the bills are paid...so no assets.

 

[PayrollHRGuy]

Yes, not normal. Agree. Fine w/all profits from consulting and real estate being treated the same.

Would you have thoughts on whether or not to use the DBA name, LLC name or both on the paperwork (contracts, W9 etc)?

The legal entity is the LLC.

 

[Taxing Matters]

Would you have thoughts on whether or not to use the DBA name, LLC name or both on the paperwork (contracts, W9 etc)?

On contracts and other important legal documents other than tax documents you want the LLC name to appear as that is the legal entity that is conducting the business. It generally a good idea to include the DBA along with the LLC name too. You would particularly want to do that when the people you are doing business with primarily know the business as the DBA name. I'll give you an example of how this is generally done. Assuming the LLC was named “ABC LLC” and the DBA name was “Pixelrogue Cosulting” then you’d provide the name of the business in contracts, etc, as: ABC LLC d/b/a Pixelrogue Consulting.

For the W-9 and most other federal tax documents, however, you need to put YOUR name down and your SSN. That is because a LLC organized in the U.S. and owned by just one person is by default disregarded for federal tax purposes. This means that the IRS sees the business as owned directly by you as a sole proprietor; it doesn't see the LLC. So since for federal tax purposes you are the person who owns and runs the business, it is your name and SSN that goes on the W-9. You may put LLC name and DBA name on line 2 of the W-9 using the same format as I provided in the previous paragraph, which then would help the client associate the W-9 with your business. See the instructions included with the Form W-9.

 

[LdiJ]

Nothing contradictory. The LLC is for the rental business. There are no meaningful assets...it does not own the property. The LLC manages the day-to-day finances (rents collected, bills paid) plus a credit card, paperwork (not the mortgage, not the deed etc). Balances are never much once the bills are paid...so no assets.

You opened an LLC just to manage the rental property? What do you believe that did for you? I think that you need a sit down with a business attorney to talk about your various business models. You also need a sit down with a tax professional (after you sit down with the business attorney) to make sure that you understand any tax ramifications from whatever models you choose.