Choices Made and Problem Solved

If you’ve been reading this blog over the past several months, you know that my family and I recently moved from Colorado to Missouri. Because of this, I had to close down my private practice and figure out my next step in a new state.

I think I’ve done it.

After talking with several attorneys and–I confess–only one accountant, here’s what I’ve decided to do:

• Merge our two companies into one. Until a couple weeks ago, my husband and I ran two Colorado-based business, his music education software company, Beyond the Notes, Inc., and my music therapy practice, Neurosong Music Therapy Services, Inc. The problem is that both businesses are small enough–especially since closing down my private practice–that the double amount of paperwork and fees is unnecessary. And with it being just me running it…well, I am ready to streamline things. Thus, we merged our two companies into one. To be fair, there is a down-side to this. Most attorneys will advise you to keep the two business separate. It makes sense from a liability standpoint–if one company is sued, you only want that company’s assets to be at stake…not both. But I weighed the pros and cons of keeping it two businesses versus merging to one and went with the latter. Besides, I figure, I can always change things later on.
• Dissolve the Colorado companies. If we were to merge our two Colorado-based companies into one Colorado-based company, then we’d fill out and file a Statement of Merger in Colorado. But, because we are merging into a Missouri-based company, we have to dissolve our Colorado companies. It’s not that hard–the Colorado Secretary of State has an Article of Dissolution you can fill out online. Then it’s simply a matter of contacting all the other state and federal agencies (e.g. Department of Revenue, Unemployment, IRS, etc.) to close down those accounts. A pain? Yes. But necessary.
• Start an LLC in Missouri. We were going back and forth between keeping the S-corporations or starting an LLC. The primary benefit of an LLC? It’s flexible and there’s less paperwork and filings to manage (read: no quarterly payroll taxes. Yes!). The primary benefit of an S-corp? No self-employment tax. With an LLC, you have the liability protection of a corporation, but are taxed like a sole proprietorship. This means that anything I pay myself through the LLC (whether salary or otherwise) is subject to a self-employment tax. So why go with the LLC that has higher taxes? Because you can file paperwork to be taxed like an s-corporation. That’s right–when I get tired of having to pay self-employment tax (which will be a good day because it means I’m making money!), I can submit paperwork to the state to be taxed like an s-corporation. At that point, I will have to start paying and filing quarterly taxes again–but by the time I get to that point I can hire an accountant to take care of that for me! Problem solved…LLC started.

So that’s where I am right now–lots of paperwork and phone calls as I work through the logistics of moving our businesses. As a side note, it was really easy to start an LLC in Missouri. I did it online through the Secretary of State. Some simple paperwork, a $50 filing fee (it’s twice as much to file through the mail), and, voila!, I have a new business.

In closing, I want to thank all of you who left comments, suggestions, and words of encouragement for me as I went through this process. I hope that by blogging about it, it will help you at some point navigate the waters of running a private practice yourself.

So, now that I’m (almost) finished will all my paperwork to transfer my businesses, I can finally concentrate on my presentation at the 1st Annual Creative Arts Therapies Teleconference next week! I’m super-excited to be a part of this event. It features 10 different speakers talking on various aspects of music therapy, art therapy, dance therapy, running a private practice, etc. There’s a lot to learn…and the best part is that it’s super affordable and there’s no travel involved!

To learn more about the conference, click this link:

Hope to “see” you there!

Tagged as: Corporation, LLC, Private Practice, Private Practice