Hi,
I know I'm a newbie but hopefully I can get some help without angering anybody. Here's my situation...
I've started a sole proprietership back in 2002 and claimed ~16% of my house for business use. Although the business was growing slowly ~$300/yr., it still didn't cover all of those expenses. Anyhow, I've booked more orders and earned ~$800/yr. for 2005.
I filed the s-corporation in Aug.2005 and am not sure if I was supposed to goto my local state county admn office and change my DBA? Is my sole proprietership still in effect even though I filed all my s-corp items? Anyhow, I went to a CPA to get my personal and corp taxes done, and he says I can't do the 16% write-off anymore. He says I can rent out that space to the corporation, but I'm wondering if the corporation needs an actual location? I've got a p.o.box in the corporation's name and would that suffice? If that's the case, then I don't have to worry about the corporation possibly in the negative again as I'll most likely have to charge a rent rate of ~$300/mo. which is already more than what I earned in 2005.
I'm confused on what i should do. I heard incorporating was supposed to protect my assets and seperate the entity but can't seem to get anyone to give good advice on what to do. I'm currently also working as an electrical engineer at a startup so it's been very hard to free up time to work on my own business since the demands of the startup require many additional hours of work. Although it's been slow, it has been growing every year, and just need some guidance. I can't just quit as I would rather work and invest into my company dream until it makes enough money to even sustain a decent income level. Can anyone help?
Thanks!

A PO box would give you a mailing address, but where is your principal place of business? Sounds like your home--so why would you want to lose out on the deduction? Instead of "renting" space to your S corp, talk to a CPA about taking a deduction as unreimbursed employee business expenses (since, after all, as the sole owner-officer of the S corp, you would be considered an employee of the S corp).

As for the dba, it was issued in your name. The sole proprietorship was never a separate entity--it was you. You can cancel the dba if you're not using it anymore or, if you want your S corp to use the same dba, you can fill out an application on behalf of the S corp for the dba.

Hi Aangelica,
Thank you for your help and response!
I am still working from my home as you stated. Would the request for "unreimbursed employee business expense" be applied to the s-corp filing or the personal tax filing?

I got a response from another forum that renting out to the s-corp would change part of the house to a 'commercial' rental and that if/when i ever decided to sell the house, that there would be ramifications?

I'll go check on the dba filing. I'm curious if I ventured outside of my state to find business, would i have to get another dba in the adjacent state as well? (i.e. if the dba is in Texas and I was on the border to Louisiana...do I need to file another dba there?)

I am referring to form 2106 that would get attached to your 1040 personal tax return.

There could be tax implications if the house were to be sold as far as possibly owing taxes on depreciation costs that may have been deducted. Check with your CPA.

A dba that is filed in one place only gives you the right to use that dba there. If your LLC was formed in Texas and you wanted to do business in Louisiana, you'd have to obtain foreign qualification in Louisiana; in other words, you'd have to to register the LLC as a foreign LLC in Louisiana in order to obtain a certificate of authority to do business there.

If you wanted to do business in Louisiana under a name other than the registered legal name of the LLC, then you'd have to take the extra step of applying for a dba there.