Many private business owners elect to incorporate, turning their companies into C corporations. But, at some point, you may consider converting to an S corporation. This isn’t necessarily a bad idea, but it’s important to know the ramifications involved.
Similarities and differences
S and C corporations use many of the same recordkeeping practices. Both types of entities maintain books, records and bank accounts separate from those of their owners. They also follow state rules regarding annual directors’ meetings, fees and administrative filings. And both must pay and withhold payroll taxes for working owners who are active in the business.
There are, however, a few important distinctions. First, S corporations don’t incur corporate-level tax, so they don’t report federal (and possibly state) income tax expenses on their income statements. Also, S corporations generally don’t report prepaid income taxes, income taxes payable, or deferred income tax assets and liabilities on their balance sheets.
As an S corporation owner, you’d pay tax at the personal level on your share of the corporation’s income and gains. The combined personal tax obligations of S corporation owners can be significant at higher income levels.
Dividends vs. distributions
Other financial reporting differences between a C corporation and S corporation are more subtle. For instance, when C corporations pay dividends, they’re taxed twice: They pay tax at the corporate level when the company files its annual tax return, and the individual owners pay again when dividends and liquidation proceeds are taxed at the personal level.
When S corporations pay distributions – the name for dividends paid by S corporations – the payout generally isn’t subject to personal-level tax as long as the shares have positive tax “basis.” (S corporation basis is typically a function of capital contributions, earnings and distributions.)
Risk of tax audits
C corporations may be tempted to pay owners deductible above-market salaries to get cash out of the business and avoid the double taxation that comes with dividends. Conversely, S corporation owners may try to maximize tax-free distributions and pay owners below-market salaries to minimize payroll taxes.
The IRS is on the lookout for both scenarios. Corporations that compensate owners too much or too little may find themselves under audit. Regardless of entity type, an owner’s compensation should always be commensurate with his or her skills, experience and business involvement.
The right decision
For businesses that qualify (see sidebar), an S corporation conversion may be a wise move. But, as noted, there are rules and risks to consider. Also, as of this writing, there are tax reform proposals under consideration in Washington that could affect the impact of a conversion.
CTDA helps you succeed in your business through a variety of programs and services that include educational opportunities, webinars, and discounts on shipping, client collection services, telephone charges, auto rentals, and more. CTDA offers networking and relationship-building opportunities through participation in Total Solutions Plus all-industry conference and Coverings annual trade show. Membership in CTDA also increases your national exposure and gives you access to the annual membership survey, a valuable resource to evaluate your company in terms of profit improvement, employee compensation, distribution and company performance. The CTDA website, CTDA Educational Opportunities, Weekly Newsletters and TileDealer Blog are all free resources that will “keep you in the loop” as well. CTDA is always looking for ways to improve the benefits of membership. To learn more about membership, please contact [email protected] or 630-545-9415 visit the website at www.ctdahome.org. Like CTDA on Facebook and Twitter @Ceramic Tile Distributors Association (CTDA).
I want to install porcelain tile in my kitchen and my condo association requires a 1/4” cork underlayment for sound mitigation, but my installer and everyone else I’ve spoken with tells me I shouldn’t use cork in a wet area. One installer told me that the NTCA does not recognize 1/4” cork as a suitable substrate for tile applications. Can you tell me if that’s true and, if so, is there some documentation about this that I can present to my condo association?
In the NTCA Reference Manual, cork is listed as a questionable substrate for tile. There are several other bonded sound-reduction membranes that are designed specifically for tile installations. Bonded sound reduction membranes may be trowel-applied, sheet, or composite membranes that are bonded to a suitable substrate so that tile can be bonded directly to the membrane. Their purpose is to reduce floor impact noise.
Material specifications for these products are contained in ANSI 118.13. I suggest finding a substitute for the cork that meets ANSI 118.13. Take the technical data from that product and present it to your condo association for approval. I hope this helps.
– Robb Roderick, NTCA Technical Trainer/Presenter
Can you please tell me what the tolerance for lippage for 6”x 36” plank tile would be? The builder is quoting 1/8” which they said is the thickness of two quarters. The tile seems good the long way but the short way – walking across in your bare feet – you feel it.
The American National Standard Specification for the Installation of Ceramic Tile (ANSI A108) defines acceptable lippage for Pressed Floor and Porcelain Tile that meets the specifications for ceramic tile (found in ANSI A137.1) for typical installations of tile to be as follows:
All sizes of Pressed Floor and Porcelain Tiles with grout joint widths of 1/16” wide to less than 1/4” wide: Allowable lippage is 1/32”.
All sizes of Pressed Floor and Porcelain Tiles with grout joint widths of 1/4” wide or greater: Allowable lippage is 1/16”.
For reference: 1/32” is roughly the thickness of a credit card. 1/16” is roughly the thickness of one penny.
The plank tile you describe is very likely a Pressed Floor and Porcelain Tile. The manufacturer of the tile can tell you whether it was manufactured to the specifications in ANSI A137.1 (it is usually printed on the carton).
I would be happy to discuss any questions your builder or tile installation contractor may have about lippage or other installation standards that can have an effect on lippage.
– Mark Heinlein – CTI #1112,
NTCA Training Director; Technical Trainer / Presenter
Does a shower pan membrane need to be a solid, continuous piece, or is it all right if one corner is completely sliced up and then caulk applied to all cracks? It seems unsafe, and the weight of the concrete and tile could break open all of the cuts. Please help. Thank you very much.
It sounds like you are having a traditional mortar bed type installation constructed that utilizes a waterproofing liner over a pre-sloped pitch.
It is critical to install this, or any type of waterproofing system, in a manner consistent with tile industry methods and standards and manufacturer’s instructions. Rips, tears, cuts, punctures and improperly-sealed seams lead to leaks and failures of the system. With any type of shower installation, I recommend conducting a water test of the system before mortar is placed. In many locales, this is a code requirement placed on the plumbing permit.
The proper methods and details to construct this and many other type of shower pan installations can be found in the TCNA Handbook. If your contractor is a member of the National Tile Contractors Association they will have a copy of this handbook and know how to use it. They should also have a copy of the ANSI A108 standards that provide detailed instructions for the requirements of mud bed installations.
I will be happy to speak to your installation contractor to help them with any questions they may have about this or any other installation. Please feel free to have them contact me. If they are an NTCA member, they are familiar with this service we provide our members. If they are not a member, I would be happy to discuss with them the many benefits of membership including technical support, free training opportunities and obtaining and using the industry standards to base their installations on.
I hope this helps!
– Mark Heinlein – CTI #1112,
NTCA Training Director;
It’s that time of year when we are pushing hard to reach the career goals we set back in January, and now there are only weeks left to the finish line. We all lead very busy lives, and even more so as we approach the holiday season.
In the midst of our hectic lives do you ever wish you could hit the pause button for a moment? Years ago, I heard a wise man say, “Keep the main thing, the main thing.”
Here’s a question for us to consider: how can we prioritize those other “main things” like we prioritize our careers? “Main things,” like family, faith, and caring for others in our community. It’s hard to hit pause when most of us are never far from our smart phones, televisions, computers, social media, or the 24-hour news channel. How do we minimize the distractions that rob us from growing and moving forward to achieve our goals?
We know planning and prioritizing our time is always the fundamental first step in the right direction. I’ve learned that if I take a little time to regularly reflect on the blessings in my life, I have that extra boost of motivation to stay the course, whether that applies to business, family, my faith or serving in the community. When we reflect, and realize the many ways our lives are blessed, we walk in a fresh perspective that makes some of the stressful stuff in life take its rightful place in the back seat.
I recently had the opportunity to visit a third-world country with a team that reaches out to the two billion people in the world who have no access to basic financial service and serves them through micro loans for small business enterprises. While there, I was privileged to observe how these people who had limited electricity, no water or sewer services, and limited public or private transportation live contented, even joyful lives, in the midst of severe poverty. How do they live with joy amid poverty? They had the love and support of their families and community and a sturdy faith in God. They had an unquenchable entrepreneurial spirit that propelled them to work hard to better their lives. This experience caused me to embrace the value of every life, the dignity of work regardless the pay scale, and see that we all have purpose. It also reminded me we were all born into a set of circumstances for which and over which we had no choice or control. Those of us fortunate enough to have been born in the United States of America, have not only received blessings beyond compare, we have been given the opportunity – no, I would say the responsibility – to lift others up in every way possible.
So, this Thanksgiving I’d encourage all of us to reflect on how blessed we are and how we can make a difference in the lives of others without compromising their dignity.
How is it possible that we are already in November, looking down the barrel of the Christmas season AGAIN? This fall has been filled with the good and the bad: fraught with fires and floods, a pilgrimage in Spain for me (more to come in a later issue), and we are on the cusp of Total Solutions Plus, the all – industry conference that is growing by leaps and bounds every year – this time held in our nation’s capital.
It’s also the month that we count our blessings – officially – with the holiday of Thanksgiving. What are you thankful for, personally or professionally? If you share with me at [email protected], I can include your comments in an upcoming issue, as we move into the new year.
As for me, I’m really grateful for all the focus on education and training NTCA has. Now, this has been part and parcel of the NTCA mission since it began, but in the last couple of years, we’ve seen it skyrocket to a new level, with the incredible resource known as NTCA University compiled by Becky Serbin, Dan Welch, Dave Rogers and others – and planning to make this available to support more people becoming educated and skilled tradespeople as we go forward. I’m grateful for the development of the Regional Training program, which had its debut in New Berlin, Wis., last month. Together with our ongoing workshops and the online opportunities, no serious tile setter should be without the chance to learn more about products, methods and standards that will only make their jobs better.
I’m grateful for our amazing trainers and presenters – Robb Roderick, Luis Bautista (who also enables us to reach the Spanish-speaking tile setter community with this vital information), Scott Carothers, who somehow fits in more educational sessions with his Certified Tile Installer testing schedule, and Training Director Mark Heinlein, Facebook personality extraordinaire, along with able assistant and wife Connie. In addition, I’m grateful for Kevin Insalato, who is the Regional Evaluator Coordinator for the CTI tests, and has worked hard to be sure more Regional Evaluators are trained and able to bring CTI tests to more eager tile setters around the country.
Then there’s the amazing leadership, staff, board of directors and the tireless State Ambassadors and volunteers – everyone pulling together for the good of everyone else. It’s quite a community to be a part of.
Do what you can to get the word out about NTCA. And it is quite serious about being the Voice of the Contractor, so if you have something you want to share or communicate, visit the website at www.tile-assn.com, and get in touch with one of us. We are stronger together.
Critical care was taken with the design of Jacobs Medical Center, a 500,000-sq.-ft. specialty hospital in La Jolla, Calif. Construction specifications for this landmark project included a full system of CUSTOM® tile installation and flooring preparation products on all 12 floors. This cutting-edge medical center focuses on innovating complex procedures such as brain surgery and marrow transplants. To support its medical advances, the healing environment is filled with a cheering array of ceramic and glass tile precisely installed in patient bathrooms, public and staff areas, the kitchen and a welcoming cafeteria.
Floors were leveled using a CustomTech™ system including premium quality TechLevel™ 150 Self-Leveling Underlayment.
The tile installation at Jacobs Medical Center began with surface preparation in accordance with industry standards. Wet areas, such as patient bathrooms and showers, were treated with liquid-applied RedGard® Waterproofing and Crack Prevention Membrane, which meets the requirements of ANSI A118.10 and A118.12. RedGard is a ready-to-use elastomeric membrane that creates an effective, continuous waterproofing barrier with outstanding adhesion to drain assemblies. A single coat of RedGard was also applied on floors in dry tiled areas to provide crack isolation up to 1/8”.
A perfectly flat floor reflects the summer sky immediately following application of CustomTech™ TechLevel™ 150, a premium quality self-leveling underlayment.
Two polymer-modified, cementitious mortars from CUSTOM’s established VersaBond family were used. VersaBond®-LFT Professional Large Format Tile Mortar was selected to install large format tile throughout the project. This includes 12” x 24” porcelain in patient bathrooms on all floors, plus 9” x 36” and 6” x 36” wood-look planks in the hospital cafeteria. VersaBond-LFT is a non-slumping mortar that can be applied as thick as 3/4” on horizontal applications to help prevent lippage issues common with large format tile. Kitchen quarry tile and 2” tile on shower floors were set with VersaBond® Flex Professional Thin-Set Mortar. VersaBond Flex is formulated for high bond strength and extended open time to allow for tile adjustment.
All wet areas were treated with liquid-applied RedGard® Waterproofing and Crack Prevention Membrane. RedGard exceeds ANSI A118.10, A118.12, IAPMO shower pan liner and TCNA low perm barrier standards.
Patient bathrooms and nursing stations on each floor received one of three different color schemes with 3/4” x 3/4” glass mosaic wall tile in shades of green, blue and peach. Public restrooms were tiled in a dramatic black-and-white pattern with 1/2” by 1/2” ceramic mosaics. Specifications designated wall tile installation throughout the project with ProLite® Premium Large Format Tile Mortar. ProLite offers non-sag performance on walls along with excellent handling characteristics, making it an installer favorite. This versatile mortar also exceeds ANSI A118.4TE, A118.15TE and A118.11 standards for demanding installations. ProLite is formulated with lightweight, recycled aggregate, so it weighs 40% less than other mortars. This makes ProLite easier to carry, mix and apply than other mortars while also making projects eligible for LEED points.
VersaBond®-LFT Professional Large Format Tile Mortar was selected to install large format tile throughout the project. VersaBond-LFT is a non-slumping mortar that can be applied as thick as 3/4″ on horizontal applications to help prevent lippage issues common with large-format tile.
“Out of all the mortars we have used over the years, our installers like CUSTOM’s ProLite the best,” said Gary Rodocker, superintendant at Inland Pacific Tile.
CEG-Lite™ 100% Solids Commercial Epoxy Grout was specified on all floors and walls for chemical and stain resistance in a clinical environment.
For chemical and stain resistance in a clinical environment, CEG-Lite™ 100% Solids Commercial Epoxy Grout was specified for use on all floor and wall tile. CEG-Lite is easier to spread than typical epoxy grouts, cleans up with only water and contributes towards LEED certification. This grout exceeds the performance requirements of ANSI A118.3 and is suitable for vertical grout joints without an additive. Movement joints were treated with CUSTOM’s Commercial 100% Silicone Sealant to remain flexible and protect the assembly in accordance with TCNA Handbook detail EJ 171.
CUSTOM manufactures all of its grouts and sealants in an array of 40 designer-inspired colors and many of the shades were used to match the nuanced tile palette at Jacobs Medical Center. The extensive ceramic, glass and large format porcelain tile set throughout the hospital was supplied by Daltile.
Wall tile throughout the project was installed with ProLite® Premium Large Format Tile Mortar. ProLite offers superior handling and non-sag, thixotropic performance. It’s ideal for hard-to-bond tile like glass.
“We are very satisfied with the performance of the products and the support of the staff at CUSTOM,” said Dann Salinas, senior estimator and project manager at Premier Tile & Marble. “The Technical Services team was very responsive and attentive to our needs during all phases of the project.”
Prior to installation of floor coverings, substrates at Jacobs Medical Center were prepared with a CustomTech™ underlayment system. The Rouse Company addressed floor flatness on 330,000 sq. ft. of concrete slabs including corridors, laboratories and patient care areas.
TechPrime™ A Advanced Acrylic Primer was used to seal the surface and improve the bond of the calcium aluminate-based underlayment. After just an hour of dry time for the primer, the installation team poured TechLevel™ 150 Self-Leveling Underlayment up to 1-1/2” deep. Premium quality TechLevel 150 achieves greater than 4,300 psi compressive strength to resist point load, which is important given the weight of hospital equipment.
Many of the patient room showers feature curbless access, highlighting the importance of using RedGard® Waterproofing and Crack Prevention Membrane, a liquid barrier offering seamless, monolithic coverage.
“TechLevel 150 is my go-to leveler if I have a choice,” said Josh Reed, concrete division manager at the Rouse Company. “We definitely prefer it over any other product and use it on all of our jobs. The entire CustomTech flooring prep system is easy to use and works great. We love it!”
CUSTOM tile installation and flooring preparation systems were selected on the basis of rigorous product standards, unparalleled technical support and quality backed by an extended warranty. The high-use, high-traffic tile assemblies at Jacobs Medical Center qualified for a 15-year installation system warranty. Two lightweight Emerald Systems™ formulas included in the installation, ProLite and CEG-Lite, can also earn carbon offset credits for any project where they are installed.
1/2” mosaics in various black and white patterns give a dramatic yet timeless look to the public restrooms. Tile throughout the hospital was supplied by Daltile.
A project of this scope and scale called for a team with extensive expertise in hospital construction, led by architects Cannon Design and executed by general contractor Kitchell Contractors. Commercial flooring specialist, The Rouse Company applied a CustomTech™ flooring-preparation system. Tile contractors on the job included Premier Tile & Marble, who set the tile on floors B1, lower level and 1-3, and Inland Pacific Tile, installers for floors 4-10. Architectural and technical representatives from CUSTOM assisted the designers and contractors during each phase of the construction.
Kitchen quarry tile was set with VersaBond® Flex Professional Thin-Set Mortar, which is formulated for high bond strength and extended adjustment time.
“Jacobs Medical Center is a showcase facility that joins the rapidly-growing ranks of impressive projects specifying Custom Building Products,” said John Diaz, commercial architectural coordinator with CUSTOM. Jacobs Medical Center is owned and operated by UC San Diego Health in La Jolla, Calif.
9″ x 36″ and 6″ x 36″ porcelain wood-look planks were set in the hospital cafeteria and dining room using non-slumping VersaBond®-LFT Professional Large Format Tile Mortar.
Some of the benefits of NTCA extend beyond the NTCA membership. Such are NTCA free webinars and the Tile-TV digital news magazine.
Twice monthly, you can tune in to free hour-long webinars on pertinent topics to the industry, presented by experts. Sessions in the series are individually sponsored by ARDEX, Coverings ’18, Custom Building Products, Emser, LATICRETE, MAPEI, Schluter, and TEC. If you can’t tune in during the day, no problem! NTCA archives all the webinars so all you have to do is go to www.tile-assn.com/?page=webinars, register, and you can watch any of 50 (at this writing) webinars. Some of the webinars include: Sealers for Tile, Grout & Natural Stone; Superior Tile Format, The New Generation of Tile; Barrier Free Showers; Strategies for Social Media; Benefits of Precast Cementitious Terrazzo Tile; Membranes and much, much more.
Take a look! Mike Shoffner, marketing services coordinator for Ironrock, Inc., called these webinars “very educational and informative.” We think you’ll agree.
NTCA also produces a monthly news magazine called TileTV. View it at www.iwantmytiletv.com and learn about industry events in a lively news magazine style. The most recent show at this writing – August 30, 2017, has the 2017 Italian Tile Expo at the center of its program, explaining that “NTCA Representatives will be delivering presentations at the upcoming Cersaie Ceramic Tile Trade Fair in Bologna, Italy. Meetings regarding large format and gauged porcelain tile will also be held with Assoposa and leaders of the EUF. Tune in for more details.”
Coverings, Daltile, LATICRETE, ARDEX, Custom Building Products, Bellota, MAPEI, Tile Shop, Lackmond all sponsor TileTV and make it possible for NTCA to bring you this news magazine.
In addition, a brand new segment for Tile-TV started with this episode. NTCA Training director, Mark Heinlein, answers questions from viewers in “Question Mark”. Tune in to this punchy monthly news show and view archived shows from 2017 and 2016 or follow at Facebook at https://www.facebook.com/tiletv.