Llc

[eyebright]

Is it necessary to have LLC after you business or could you be a sole proprietor? If you have an LLC business what did you have to do to retain that?

 

[meeplesoap]

It is not necessary to be an LLC, you can be only a sole proprietor. However, the protection of an LLC means that should you be sued, your home, vehicles, and personal property are protected from seizure.

I cannot advise what to do, but we've opted for SP to start with, and in a year revisit the LLC option. Setting up an LLC costs around $300-$500 (we're in California). To us, it was worth it to wait a year. It really depends what you have, financially, to put into the business; had I had the excess funds available I would've gone for it out of the gate.

Hope that helps.

 

[la-rene]

Meeple: not only does it cost that much to start with, but it also has an $800 mandatory yearly tax/fee on top of your regular taxes. At least, that is what I've learned and what a lawyer has confirmed. CA sux for small business.

If I am wrong, someone please point me to the right info, because inquiring minds want to know! lol!

LA

 

[BankerJohn]

An LLC is a Limited Liability Company. A Sole Proprietorship means you do business as yourself for tax and liability purposes with a D/B/A (doing business as) trade name.
From a federal and possibly state income tax point of view, the Sole Proprietorship means you file Schedule C and pay taxes as part of your personal 1040 tax filing. An LLC is its own tax paying entity and would require a separate tax filing for corporations (either form 1120S or 1065 depending on the structure of the LLC).
I am not providing tax advice and you should speak with tax counsel on which structure is better for your situation.

From a product liability standpoint, an LLC *MAY* afford you additional protections. I stress *MAY* and recommend you speak with a corporate attorney regarding a recommended corporate structure and potential liability of each, Sole Proprietor and LLC.

Just my $0.02

 

[pamielynn]

Even if you form an LLC - if it's just you, the courts, IRS whatever you're involved with will see that it's JUST you. It won't give you the protection you think it might unless you go in and actually get yourself a board of directors and everything else that goes along with it.