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Sole Proprietorship, or LLC?

Discussion in 'Business Fundamentals' started by beanz27, Mar 14, 2013.

  1. beanz27

    beanz27 Senior Member
    Messages: 984

    So here is my question, and I know little about this.

    I want to do this the right way, actually have a legit business and all. For snow I would think it would be better to be LLC due to liability, but sole proprietorship is much easier to set up.

    Any thoughts, ideas, or guidance here? I can do either, and if one costs more then the other, I'm trying to stay under 5k.
  2. Mass-hole

    Mass-hole Member
    from Boston
    Messages: 35

  3. mike33

    mike33 Senior Member
    Messages: 335

    S corp, this is what i went to from being asole propriotor
  4. joe2025

    joe2025 Member
    from NEPa
    Messages: 56

    I would set up an LLC, you can do it yourself like Mass-hole said. I had my lawyer set it up for me so I didn’t “miss” anything with the paperwork. If you are a small company when it comes tax time the LLC is figure separately from any other income you may have and then it is transferred to your personal tax return as a line item for profit or loss. LLC will protect you from liability to a certain extent but not 100%. Setting up as a corporation can get confusing and expensive for a small company. My accountant advised me to stay as an LLC until the company grew to a certain point, income, employee’s, capital, etc..etc..etc..

    I believe that an “S” corporation is similar when it comes time for taxes as the business expenses are “passed” to your personal taxes return as a line item for profit or loss. Your best bet is to talk to your accountant for some advice that fits your business and personal situation. You may want to run it by your attorney as well. No sense it setting it up until you are sure about what you want to do not only now but in the future.
  5. tuney443

    tuney443 PlowSite.com Addict
    Messages: 1,847

    Another one of those questions best answered by a professional---meaning a CPA and/or a lawyer.You know,it's like the pretty blond believing Bubba with the buck teeth is a French model--because he told her and everything on the net just has to be true,right?
  6. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

  7. beanz27

    beanz27 Senior Member
    Messages: 984

    How long does it take you to search for these photos lol?

    you have waaay too much time on your hands lol.
  8. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

  9. 32vld

    32vld Senior Member
    from LI, NY
    Messages: 622

    When I went legal I asked my lawyer better solo or LLC. My lawyer said as far as tax reasons it will most likely not matter because your income may not be that large.

    Being an LLC you will still be able to be sued personally for damages.

    As the owner, if all I did was sit at my desk and answer the phones but did not do actual work but used an employee to do the work and my business was sued for damages.

    The employee breaks a window, he can be sued because he did it in the course of performing his work, and the corp/business can be sued. Though I could not because I would not be liable.

    Though being I would be the one doing the work, solo so I am the only employee of the business. The business would be liable and so would I because I phyically was the one that did the damage.

    Before my lawyer explained this to me he said I will be talking myself out of $300 LLC fee.
    So being that I would still be on the hook to get sued it was not worth it to become a LLC at this time.

    Only thing to wait and see is at what point the accountant determines that I will be better off as a corp. Hope WE all make that much money real soon.

  10. mike33

    mike33 Senior Member
    Messages: 335

    S corp works well for me, and yes talk to a cpa and an attorney. I have a landscape business in summertime and of course plow in winter. I work for the company and on payroll as long as we are working. So i get a W-2 in Jan. just like my guys. If we screw up yes i carry 2 m. ins but my home is safe since it is mine and none of the company is tied in even though i own all 100 shares of corp. I pay weekly fed, state, med.,ss, and unemployment tax just like the remainer of staff. I go for a loan i have a w-2 to show for my income. Tax time the corps profit or loss is added or subtracted to my income and taxs based on that. On a S corp if there is money left over it can be rolled over to another year where an LLc you will get taxed on. All depends on what works for you. LIke the ford and chevy debate.
  11. mike33

    mike33 Senior Member
    Messages: 335

    Sole prop. everything with your name on is at risk on law suit. Its hard to have yourself on pay roll too. I would never go this route, i did for years and considered myself lucky.
  12. framer1901

    framer1901 Senior Member
    Messages: 852

    I think it really depends too on where you are at in business and where you plan to go.

    There are definetly added costs to being a S Corp, as in the cost of tax prep - I wouldn't even know where to begin at doing our taxes. Money can move thru a S Corp differently also, so I'm told - it seems to move pretty fast at this point.

    I'm no lawyer, but by being a S Corp, I don't completely trust that all my personal stuff is protected - in this society, I don't think anything is protected.

    Assuming the worst in liability, I worked with an accountant and choose the S Corp path. Fiscally, there are way more advantages than LLC or Sole.

    With all that being said, if you are just farting around doing 20-75k a year, you'd have to look at the added cost of tax prep and see if it's worth it. Quick Books or something similar will definetly pay for its self when it comes tax time.
  13. mike33

    mike33 Senior Member
    Messages: 335

    Well said.