Sole Proprietorship, Corporation or LLC?

[jwbryson1]

Is there much protection added going LLC?

:scratch:

2 words: LIMITED LIABILITY

 

[CCericola]

You will get advice on all types of business here. When it is all said and done, no matter what we say, you should consult an accountant so you can choose what is right for you.

 

[pixmedic]

:scratch:

2 words: LIMITED LIABILITY

"Limited " NOT "none"

 

[mjhoward]

:scratch:

2 words: LIMITED LIABILITY

"Limited " NOT "none"

I suppose that would be better than the FULL liability of the Sole Proprietorship though, right?

https://www.legalzoom.com/llc-guide/llc-sole-proprietor-partnership-comparison.html

 

[KmH]

Some additional LLC info;

Please note that under certain circumstances, an individual member may be liable for the debts of an LLC. These circumstances include:

• If a member personally guarantees a debt.
• If the LLC fails to have a separate bank account and personal funds are intermingled with LLC funds.
• If the LLC has minimal capitalization or minimal insurance.
• If the LLC fails to pay state taxes or otherwise violates state law (like defrauding consumers).

Disadvantages

Cost. LLCs cost more to set up and run than a sole proprietorship or partnership. For example, there are the initial formation fees, filing fees and annual state fees. These costs are partially offset by lower insurance costs.

Formal organization. Although an LLC requires less formalities than a corporation, there is still more paperwork involved than a sole proprietorship or partnership. A sole proprietorship or partnership can commence and operate without any formal organizing procedures; not even a hand written agreement is required.

Separate records. In order to maintain the separate form of the LLC and maintain the liability protection of its members, the owners of the LLC must carefully maintain separate records and keep their personal business separate from the LLC's business. Even more importantly, the LLC's money should never be intermingled with personal money.

 

[jwbryson1]

:scratch:

2 words: LIMITED LIABILITY

"Limited " NOT "none"

I suppose that would be better than the FULL liability of the Sole Proprietorship though, right?

https://www.legalzoom.com/llc-guide/llc-sole-proprietor-partnership-comparison.html

Correct, MJHoward. The only way to avoid all liability and to have "no liability" as pixmedic suggested would be to sell your camera and stay home. :mrgreen: The point in incorporating is to gain limited liability and avoid UNlimited liability.

 

[tirediron]

Rules may be different in the US, but in Canada, the "extra protection" offered by incorporation, LLC, et al is really null and void for a photographer unless you aren't actually shooting the event. If I am incorporated, and muck up a wedding shoot, the couple will surely sue my company, but in all probability, they will also name me personally in the suit as I was the photographer.

 

[mjhoward]

Some additional LLC info;

Or they could just read the full text in the link I posted.

 

[pixmedic]

Correct, MJHoward. The only way to avoid all liability and to have "no liability" as pixmedic suggested would be to sell your camera and stay home. :mrgreen: The point in incorporating is to gain limited liability and avoid UNlimited liability.

Yea...i didnt imply that anything was "zero" liability, nor that i even thought anything was. My intent was that even though I understand the basic premise of "limited liability" i was unclear as to what limits were placed on the person. Apparently english is not my strong suit since this was clearly misunderstood. Apologies.

 

[12sndsgood]

The liability like anything else is going to vary from case to case,and with the court system there is no single clear answer, But an LLC does have extra layers of protection compared with a sole proprietership in regards to personal assests as long as you do things correctly and by the book. for example. you want to buy a tv. well you have the money in your business account so you go and buy it using your business card. now in the courts eye, you and the company are one in the same and they have the ability to go after your personal assets. same scenario, but you write yourself a check from the business, its considered payment for your services of photography. now you take that money and go buy the tv. now you are still considered seperate from the company itself and your assest become a lot harder to go after. this is just an example and may not be the best example. but from what i have read, these are the little things you have to watch out for to keep yourself seperate from the company and harder to go after in a court case.An LLC does help seperate you from the business. but its not just foolproof protection. Just do your research and really find out where those layers are and what your responsibillities are. And hope you never have to put them to use.

 

[2WheelPhoto]

This has been an interesting thread in advance of my photography business class (and last class before I'm certified at USF). I like CCericola's answer =)

 

[jwbryson1]

I like CCericola's answer =)

She always has good input because she knows what she's talking about.