Sole Proprietorship vs. LLC

[SteffJay]

I am looking to create my business, and I'm getting very mixed reviews on whether to file as a Sole Proprietor or as an LLC. I'll be honest, when it comes to the business side of things, I am very new. And before I start speaking to banks and lawyers, I'd like to have a little bit of an idea of what I'm talking about and what I'm looking for.

So I was just hoping some of you can tell me what you've done, and how it's worked out for you?

 

[The_Traveler]

I had three LLCs (non-photography but a litigious field) just because of the issue of limited liability.
It cost $, as opposed to a sole proprietorship but it was worth it.

 

[jwbryson1]

From a tax standpoint, a sole proprietorship is generally identical to a single member LLC which is treated as a "non-entity" under US tax laws. From a liability standpoint, you will want to be incorporated to provide a level of protection between yourself and your assets.

 

[12sndsgood]

something im looking into as well. from what ive read so far i have been leaning towards an L.L.C.

 

[SteffJay]

Hmm... it seems like an LLC keeps the individual better protected.

 

[KmH]

If it was that simple, but it's not.

If there is only one member in the company, the LLC is treated as a "disregarded entity" for tax purposes, and an individual owner would report the LLC's income or loss on Schedule C of his or her individual tax return.[/uote]

Starting a Business | SBA.gov

Forming an LLC in New York | Citizen Media Law Project

New York LLC - LegalZoom

Division of Corporations, State Records and Uniform Commercial Code, NYS Dept. of State

Got a store front studio? A home based studio? Home based business, but no studio? Have you talked to an insurance agent, accountant, attorney yet?

Are you just starting to write your business plan, or have you been working on it for a while now?

An attorney qualified to practice in New York is your best source for what business type would work best for you advice. Thirty minute consultations usually don't cost all that much.

Limited liability company - Wikipedia, the free encyclopedia

Limited liability - Wikipedia, the free encyclopedia

 

[Bitter Jeweler]

Honestly, talk to a few accountants.

You get a real mixed bag of what they say. Trust me.
Hear what they have to say, understand it, and then you may have more questions to help you decide.

 

[SteffJay]

Got a store front studio? A home based studio? Home based business, but no studio? Have you talked to an insurance agent, accountant, attorney yet?

Are you just starting to write your business plan, or have you been working on it for a while now?

I'm just starting out. I've been working freelance for a while, but I'd like to have something more concrete. At this point, it's a home based business that I'd like to develop into a studio at some point. I've been doing research to start writing a business plan. I'm taking it very slow. I'd like to have a really good sense of everything and be prepared before I jump in to anything.

 

[jwbryson1]

If it was that simple, but it's not.

If there is only one member in the company, the LLC is treated as a "disregarded entity" for tax purposes, and an individual owner would report the LLC's income or loss on Schedule C of his or her individual tax return.[/uote]

What point are you trying to make, Keith, that has not already been made above? It is true that a single member LLC is treated as a non-entity (or you can call it a disregarded entity--same thing) for US Federal Income Tax Purposes. This means that the single member can either have the LLC taxed as a corporation (such as a C corporation) or the member can report the income on Schedule C similar to a sole proprietor.

These are the TAX rules of an LLC.

Keep in mind that the LLC is STILL a corporation, irrespective of the tax treatment, so the owner still gets the benefit of the corporate shield whether she chooses to be taxed as a corporation or as a non-entity.