For those operating out of the U.S. : Sole Proprietor vs. L.L.C. (11)
For those operating out of the U.S. : Sole Proprietor vs. L.L.C.
I am trying to get started in the AM game but I have a few things holding me up. My number one issue is I prefer not to use my social to do business. I am leaning towards an L.L.C. setup to protect my personal assets but of course I could get started much quicker using my social. I was curious what structure most of you (operating out of the U.S.) use?
I appreciate any advice you guys can provide!
-jagnl
LLC, there is no reason you should be running as a Sole Prop, you will be getting wrecked by taxes and personal liability.
as far as I am aware, an LLC does not have any impact on your taxes if you're just operating as a 1 person LLC, you still are taxed same as if you are a sole proprietor. I believe LLC only provides you with protection from personal liability as long as there is no commingling of funds. I'm not a lawyer so could be wrong here, but I believe you need to file or structure yourself as some sort of corporation to change the way your taxes are setup. LLC is good for protecting your personal liability though. If you plan on doing big numbers and have a lot to lose, you pretty much need to be operating as an LLC or some form of entity that protects you - speak to a professional or at the very least setup an LLC for yourself
I can only speak of my experience in the state of Ohio, I don't know how things are different from state to state. Also, I am certainly not an expert on these matters and you should seek advice from a professional.
Ok, I recently set up an LLC for my AM stuff. Like keepitsimple mentioned, an LLC will not have an initial impact on your taxes. It is for protecting your personal liability and is meant to protect you and your personal assets. Initially, a single member LLC is taxed the same as a sole proprietor but, you can elect to be taxed as an S-Corp or C-Corp instead. This is something that you should definitely speak to an accountant about. I opt to be taxed as an S-Corp because it allows me to leave money in the business at a much lower tax rate and pay myself a salary. As a sole proprietor, everything you make will be taxed as income on your personal tax return whether you leave it in the business or not.
Setting up the LLC is actually pretty easy to do and I did mine myself. But I then sat down with my accountant to decide how I would elect to be taxed and usually have him submit the additional paper work for me.
-Aaron
s corp. pay yourself salary. if your making over like 40gs a year your being an idiot not to get this setup properrly.
Actually if you are just starting out, there is no reason to be anything but a sole proprietor.
1) It's not gonna help with taxes unless you are doing really well.
2) I hate to break it to apparently everyone, but a one-person LLC will not protect or shield your personal assets whatsoever. Despite the name of it.
3) Also, depending on where you live, it can cost quite a bit.
If you are sketched out by using your ssn you can request an ein for free and use that in place of your social (google it).
I am not an attorney.
Originally Posted by palmtree
What I was thinking when I said that was, if you are doing something illegal or shady, don't expect a one-person LLC to protect you (or your assets) when you get sued. Because it won't.
That being said, in some circumstances it does offer certain protections. It varies by state. You should really google it because I'm not a lawyer.
Well it depends where do you live.Check what is the Corp tax in your country and decide what you gonna do.As well as find an accountant explain to him what is your business about and he will recommend what type of sturcture it will be better for you.
For example i am in Bulgaria and i have LTD (which means LLC) here and the tax here is 10% so for me its great.
Not an expert or lawyer, but in my opinion if you plan on making much money an S corp is a good way to go in the USA. Pay yourself, and your spouse if you want, a salary and stuff most of it into an individual 401K. You can shelter quite a bit of income for later in life. Any profits after expense and salary are passthrough. Downside to paying salary is quarterly reporting and payroll tax. There are plenty of accounting firms will figure that out and do the filings cheaply.
Thanks everyone for the advice. After some digging it looks like several above are correct, no tax advantages between a sole prop and single member llc (just liability protecton but even that can be pierced if you aren't careful). Looks like LLC taxed as S-Corp is a good way to go if you don't mind the added paperwork.....
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