sole propieror vs. LLC

LLC is the way to go if you have the funds to do so.

With a LLC the "company" name is the "owner" and is not tied to any one person. Reason why this is good...you cant be sued only the company can be so your life style will be safe...they cant take your private car/house or your shirt off your back.

If you are a sole owner. The "company" is the owner and the owner is the company. Both can be sued for the same thing. Meaning the company can be sued and then they can sue you privately for the same thing...and win both judgments

When it comes to taxes....since a LLC is counted as its own "person" its HAS its own taxes...some are very steep...but have a good account it an file taxes GOOD an the taxes will be lower (donate a lot of stuff...).

But taxes on a LLC and or on a sole owner....either way you have to pay taxes about three to four times so when you look at the legal side...LLC is a GOOD safe bet.

p.s you can get your LLC in another state legally be run you company in a diffident state. Reason for doing this....some states have a better LLC plan than others from cheaper taxes to Gov/state benefits..something else to look into!

Originally Posted by Victor

Read up on "piercing the corporate veil". It is getting more common to sue the LLC and then sue the members personally. A single memeber LLC like what I think he is talking about is very easy to sue both the company and himself personally as the seperation between the two is limited at best.

True in a way. That is why most llc companies have a BoD (Board of directors) and have CEO's that will "run" the company but when you look inside of there setup you can clearly see who runs the show.

On another note, as you pointed out there is a book an many other good books about LLC's and sole owner type of companies. I was only giving a short hand info on the subject. To know what option is best you should talk with your attorney and or buy a few books on this subject as there are many facts on this.

Couple of notes...Their are some tax saving getting your paycheck from the LLC as opposed to paying yourself as the Sole Proprietor since the LLC paycheck is deduction for the biz. If you are receiving a 1099 from your current employer you had better have a business set up now or your taxes are going to suck. You are responsible for 100% of your payrole taxes not just half(don't confuse that with state and fed taxes) and the deduction you can take as a business will help offset that.

Originally Posted by Bobby

....write off without being a legal registered business.

When I worked for power plants (I use to build them..I was a pipe-fitter by trade) I was a sub contract worker...hired for that one job and that one job only..once job was over I was out of work.

Every day I was out of town (all the time) as I used my mother/fathers house as my "home address" so even tho I was "living" by the job site it was not counted as my home. So as I was saying every day I was out of town. I was able to write off my fuel, wear and tare on my truck (by the mile), hotel costs, food costs, movie tickets...anything that I did out of town was a write off becuase I was working "out of town" an by the IRS they say its a cost so I get money back on all my "costs" at the end of the year.

p.s if you do that kind of work...replace and do all car repairs OUTSIDE your home city (50miles out) and write it off.

Every dime I gave to the IRS I got back at the end of the year...they owed me more than what I paid in...but you can only get back of what you paid in simple (you paid $5.00 in taxes...you can only get back $5.00 not $5.01)

Originally Posted by easyrecycle

p.s if you do that kind of work...replace and do all car repairs OUTSIDE your home city (50miles out) and write it off.

Every dime I gave to the IRS I got back at the end of the year...they owed me more than what I paid in...but you can only get back of what you paid in simple (you paid $5.00 in taxes...you can only get back $5.00 not $5.01)

I would be careful with that...If you are using the Standard Mileage Deduction, that is meant to cover repair costs as well. If you want to deduct repairs you have to break everything down ie. gas and maint and whatever vehicle costs you incur. Also, if you expect to be getting whatever money you are paying in during the year back after you file taxes, your doing it wrong. Why give the feds your money to hold till you want it back? Estimate your tax liability and pay that amount only, come April 15th you should not owe and you should not pay if you estimate correctly.

In VA, it costs $100 with a $50 per year renewal fee. Your business license is a one time fee of $50 (unless it has changed) and unless your company profits over $50,000 then you do not pay anything more for a license, BUT must still renew every year.

If it profits over $50,000 in a year, you pay a % of whatever it makes over $50,000.

If you live in Virginia just go to http://www.scc.virginia.gov/ to learn more about LLCs.

I love LLCs. Wouldn't use anything else. All my firms are LLCs.

Originally Posted by KZBell

.....Why give the feds your money to hold till you want it back? Estimate your tax liability and pay that amount only, come April 15th you should not owe and you should not pay if you estimate correctly.

I find it a GREAT savings plan. You pay a small amount...its held up in a place you CANT spend it.....at the end of the year I get a nice fat check that's all mine =)

+ if you line it up an show that you will owe nothing for that year a head of time. They tend to keep a long eye on you...they think you are cheating the system....better to pay up...fill your paper work and have them go..hey we need to pay you back! you did not owe us ANYTHING. Works better that why I think but...more than one way to skin a cat.

Originally Posted by easyrecycle

I find it a GREAT savings plan. You pay a small amount...its held up in a place you CANT spend it.....at the end of the year I get a nice fat check that's all mine =)

+ if you line it up an show that you will owe nothing for that year a head of time. They tend to keep a long eye on you...they think you are cheating the system....better to pay up...fill your paper work and have them go..hey we need to pay you back! you did not owe us ANYTHING. Works better that why I think but...more than one way to skin a cat.

It's your money, do with it what you will, as for mine I prefer not to have to ask for it back. And it's not that you owe nothing for the year, your just not overpaying when sending in your quarterly payments. It's worked for my business filings for the past 20 some years(knock on wood) but if they do want to have a sit down I'm certain my books balance a heck of a lot better then theirs.

Originally Posted by Bobby

Thanks for all the input, Im meeting with an attorney next week to run a few questions by her, then I should have a better idea if I wil register as a sole proprietorship, or if it will benifit me to form an LLC. If I am understanding it correctly In KY my single member LLC will be recognized the same as a sole proprietorship as far as taxes, and a few of you have stated that it could be treated the same if legal issues were to come up...If this is going to be the case then I can save money on the LLC and regester as a Sole P. Again thanks for the input everyone.

Become a LLC but not as a sole LLC...have a board members...they can be your family...they dont need to do much...better in long run for legal issues.

Originally Posted by easyrecycle

Become a LLC but not as a sole LLC...have a board members...they can be your family...they dont need to do much...better in long run for legal issues.

This is true. You can say that they are your "advisors". You be the chairman of the board, and run the company.

Originally Posted by GeorgeB

This is true. You can say that they are your "advisors". You be the chairman of the board, and run the company.

chairman has no word on the board. They are the "judge" they hear what the board has to say..an helps push them alone. They can not vote unless there is a tie.

You should NOT be on this "board" you have your board members do as you say...or have a clause that you can remove them from board with out notice and place a new board member.

You are on the outside of the board with strings holding each board member and telling them what you need/want. Some may toss there hands up and cause a fight...but they can easily be removed.

How do you think the gov works? you make sure the people you want are where you need them.

(on a BoD of 5 people and you have 3 of them in your pocket...you own the board...3 < 2 not 3 > 2 )

now...i am leaving a good part of info out...but this is where the countless amount of books and your attorney will help you out.

Your bylaws and "rules/laws" of the company..is a big deal...and is HOW you keep it under control...I.E in your bylaws you can say that a ceo has power over blank board and if need be can pull the power from the board and form a temp board of there pickings until a replacement board is found if so called ceo feels they are not doing/working for the best of the said company.

Government works in some of the same ways. I do have some understanding of this because I do hold a set of some power *computer related..nothing government related*

This is a very long subject no matter how you look at it...and...so many ways it can all be setup...but mind your self...the bylaws of any company sets ALL GROUND RULES those RULES are SET by you/founder of the said company/board.

You can find many bylaws online and read them from city's to companies an so on an so on.