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  1. #1
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    LLC or Corporation?

    I have just started a home-based business with Ameriplan and was wondering if I can put it as a LLC or a corp. If anyone have any suggestions, please don't hesitate to post reply.
    Last edited by moospot; Dec 29, 2005 at 07:22.

  2. #2
    SitePoint Addict michael - ohio's Avatar
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    If you set it up as a Corp. you'll probably want it to be an "S" corp (as opposed to a 'C' corp) so that all profits will pass to you and be taxed at your personal tax rate (which is generally lower than the corporate tax rate). If you set it up as an LLC, the fed now requires you to register it as a 'sole proprietor LLC' if you don't have any partners.

    What should really drive your decision about entity type is what you plan to do with the company in the future: do you plan to bring in partners, sell it as a whole, sell shares or stakes, issue stock, etc.

    Each entity type has it's advantages and disadvantages - as well as different reporting and recording keeping requirements. And each has different pros and cons with regard to shielding from personal liability, ease of transfer or sale of ownership.

    Talk to a CPA and a lawyer about what you want to do and when you expect to be able to do it.
    Last edited by michael - ohio; Jan 1, 2006 at 01:20.

  3. #3
    Non-Member demosfen's Avatar
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    Is there a reason why you can't have it as sole proprietorship?

  4. #4
    Resident Grump BillyParadise's Avatar
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    Sure, it's called the corporate shield. Nobody should run a business as a sole proprietor.

    http://www.buschfirm.com/articles/cb...ping_your.html

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  5. #5
    SitePoint Wizard
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    Don't talk to a lawyer, talk to an accountant. People always get this wrong.

    I think it really depends on your needs. Also, the feds don't have much say in business registration, that's a state thing. I know that Florida lets your register one-man LLCs with the same benefits just fine. It varies between states.

  6. #6
    Non-Member demosfen's Avatar
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    Quote Originally Posted by BillyParadise
    Nobody should run a business as a sole proprietor.
    BP
    I do... No need for a shield, the creditors can confiscate only what they can find

  7. #7
    SitePoint Guru Marubozo's Avatar
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    It really comes down to what type of business you are running, how much money you anticipate making, and your current financial situation (assets, liabilities, other income, and tax rate). The obvious advantage of operating as an LLC or a corporation is the seperation of you as an individual with your company as a seperate entity, which creates the personal liability protection you are probably seeking.

    But, from a tax perspective, there are many things to consider, and the best option for you will ultimately depend on a number of things unique to your own specific situation. In some instances, pass-through taxation benefits of an LLC or S-Corp might be a benefit for you, but in other instances, keeping the true corporation seperate and having corporate taxes seperate from your personal taxes might be more beneficial. If you are completely self-employeed, or have secondary income as well, this can play a huge part in other tax considerations.

    As charmedlover said, you really should speak to an accountant and go over your options, as they are the ones who will be able to illustrate where you can benefit the most in each situation. As Billy said earlier, it really makes no sense to be a sole proprietor when it costs next to nothing to establish a seperate business entity, but choosing the correct entity can make a tremendous difference.
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  8. #8
    Non-Member demosfen's Avatar
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    Marubozo is back?? One would think you died or accidentally deleted your sitepoint bookmark or something

  9. #9
    SitePoint Guru Marubozo's Avatar
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    Quote Originally Posted by demosfen
    Marubozo is back?? One would think you died or accidentally deleted your sitepoint bookmark or something
    It is true, I have been MIA for quite some time, but I do occasionally brose the SPF
    Generation X Finance
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    Financial Planning writer at About.com


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