sole proprietorship or LLC?

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For those of you out there with your own small business, how do you have it registered? Sole propietorships require less paperwork and BS, however you as the owner are solely responsible and anyone who sues you can come after your assets. Whereas the LLC has a lot of paperwork and all that fun stuff but your personal property cannot be taken if you were to get sued. Looking at my options....what do ya'll out there have?
Reply:This page seems to do a good job explaining the pros and cons.http://www.legalzoom.com/incorporati...omparison.htmlRichardSculptures in copper and other metalshttp://www.fergusonsculpture.comSyncrowave 200 Millermatic 211Readywelder spoolgunHypertherm 600 plasma cutterThermal Arc GMS300 Victor OA torchHomemade Blacksmith propane forge
Reply:If you have a problem telling right from wrong neither has any advantage, a proper charge or suit will blow through both in a minute as well as a corporation.That said, a suit against an LLC or corporation will require the opposing attorney to work a tad bit harder... just a tad though...Matt
Reply:Ya I know the differences between the two...just trying to get a feeling if those with a SP feel that insurance covers their butt good enough or if it's worth the extra pain and money to do an LLC
Reply:it was 180 to do a LLC , i got it cause i liked the extra letters behind my name. lol jk Yeah basically i was trying to keep the two seperate but i doubt i have done a very good job of that as most the time the rent at home gets paid by the llc so who knows ill probably be in jail for tax fraud or something knowing my luck , there are 15,000 pages of tax code. i know one, how to send them the money they say i owe when we do the paperwork.I forgot how to change this.
Reply:Your choice should be based on how you want your  income divided between you and the Gub'ment.How much money you are making/billing will be the deciding factor really.A session with a good tax account is worth the money.Legal protection is just a Myth.Ed Conleyhttp://www.screamingbroccoli.com/MM252MM211 (Sold)Passport Plus & Spool gunLincoln SP135 Plus- (Gone to a good home)Klutch 120v Plasma cutterSO 2020 benderBeer in the fridge
Reply:Well spoke with a buddy today who happens to be in the money making business. I'm not a business major and have no interest in paperwork or taxes other than what is required of me. Looks like it will be an LLC. Pay out dividends instead of a salary and yadda yadda. Guess I'll go from there and see how things work out
Reply:legal zoom is the best
Reply:I have a LLC. It just fit my program best at the time I started it..............................."Look Good Doing It"!!!!!!!!!!!!!!!
Reply:I went with an S.Corp, There is a few more tax savings with it than the others but you have the head ache of all the paper work that goes with it. Sat down with a CPA and this was the best for me.LarryMiller XMT 304 CC/CVSyncrowave 180 SDLincoln PowerMig 255XTTermalDynamics 52Lincoln 305GComlpete machine shop to back it up
Reply:Originally Posted by Broccoli1Legal protection is just a Myth.
Reply:LLC and good insurance
Reply:LLC.It will give you "some" extra protection.  The days of hiding behind the corporate shield are pretty much gone.  IIRC, there are subtle differences in the way insurance payments can be made, but not a whole lot more. In terms of income, it doesn't matter.  You empty the corporate acct at the end of the year and pay personal taxes on it.TA Arcmaster 300CM3XMT 304S22P12 suitcase feederX-Treme 12VSOptima pulserTA161SMaxstar 150STLHypertherm PM45OP setupStihl 020AVP, 039, 066 Magnum
Reply:Why are you in such a hurry to become a Corp?Most ventures fail in 5 years. Starting off as a corp and having limited profit is just going to accellerate your demise. The bookwork is a huge drain. Between the bookwork and your accountant fees, you may as well shoot yourself in the foot.I would start off as an SP and try to rake in some profits.Oh, I agree about the insurance. Better to put your money there.Weld like a "WELDOR", not a wel-"DERR" MillerDynasty700DX,Dynasty350DX4ea,Dynasty200DX,Li  ncolnSW200-2ea.,MillerMatic350P,MillerMatic200w/spoolgun,MKCobraMig260,Lincoln SP-170T,PlasmaCam/Hypertherm1250,HFProTig2ea,MigMax1ea.
Reply:An LLC, S Corp and SP are all taxed the same as a pass through entity.  The differences are in the legal distribution of stock and how the ownership is composed.  An LLC, S corp and SP are all taxed at the pass through rate of the business principals.  Been there, done that.  Regardless of what some say or think, incorporation does offer some liability advantages.  And you'll need some good insurance as well.  We start with a million general liability and inland marine on anything taken to the job.A lot of it depends on the state in which you incorporate.  Some use their own states, some use Delaware, some use Nevada.  Nevada has an advantage that the corporate veil is rarely pierced in Nevada courts.  The indemnification is significant. If you are doing business in Nevada with Nevada based employees, they don't share the info with the IRS.  If you are what they call a "foreign entity" in your home state, incorporated in Nevada your home state may share that info, but Nevada won't.  Regardless of if you are an SP or a corporation the IRS is going to require the same documentation in your book keeping.  You are going to have to substantiate income and deductions if required.  To keep the corporate veil intact you are going to have to run the business as a separate entity.  Ed says it's a myth but he likely didn't have good enough accountants and lawyers or book keeping skills.  In Nevada, if you do it right your personal assets will be shielded.  Guys run into trouble when they co-mingle funds, pay for personal expenses out of the business account, etc and not maintain the separation between the individual and the corporation.
Reply:get some good local advice, learn  the deductions, practice explaining why the office needed a 52" plasma tv...
Reply:Thanks for the good info dstevens. My home of residence is in Indiana but I live in Florida currently and will for the next 7 months or so. Not sure where I'll be next but I'm military and my wife and I are keeping residency in Indiana. I will be filing the LLC there. The taxes suck, but I'd rather maintain everything there instead of switching over. Were looking into having my wife go back to school for business classes to learn to do the books. Probably will start off with a CPA for the taxes at first and see if we can eventually transition over to doing it all ourselves.I may start as a SP and transition to a LLC on down the road. Need to talk with some buddies that were business majors and know a little more about all this than I do. Thanks for all the replies.
Reply:I'm not sure if it's the same in your state, but Texas as well as many other states impose what is commonly referred to as a margins tax. LLCs and S-Corps get hit with it. NFIB fought it and finally got SPs and general partnerships excluded. We chose to stay SP until company size makes it absolute necessity to file on the corporate side. Better to roll profits back into the health of the company and equipment upgrades thereof while we can, than to have it all consumed by so many state/fed taxes. When it all comes down to it, regardless of what you decide, good insurance goes a long, long way. Just my .02 MM140 AutoMM252"Sometimes you just have to shoot the engineers and get on with the job"
Reply:no tax advice here, you have to find your own way; but  having a structured business arrangement using an LLC or S-Corp does present well to potential customers. it will also push you towards keeping your business and personal records separate.   as far as the complexity of returns for an independent contractor there is not much difference between an s corp and schedule c.  as far as the expense of the s corp annual filing it is 150 dollars (in florida) that's it.  you'll save that on SE tax.   get yourselff some tax software, i use turbo tax and it makes filing very easy.  you should be using it anyway.
Reply:Originally Posted by dstevensAn LLC, S Corp and SP are all taxed the same as a pass through entity.  The differences are in the legal distribution of stock and how the ownership is composed.  An LLC, S corp and SP are all taxed at the pass through rate of the business principals.  Been there, done that.  Regardless of what some say or think, incorporation does offer some liability advantages.  And you'll need some good insurance as well.  We start with a million general liability and inland marine on anything taken to the job.A lot of it depends on the state in which you incorporate.  Some use their own states, some use Delaware, some use Nevada.  Nevada has an advantage that the corporate veil is rarely pierced in Nevada courts.  The indemnification is significant. If you are doing business in Nevada with Nevada based employees, they don't share the info with the IRS.  If you are what they call a "foreign entity" in your home state, incorporated in Nevada your home state may share that info, but Nevada won't.  Regardless of if you are an SP or a corporation the IRS is going to require the same documentation in your book keeping.  You are going to have to substantiate income and deductions if required.  To keep the corporate veil intact you are going to have to run the business as a separate entity.  Ed says it's a myth but he likely didn't have good enough accountants and lawyers or book keeping skills.  In Nevada, if you do it right your personal assets will be shielded.  Guys run into trouble when they co-mingle funds, pay for personal expenses out of the business account, etc and not maintain the separation between the individual and the corporation.
Reply:Originally Posted by BCTimberwolfI may start as a SP and transition to a LLC on down the road. Need to talk with some buddies that were business majors and know a little more about all this than I do. Thanks for all the replies.
Reply:Originally Posted by scottcompositesI'm not sure if it's the same in your state, but Texas as well as many other states impose what is commonly referred to as a margins tax. LLCs and S-Corps get hit with it. NFIB fought it and finally got SPs and general partnerships excluded. We chose to stay SP until company size makes it absolute necessity to file on the corporate side. Better to roll profits back into the health of the company and equipment upgrades thereof while we can, than to have it all consumed by so many state/fed taxes. When it all comes down to it, regardless of what you decide, good insurance goes a long, long way. Just my .02
Reply:for the record it is corporate veil, not corporate shield.   another thing to consider is that the incidence of audits by the irs is considerably higher for SP's filing a schedule c as opposed to an s corp.
Reply:Originally Posted by socoj2Texas has margins tax because as Pass through entities S-Corp and and LLC would pay no tax what so ever on profits as its just income to the owners and S-Corp and LLC are exempt if revenue is below $600k.
Reply:Originally Posted by LarrysmachineI went with an S.Corp, There is a few more tax savings with it than the others but you have the head ache of all the paper work that goes with it. Sat down with a CPA and this was the best for me.Larry