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Any advice is appreciated!
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No tax savings being a LLC , and a $800.00 a year filing fee
Unless you want to shelter some liability , stay a sole proprietor. Much easier on a tax filing standpoint and less costly
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It depends on how you want to portray your business my love...
Sole Proprietorship encompasses both personal and professional assets & liabilities...
An LLC is a limited liability corporation, which then separates your personal and professional assets & liabilities , and limits your liability of your business...
It's definitely something that you would want to discuss with a CPA and an Attorney...
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You can get a personal umbrella policy for less money than the $800.00 a year filing fee, that protects you more than a LLC
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Looks like somebody stole your idea ๐
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LLCs are about Liability not taxes. If you don't have any concerns about Liability then remain a sole proprietor. If you are truly trying to separate your personal liability from your business then get an LLC.
If your business goes under your person assets are protected as long as you meet and maintain the requirements of having an LLC
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The gentleman above is 100% correct. An LLC protects all your personal assets and legally keeps them separate from any lawsuits a customer might file against your business. Having said that, if your business is growing, looking into an LLC might be quite a good idea for you. It does cost roughly 1000 per year to maintain.
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both sole proprietor and llc goes onto your 1040 form. so there's not much of a tax difference. you might be able to claim more deductions as an llc though
the major difference is that an llc provides some protection in case you get sued. it's a separate entity. but to really be able to use that as a 'shield' you have to really run the llc as a company. i.e. make sure your bylaws are appropriate, have your annual meetings, keep up on your filings, etc
unless you're really making a lot of money, or have some proprietary information, technology, patent, etc - stay as a sp
but i'm a stranger on the internet - and not a lawyer or accountant. so take this with a grain of salt and get advice from a real expert
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LLC = limited liability "company" not "corporation"
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Thanks everyone all this info helps and is something I will take into consideration
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Peregrine is mostly correct in what he is saying. If you are a 1 person Limited Liability Company then the LLC is treated as a "disregarded entity" and you report your income on Schedule C of your form 1040 the same as you do now as a sole proprietor. Assuming you are a 1 person California LLC you will still need to file an abbreviated California LLC tax return with the Franchise Tax Board. If more than 1 person owns the LLC you will need to actually file a Federal Income tax Return for the LLC.
I would put the minimum cost of having a California LLC at more like $1,500 per year. $800 is the minimum tax and the rest is the cost associated with having maintaining the LLC and preparing the tax returns.
You need to talk with a knowledgable CPA or Attorney to determine if you should create an LLC.
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Ahhhh Pastry, hearing you talk about business is getting me hard.
If you need a maintenance man, I'm your man:
I can pull weeds. I can shake your tree. I can trim your bush. I can water your lawn. I can check the holes for gophers, deep into them holes. I can lay pipe too, let me do your plumbing. I also paint, I can paint the front and the back..
Let me cultivate your garden. It will need to be fertilized.
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Stumpy is correct about annual costs of maintaining an LLC the other comments are fairly accurate.
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in a LLC, the year end profit is subject payroll tax.
maybe look at S corp..
same start up cost.
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My company is a set up as a S corp. LLC is quite similar. It is to separate your personal assets from the business and liability. all of the advice above seems very consistent with the facts as I understand. The only thing that I didn't see mentioned is that an LLC or corporation does not allow you to be a total A HOLE running it. If it's determined that the corp. is just a sham and you're harming somebody financially or physically due to your gross negligence the corporate "vail" can be pierced and you can be held responsible. Similar to many exculpatory clauses that companies try to use.. "we are not responsible for...." yadda yadda... Any ways all good comments and advice from "da guys" above.
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with S/C corp...would need to take payroll, a separate tax filing...so add that to the minimum tax in extra costs involved
old partner going thru a couple easy C-corp audits now...agents are saying get ready for more corporate audits in general
i hadn't seen one in 25plus years
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I like your soft soles. Does that count?
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I've had them all at some point and unless you got a specific reason for doing something, I'd stay with Sole Prop.
LegalZoom can set it up but it's a pain in the ass to maintain an LLC, S or C Corp. Annual fee, annual Secretary of State Statement of Information, extra tax return, annual meeting minutes filing, etc. etc.
If you're concerned about liability, buy insurance or get an Umbrella Policy.
Oh, and don't do anything fraudulent. If you do, they'll pierce the corporate veil and take you down regardless your so-called limited liability.
Good luck
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All of the answers you have heard are inaccurate or flat-out wrong.
1) There is no tax advantage to a single-member LLC vs a Sole Prop.
2) If you make the proper elections to have the SLLC treated as an S-Corp there could be plenty of advantages
3) the advantages of the elections in #2 are income-driven and at lower income levels it is not worth the headache and cost
4) SLLC is always a good idea if your business could put other business and personal assets at risk from creditors or litigation.
Ill send you a PM if you wish to discuss it
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the moment you say LLC, the state of California wants $800 per year regardless of the income you make or dont make, even in the planning stages and building up to go into business, they will say you owe them the $800 annual fee. You can get the same things by remaining a sole proprietor. Filing a schedule C will save the $800 fee plus you can write off expenses the same as you do with a llc. Unless you are making millions , an LLC is pointless. Lot of companies say they will give you corporate credit, however that is slim to none in the start up phase.
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