INC. or LLC

[Wolfking42084]

Just wondering what everyones idea on making their company either an LLC or becoming INC.? And for those that are one or the other, what was the easiest and cheapest way to get it set up? thanks logan

 

[CentaurG2]

You will need to check with the laws in your state. Each state has different rules regarding business designations. Also check with your accountant and lawyers to make sure that your choice of business meets your needs for both protection and tax/revenue flow.

 

[John Paul Sanborn]

It depends on your size. LLC does offer some limited protections, INC even more. Many of us do not separate our business and personal expenses as strictly as the law would require for either protection to be good enough in court.

C Corp does offer some benefits with self employment tax, but you will need to employ yourself and pay a salary. Then you will also have 2 sets of taxes to file.

Of me being an LLC and having a tax ID give me a legal identity as a true sub contractor in the eyes of the state and insurance companies.

 

[TreeTopKid]

It depends on your size. LLC does offer some limited protections, INC even more. Many of us do not separate our business and personal expenses as strictly as the law would require for either protection to be good enough in court.

C Corp does offer some benefits with self employment tax, but you will need to employ yourself and pay a salary. Then you will also have 2 sets of taxes to file.

Of me being an LLC and having a tax ID give me a legal identity as a true sub contractor in the eyes of the state and insurance companies.

In the UK to become a limited (Ltd) company you have to have reached a certain tax/turnover threshold. Is it the same here? I've been wondering about this for sometime.

 

[John Paul Sanborn]

LLC is a limited liability corporation it is designed to shelter the owner from fault derived from the business. ie they cannot sue you for your house, car and wifes jewelry. Unless you acted in criminal fashion.

 

[TreeTopKid]

LLC is a limited liability corporation it is designed to shelter the owner from fault derived from the business. ie they cannot sue you for your house, car and wifes jewelry. Unless you acted in criminal fashion.

Thank you, it is the same as a 'Limited' Company.

 

[Wolfking42084]

Would an LLC be worth pursuing since my business is a secondary income? Sorry, kind of lost on the whole thing

 

[John Paul Sanborn]

I know guys who have worked for 30 years with out it. Depends on your comfort level and what you do.

The only reason I did it was for bona fides as a subcontractor.

If you think it unlikely that someone will sue you for everything you have....

 

[lt1nut]

Would an LLC be worth pursuing since my business is a secondary income? Sorry, kind of lost on the whole thing

Listen to what JP is saying. Check with an atty before doing anything, or spend some time researching it on the net, talking w/ other contractors/subs you know and trust.

In a nut-shell a lot of it comes down to how much you have to lose financially now and in the future if something dumb happens to or is caused by you.

Sole Proprietor: you are the company and the company is you, one and the same come hell or high water. If you mess up, negligent or not, you are personally, 100% on the line, responsible. This includes your house, future earnings, inheritance, wages from your job and possibly that of your wife's, retirement and college savings (???), etc. Tax-wise all income is personal income, the company is NOT it's own, separate entity and therefore can not retain earnings.

LLC: "LIMITED Liability Company, does not require a Board of Directors, Board Meetings, etc. You have limited liability (personal responsibility, "sheltered") if the unthinkable happens, as long as you were not negligent to a fault (irresponsible). If you were to be sued the party suing you would have to prove negligence in order to go after your personal net worth / finances. Tax-wise the company is more of it's own entity, I BELIEVE it can retain earnings, own equipment, etc.

Sub Corp, Sub Chapter S, INC.: you become more and more legally separated from the company, the company becomes more and more as separate entity (think: person in and of itself); more reporting needed, more expensive to start/initiate, more/different tax ramifications, etc.


In all honesty, LLC is a HUGE benefit to contractors, it was "made" for the smaller to medium company that wanted/needed most of the protection of the various Corp/Inc.'s but could not justify the expense and b.s. of being a Corp. Think of it in terms of how big of a saw you need for bucking up to 12" logs: overkill is fun for a short while but becomes a huge burden after and hour or so, that may be a 357 or a 372 depending on the person.


I am NOT an Attorney or an Accountant, this is just my basic understanding and is not to be taken as advice in any way. I recommend talking to a CPA, tax Accountant or business/contract Attorney.

 

[Wishie22]

Ask your accountant when you do your taxes.

I am pursuing an LLC for Business, Rentals will be under a seperate LLC (Have a two family home).

Just to protect my family and dwelling from the rest of the sew happy public. Had a guy lock up his breaks :jawdrop:, I didn't stop in time. While being sued we discovered he had anther case he was sueing on. He locked up his breaks on someone else... :looser:

You can be driving down the road and a tire blows out causing you to loose control. Someone is hurt and your car ins. gets maxed due to treatments needed. Then they start going after personal assets, house, cars, equipment, college funds, etc.

I don't wish injury upon anyone and would want them to get the best treatments necessary.

You still have to look out for protecting your family too.