So…I’m in the initial phase of the business planning for our window cleaning business in North Carolina. We are building a solid business plan, and are getting ready to apply for the business license and go along with the legalities. (I say we, because it is myself and a good business partner friend of mine that is starting this business. I plan on running this thing LONG TERM - building it into a self-sustaining company someday - his intentions are to make some money to transition him into another line of work eventually later on down the road (several years)).
So with that understanding, I need your suggestions on which route to take…
Sole Proprietor?
LLC?
or
Corporation?
I’ve read into most of the pros and cons of each, and just am unsure of what route to take. I like the ability to freely use money where I desire in the Sole Proprietorship, but don’t like the liability that may come about in the unfortunate circumstance of an accident of some kind.
The LLC is good to prevent “double taxation” but does not allow me to freely disperse money like the Sole Proprietorship, but does prevent personal liability for the company.
The Corporation has its benefits too, but the “double taxation” is really a pain in the you know what…
So what have you guys done, and what do you suggest? Thanks
I’ve been a sole proprietor all along, but have entertained all other options. My wife and I just haven’t been able to come to terms on making a change at this point.
I noticed in your other thread that you are starting this with a good friend. From what has been discussed here and on other Facebook groups, etc., I would encourage you to give just as much serious thought as you are about biz. structure into partnership or not. It seems there are a few pros and many cons. Just saying!
i have been a sole proprietor since the beginning but I will be switching to a LLC over the winter. There is little to no difference between LLC and sole proprietor. A corporation regardless of the type will protect your personal assets if you are sued. It’s a gamble not to become a corporation but if you are wanting a company that extends beyond yourself then do a LLC or C Corporation.
When I finally incorporated from a sole proprietor 7-8 years ago my accountant had me file as an S corp, like David Edwards said, because it’s a huge tax break.
Check your State laws. S-Corps, C-Corps and LLC’s will help you protect your personal assets and they can save some in taxes. C-Corps can create what appears to be a double taxation situation because the Corporation pays income taxes and the individuals pay income taxes, but remember the Corp can deduct payroll as an expense before taxes.
S-corps and LLC’s are pass through entities where the shareholders pay the taxes instead of the corporation.
The thing to check closely in individual states is the Workers’ Comp, Unemployment and insurance regs. In Florida, if you are anything except a sole proprietor, you cannot exempt yourself as owner from paying the Workers’ Comp and unemployment. You may be required to pay workers’ comp and Unemployment that you cannot receive if you are a 1 person operation. If you get hurt, the business closes if you can’t work. How can you collect if the business closes?
Speak to your attorney and tax person to decide which entity is right for you
From how I understand it, with LLC, if you get sued for whatever reason they can only go after your business. They can’t take anything personal.Ex, house, car etc. Hence the term Limited Liability.
The best thing for you to do is not only speak with your attorney, but also speak to a CPA or your accountant. Take their advise, everyone has their own individual situation, there are no two alike.
