Wednesday, May 26, 2010

What is my best option in registering. Dont want it affecting personal assets, but am the only owner.? -

I m unsure of what would be the best way to go. I am think LLC, but am not so sure. I would be owner and operator, but want to make sure my personal assets are protected. What is my best option?

LLC is usually the best option for the type of business you are talking about. You could incorporate, but that is a huge pain in the butt to deal with: another level of tax reporting (though not taxes, if you are a Sub-Chapter S corp.), reporting to the state, state excise taxes, annual report filing fees, etc. etc. Sub-S status does have some advantages, though. For instance, as long as you pay yourself a reasonable salary for your work (you need to be on payroll if you have a corp, you don t just take draws) then anything left over at the end of the year does not get the double self-employment tax; it just gets taxed at your income tax rate. Also, since you are an employee of the corp, you can lay yourself off if business gets bad and get unemployment compensation. States usually have stricter standards when an owner/manager of a Sub-S corp lays himself off, but if it is legitimate you should have no problem. I am not sure the extra bother and expense is worth it unless you are a very seasonal business and expect to lay yourself off every year (like if you live in a resort area of some kind.) An LLC gives you the same level of liability protection that a corporation does, without all the corporate paperwork and (sometimes) the state fees. Keep in mind, though, that neither the LLC or a corporation will be able to get a loan without you co-signing for it, and anything that you personally do that is fraudulent or illegal will still attach liability to you. If you have any questions about this, I would get in touch with a lawyer. Keep in mind, though, that lawyers tend to like corporations for some reason. I think they like to make money writing up articles of incorporation and doing your filings.

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