LLC or INC

LLC is the way to go for most small businesses. They both provide similar legal protections, however, an LLC does so for less cost, and with less complication. An LLC allows you to continue filing your taxes as a sole proprietor, if you are the sole owner of the LLC. It is what they consider a “pass-through“ corporation.

A corporation is better if you plan to work internationally, it is then required legally. All LLC can only work in the US. The corporation is also often a better option if you intend to run multiple companies underneath of one umbrella.
 
Reach said:
LLC is the way to go for most small businesses. They both provide similar legal protections, however, an LLC does so for less cost, and with less complication. An LLC allows you to continue filing your taxes as a sole proprietor, if you are the sole owner of the LLC. It is what they consider a “pass-through“ corporation.

A corporation is better if you plan to work internationally, it is then required legally. All LLC can only work in the US. The corporation is also often a better option if you intend to run multiple companies underneath of one umbrella.
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Thank you Sir!
 
VenasNursery said:
Was trying to figure out the pro’s and con’s of each.
I appreciate any advice or opinions TIA
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Llc can be setup like sole proprietor with protections or as an s corp. The s corp allows the owner to be an employee and be paid as one instead of a member draw with a normal llc. If employees are already on payroll, an s corp is just adding another employee as far as paperwork and filings. S corp can save significantly on taxes as the employee portion of the owners salary is taxed at a lower rate vs member draws.
 
Fivepoints said:
Llc can be setup like sole proprietor with protections or as an s corp. The s corp allows the owner to be an employee and be paid as one instead of a member draw with a normal llc. If employees are already on payroll, an s corp is just adding another employee as far as paperwork and filings. S corp can save significantly on taxes as the employee portion of the owners salary is taxed at a lower rate vs member draws.
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Thank you
 
Fivepoints said:
Llc can be setup like sole proprietor with protections or as an s corp. The s corp allows the owner to be an employee and be paid as one instead of a member draw with a normal llc. If employees are already on payroll, an s corp is just adding another employee as far as paperwork and filings. S corp can save significantly on taxes as the employee portion of the owners salary is taxed at a lower rate vs member draws.
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That’s what my accountant recommended a few years ago for our company so we made the switch from being a Sole Proprietor LLC to a LLC operating as an S-Corp. There is a financial threshold where this really starts to make sense but your accountant can talk to you about that.
 
RyanCafferky said:
That’s what my accountant recommended a few years ago for our company so we made the switch from being a Sole Proprietor LLC to a LLC operating as an S-Corp. There is a financial threshold where this really starts to make sense but your accountant can talk to you about that.
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Thank you
 
I started as a sole prop, then moved to a LLC. Each year you have the choice to file as a sole prop or as a s-corp.

The accountant who helped me at the time said that the benefit threshold is around 100K. One difference is to be legit you, the owner, must be on 'payroll with a fair and customary pay'. There are plenty of ways to get $ outside of payroll from the business, some of which is tax free, and the others at a much lower tax rate.

If I had to do it over, I would have gone straight to a LLC. I knew I'd get there, but wanted to grow slowly... I think it took more effort to change, than the benefits of doing it when it made sense.
Now anyone that tries to look me up with the state to verify that I am legit sees my biz name as closed and shut down. They have to seek out the name with the LLC at the end to see find it.

Here in Washington, it wasn't just changing the biz, it was a full closure and re-opening with different licenses etc.. I haven't been dinged on it, but the question of 'Years in business' comes up with funding/banking (personal and business). When I could say 15 since I started the sole prop, now I have to say 15 years total, 4 years as a sole and the remainder as a LLC...
 
Another thing to consider is liability and assets.

When I started the only thing I had of value was the business itself. So i wasn't very concerned with the layer of personal asset protection a LLC can offer.

Now that I own a home, I sleep a little better knowing there is a legal separation between myself and my biz.. Saying this a fool would think that there this iron clad, because it is not. It is more so the more tight the biz is, and just takes more work to go through that layer.
 
evo said:
Another thing to consider is liability and assets.

When I started the only thing I had of value was the business itself. So i wasn't very concerned with the layer of personal asset protection a LLC can offer.

Now that I own a home, I sleep a little better knowing there is a legal separation between myself and my biz.. Saying this a fool would think that there this iron clad, because it is not. It is more so the more tight the biz is, and just takes more work to go through that layer.
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Thank you
 
RyanCafferky said:
That’s what my accountant recommended a few years ago for our company so we made the switch from being a Sole Proprietor LLC to a LLC operating as an S-Corp. There is a financial threshold where this really starts to make sense but your accountant can talk to you about that.
Click to expand...
One thing to note, in our state if you have no employees and want to sign up for the state workmans comp, you have to file as an s corp. Something that may or may not apply in your state.
 
Fivepoints said:
One thing to note, in our state if you have no employees and want to sign up for the state workmans comp, you have to file as an s corp. Something that may or may not apply in your state.
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Here in Washington, as a sole prop, State workmans comp is elective. Same if you are a single member LLC... I wish I could get workmans comp just for the hours I'm actively doing real work (chainsaws etc). Unfortunately when the state audits you, they require paying in for ALL business tasks, a phone call, accounting, quotes, the whole works. Each task is its own category and rate.. If they feel this is off, they find a comparable and bill you for the difference plus steep penalties, interest and fines. It takes hiring a lawyer to argue with the state, and typically the best case is getting the interest removed.
I just have health insurance that covers on the job injuries, but no lost income benefits.

I love the idea of socialism, but also hate the idea of government waste...
 
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