Sole proprietor, LLC, or INC? I am a one man show. Time to renew the FLL and bus license and need to make a decision.
Gunsmithing Business Structure
- Thread starter JimT
- Start date
Re: Business Structure
I am a one man operation also.
I have an LLC to provide separation between the company and myself.
I am a one man operation also.
I have an LLC to provide separation between the company and myself.
Re: Business Structure
LLC is a good way to go, just make sure you operate it as such, or the label is meaningless. The idea is to limit your personal assets from exposure to the business' liability. If you don't take this seriously and end up with some type of liability, they will look to puncture the LLC's veil and attach your personal assets to any claim.
LLC is a good way to go, just make sure you operate it as such, or the label is meaningless. The idea is to limit your personal assets from exposure to the business' liability. If you don't take this seriously and end up with some type of liability, they will look to puncture the LLC's veil and attach your personal assets to any claim.
Re: Business Structure
Very good point. If you mix your business and personal finances then all bets are off.
If you want things to be separate... they have to be kept separate.
Separate bank accounts (I use separate banks), separate CC's, etc.
Don't spend personal money on business, and vice versa.
Maybe I'm just paranoid?
Very good point. If you mix your business and personal finances then all bets are off.
If you want things to be separate... they have to be kept separate.
Separate bank accounts (I use separate banks), separate CC's, etc.
Don't spend personal money on business, and vice versa.
Maybe I'm just paranoid?
Re: Business Structure
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: turbo54</div><div class="ubbcode-body">Doesnt an S corp more effieciently separate a mans personal finances from the corp?</div></div>
It won't do much more than an LLC, and it is pass through income. Either can be very effective and either can be run sloppily and have their veil punctured. I'm far from an expert, but for a single person, I think an LLC (properly run) would be more than enough to protect your personal assets. S-Corp, LLC, and Sole Propietor will all be taxed about the same. It might be good to talk to an accountant, but my bet is on an LLC being the recommendation.
Dave
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: turbo54</div><div class="ubbcode-body">Doesnt an S corp more effieciently separate a mans personal finances from the corp?</div></div>
It won't do much more than an LLC, and it is pass through income. Either can be very effective and either can be run sloppily and have their veil punctured. I'm far from an expert, but for a single person, I think an LLC (properly run) would be more than enough to protect your personal assets. S-Corp, LLC, and Sole Propietor will all be taxed about the same. It might be good to talk to an accountant, but my bet is on an LLC being the recommendation.
Dave
Re: Business Structure
Aside from the initial expense, I found that incorporation served me admirably for over a decade, and that the additional expense was a genuinely valid investment.
My Brother uses LLC; but his business is more like a vanity/parttime activity. Mine was 80+hr/wk.
I think that each is/was appropriate for the given activity levels.
Greg
Aside from the initial expense, I found that incorporation served me admirably for over a decade, and that the additional expense was a genuinely valid investment.
My Brother uses LLC; but his business is more like a vanity/parttime activity. Mine was 80+hr/wk.
I think that each is/was appropriate for the given activity levels.
Greg
Re: Business Structure
Take a look at this site: http://www.selfemployedweb.com/s-corp-vs-llc.htm It does a very good job of explaining the pros and cons.
Take a look at this site: http://www.selfemployedweb.com/s-corp-vs-llc.htm It does a very good job of explaining the pros and cons.
Re: Business Structure
I would not make the decision based on any "protection" you get, if anything goes south, you are going to be named in the lawsuit no matter what entity choice you make.
I think the consideration comes down to the type of investment is allowed under LLC vs S when it comes to retirement savings plans and health savings plans. I believe this is where a clear separation of the entities exists. I think LLC is better for long term passive type businesses (real estate, etc) with assets, and S is better for active transactional type businesses.
I would not make the decision based on any "protection" you get, if anything goes south, you are going to be named in the lawsuit no matter what entity choice you make.
I think the consideration comes down to the type of investment is allowed under LLC vs S when it comes to retirement savings plans and health savings plans. I believe this is where a clear separation of the entities exists. I think LLC is better for long term passive type businesses (real estate, etc) with assets, and S is better for active transactional type businesses.
Re: Business Structure
I did insurance in a prior life and found that incorporated or not it' is true they can go after anyone involved or invested. The LLC means about nothing. They go after wherever the money is. Best bet is get a couple million dollar liability policy that thoroughly covers your activities and then get a 10 mil umbrella. Your insurance company will not hand out several million without a fight.
That said I just went sole proprietor and bulked up on insurance.
Stick to solid practices that will stand the scrutiny of your peers as that is who will be called as expert witnesses to examine your work and determine if your trigger sear was actually negative and slipped off or your head space was within range when they mixed powders and put 120 grains of Bullseye behind a 300 grain Match King. Keep good records and fired cases from anything that gets test fired and your risk is really pretty small.
There are some attorneys on this forum and it will be interesting to hear them weigh in.
I did insurance in a prior life and found that incorporated or not it' is true they can go after anyone involved or invested. The LLC means about nothing. They go after wherever the money is. Best bet is get a couple million dollar liability policy that thoroughly covers your activities and then get a 10 mil umbrella. Your insurance company will not hand out several million without a fight.
That said I just went sole proprietor and bulked up on insurance.
Stick to solid practices that will stand the scrutiny of your peers as that is who will be called as expert witnesses to examine your work and determine if your trigger sear was actually negative and slipped off or your head space was within range when they mixed powders and put 120 grains of Bullseye behind a 300 grain Match King. Keep good records and fired cases from anything that gets test fired and your risk is really pretty small.
There are some attorneys on this forum and it will be interesting to hear them weigh in.
Re: Business Structure
Your best bet is probably an LLC. Although it won't make you bulletproof regarding personal liability, it may offer you some measure of protection.
Any savings you'll gain by avoiding self employment tax as an S-Corp will likely be offset by the social security and medicare taxes on your salary.
As a C Corp, you'll be subject to double taxation on profit distributions.
Your best bet is probably an LLC. Although it won't make you bulletproof regarding personal liability, it may offer you some measure of protection.
Any savings you'll gain by avoiding self employment tax as an S-Corp will likely be offset by the social security and medicare taxes on your salary.
As a C Corp, you'll be subject to double taxation on profit distributions.
Re: Business Structure
Piercing the corporate veil whether it is a LLC or Corporation is actually quite difficult to do provided the business is properly capitalized and operated as an actual business – <span style="font-style: italic">meaning</span> not just a sham to protect assets. If proper records are kept and assets and money not co-mingled, the personal protection offered by a LLC or Corporation can be very beneficial. Sure, a litigant can attempt to sue you personally, but that does not mean they will be successful. Insurance can provide some level of protection, but there are all kinds of exclusions and there certainly may be tax advantages in having the LLC or Corporation purchased the insurance rather than an individual. A CPA is the place to start.
Piercing the corporate veil whether it is a LLC or Corporation is actually quite difficult to do provided the business is properly capitalized and operated as an actual business – <span style="font-style: italic">meaning</span> not just a sham to protect assets. If proper records are kept and assets and money not co-mingled, the personal protection offered by a LLC or Corporation can be very beneficial. Sure, a litigant can attempt to sue you personally, but that does not mean they will be successful. Insurance can provide some level of protection, but there are all kinds of exclusions and there certainly may be tax advantages in having the LLC or Corporation purchased the insurance rather than an individual. A CPA is the place to start.
Re: Business Structure
A LLC or Corp. will help protect you on the customer side, but I've found most vendors selling you on credit will require personal guarantees which shreads the corporate veil. I've found that as long as you pay your vendors, it's never an issue.
A LLC or Corp. will help protect you on the customer side, but I've found most vendors selling you on credit will require personal guarantees which shreads the corporate veil. I've found that as long as you pay your vendors, it's never an issue.
