business LLC vs. Inc

AJ Drew

AJ Drew

So thinking I need to incorporate or go LLC and I am looking for opinions.  Can someone tell me from personal experience why one is better than the other for you? 

The way I do things, the business has no real assets of its own.  Example: Business paid to me (an employee) money on which I paid personal income tax.  I then purchased a tiller.  Tiller is not owned by the business, it is owned by me.  That way the business carries no inventory and I do not have to deal with things like depreciation.  Makes book keeping something I can manage on my own.

Yes, I do wind up paying more in taxes.  Not being able to depreciate things, paying personal income tax, but it is worth it for the money saved by not needing a book keeper.

Does that sound more LLC or Inc?
 
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Don't rely on this, but I don't think you need an Inc. They cost more, require separate tax returns (CPA), and often real lawyers to do the formation and yearly upkeep. On the plus side, a real Inc. that follows corporate formalities can help shield personal liability. An Inc. would be more appropriate if you plan multiple members, potential shareholders, separately held equity.
 
If it's just a sole member LLC, you can report on your own 1040 (Schedule C) without separate tax returns. Formation can usually be done on your own online via your Secretary of State website (typically for $100/year). You will be issued an EIN (tax payer ID), for which you could even open separate a bank account to keep all accounting separate. On the downside, sole member LLCs don't provide much of a liability shield - but that's what insurance is for.
 
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I just spoke with a lawyer and an accountant about this same thing. Their recommendation was to go S-corp for max personal liability. The S-corp is definitely more involved with the paperwork side, and will cost more at start up. But in the long run, it will protect you better. 
 
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Depends on your state & the cost of getting an LLC.

I would suggest consulting with an attorney for your specific situation - some of the protection these designations imply isn't always the case.

In CA for example, an LLC is $800 a year to maintain, and for a sole proprietor doesn't offer much in the way of protecting personal assets.

Liability insurance is a much better investment for that reason.

But yeah - very specific to your situation and geography to see if the juice is worth the squeeze.
;)
 
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check with your local Small Business resource center or SCORE representative for your state.  They will generally give you much better real life advice for free than a lawyer will. 
 
Generally----  an LLC will give you some protection and is filed and maintained at the state level, HOWEVER...your FEDERAL taxes are still filed as a sole proprietor. 
 
It is a big step to get a full s-corp Inc.  And, as Scott said, It's different from state to state.  I STRONGLY encourage you to get in touch with your closest small business resource center where they likely have Score volunteers to call on to help you. 
 
Definitley don't take opinions from the WWW on this topic, get informed as to what is going on in your state and definitely tap into your local small business resource center.  They will know what all is up-n-up for KY~
 
Did I mention SCORE and SBA small business resource centers?  
:lol:
 
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Salsalady, have sold at farmers markets and off the farm for many years as a sole proprietor.  So much is now moving online and going out of state that I really want to become more formal.  The focus on peppers has been great for the farm.  But not able to get to the farmers market anymore, loading and unloading on a set schedule would be horrific.  Some days, it is all I can do to walk as far as the gardens, plant my ass and get to work.  So probably going to have more than the tipping point go out of state and have to register with all the new bioterrorist and food safety laws.  Feels like I should make the business more formal if I am going to have to do all that.

Thing is, have talked to folk from Score and SBA in the past.  Although I am getting all the trappings of a small business as opposed to a guy who sells produce, those folk think small business is something much, much, much larger than anything I am doing.  Their advice almost always involves spending what I think is serious money. 

I walk with a distinct limp, often grabbing walls.  My front teeth are busted out from falls.  My speech is often slurred and all of my cloths are tattered.  It is hard to sum up other than to say I am embarrassed to talk to those people.  I am not the business man type, which is one of the reasons I am always complementing you and others on your knowledge.  So might bug the VA about a mentor of sorts, sure they have things like that.  But talking with the SBA and Score people never gets me anywhere.  Hell, half the time I dont even understand what they are saying.

I really think the government itself should have a service to help folk like me.  After all, if we succeed they get their share right off the top. 
 
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So you don't want to talk to the people who have the best, most accurate information for you, because you assume they're going to judge you based on your teeth and limp?

Dude - get over it. Here's me being as direct as possible so that you get the answers you need: Put on a clean fucking shirt and limp down there to go see them. Whistle through the missing teeth hole of it makes you feel better - but don't forget that these are public resources that you helped to pay for with tax dollars.

it's up to you to explain to them the size of your business and what your situation is so that you can get the best advice possible. If mumbling is an issue, write it down and hand them the info in a note.

Either way your last post is a cop out - you need to get the answer because making the wrong choice could be incredibly costly either in terms of asset protection or a set of initials that you wasted money on because you didn't really need it.

But the folks who do know are being paid to tell you - out of your tax dollars. So limp on down there, and mumble away - maybe wear the duck on your shoulder and spit some food at them while you talk. :rofl:

Seriously though - Who cares what they think of you - it's their information you need. Go down and get it. :cheers:
(Tough love - keepin it real up in the hizzy, as the kids say these days)
 
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Luckydog, according to SBA an egg farm with $15 million dollars or less in annual sales is a small business.  Most agricultural products are more like $750 K or less to be considered small business.  My guess is there is only a tiny profit margin in the egg business.  Many areas a business can have 1,000 employees and still be considered small business.

SBA is a whole different world.  I am really not in their class and they do tend to let a guy know it. But you know, last time I went that route was years ago.  Will probably bug them again and see if I get the same results.
 
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ajdrew said:
Luckydog, according to SBA an egg farm with $15 million dollars or less in annual sales is a small business.  Most agricultural products are more like $750 K or less to be considered small business.  My guess is there is only a tiny profit margin in the egg business.  Many areas a business can have 1,000 employees and still be considered small business.

SBA is a whole different world.  I am really not in their class and they do tend to let a guy know it. But you know, last time I went that route was years ago.  Will probably bug them again and see if I get the same results.
Click to expand...
 
Never assume. 
 
Ass | you | me
 
lol 
 
Go talk to them, or mutter to them or write a manifesto, or whatever it is you mountain folk do. (lol) - they're there to help you, not judge you. And if they're rude, call them on it and remind them of their status as public servants. Don't take no shit from no big city folk! :dance: 
 
(I do think bringing the duck would be a nice touch) 
 
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We live in the middle of No-Where and there is a local guy who is a SCORE volunteer.  I talked to him eons ago, and I know he was very involved when the current owner of our local country-bumpkin corner store was looking to buy the closed buisness and was getting all his ducks in a row to be a first time business owner.  He's been doing great, and I think a lot of it is because he got the business set up right from the get-go.
 
There may be someone close to you and our local guy will even meet you at your business. 
 
And remember what LDHS said....You paid for it already!
 
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