Home: Message List - Starting small business, Should I form LLC or Corporation

Re: Starting small business, Should I form LLC or Corporation

Mybizfiler — Thu, 11 Sep 2008 02:08:44 GMT

Hi,

Starting a Home Business, you can form LLC. Starting a business is not that easy as we think. It requires a business plan and a lot of market research and involves your time. We would be helping you preparing business plan but it cost you.

We at ICS, Inc, help you to incorporate your business and provide complete incorporation services. ICS would also help you for Small Business Loan Application which makes your work easier and you can spend your time in Business Development rather than worrying and spending time in research.

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Best Regards,

MyBizfiler

Re: Starting small business, Should I form LLC or Corporation

Designer08 — Sat, 12 Apr 2008 22:52:36 GMT

Jaime-
I just went through this same process in January 2008 when I formally set-up my graphic design firm. The extra cost of forming an LLC is well worth it because it gives you some personal protection if your business fails. As an LLC, they can only ever take away your business assets. If you were a sole proprietor and had bad debts, the bank could take your house, your car or any other personal asset you may have.

Although they are very similar, you are in essence paying for the personal security when you form an LLC. If you still have questions, try nolo.com, they have a lot of resources.

Hope this helps.

Nicholas

Re: Starting small business, Should I form LLC or Corporation

Lighthouse24 — Sat, 12 Apr 2008 18:55:38 GMT

Granted, filing as a sole proprietor in Philadelphia is relative expensive ($70, compared to $8 in my county). But that's the only fee involved (an LLC costs another $125, and has some annual filing requirements, as well).

Because a sole proprietorship is not a separate legal entity from you (it's just an extension of you), there are fewer new legal and administrative things to learn and be aware of up front. Not that you couldn't do that (or pay a professional to handle it for you) -- but if your goal is mainly to do something you enjoy on a part-time basis and make some extra cash, I'd be hesitant to make it more complicated that it has to be.

Yes, as a sole proprietor you would be personally liable for all debt your business incurred. In essence, you'd be personally liable for all debt your single-member LLC incurred, as well (for awhile, at least). The reason I say that is because when you form a new LLC, it has no history -- so if you want to get anything like a business credit card to help the business function when it is first launched, you have to personally guarantee it anyway. Similarly, if you make a business decision that causes someone to litigate, they won't just sue the LLC -- they'll also sue the person who made the decision (you).

Please understand: I'm definitely not saying that I'm right, or that anyone who recommends an LLC is wrong. This is a discussion forum (working exactly as it should, I think). If nothing else, at least we all seem to agree on the answer to your original question (LLC or Corporation?).

As far as the process to get started (whichever option you choose) here's one source of information that you should help guide you along:

http://www.phila.gov/business/startup/ind
ex.html

Good luck!

Re: Starting small business, Should I form LLC or Corporation

jaimek — Sat, 12 Apr 2008 12:59:10 GMT

All of this information has been very helpful. I guess once I speak with my accountant, she can help me decide further. As least I have a general idea on what my options are.

Re: Starting small business, Should I form LLC or Corporation

jaimek — Sat, 12 Apr 2008 12:56:46 GMT

I am in PA, Philadelphia County

Re: Starting small business, Should I form LLC or Corporation

IAmSpartacus — Sat, 12 Apr 2008 12:13:22 GMT

Jaime - I must respectfully disagree with the advice to form a sole proprietorship. We are talking about maybe an extra $50 in registration fee to the state and a couple of extra minutes to fill out and sign a boiler plate LLC agreement. For this, you shield yourself (and your home) from the business' liabilities. I just formed a new company here in NH last week. It took me about 15 minutes to fill out and print the form from the state's web site, another 15 minutes to find and LLC agreement online, fill it out, and sign it, and another hour to go to a bank and open a business checking account (the business will need to accept online payments). The total cost was $100 to the state (it would have cost $50 for to register as a sole proprietor), $25 deposit to the new account, and 90 minutes of my time. In fact, opening the checking account took more time and paperwork than the LLC! Well worth it, in my humble opinion.

Re: Starting small business, Should I form LLC or Corporation

Lighthouse24 — Sat, 12 Apr 2008 04:42:21 GMT

jaimek, in what state and county are you starting your business? If you can provide that, I can probably point you in the right direction to get started quickly.

Re: Starting small business, Should I form LLC or Corporatio

jaimek — Sat, 12 Apr 2008 00:43:51 GMT

thanks for your reply. Great info and very helpful!

Re: Starting small business, Should I form LLC or Corporation

jaimek — Sat, 12 Apr 2008 00:43:19 GMT

Wow I think that makes a lot of sense. I starting to worry that I would be putting a lot of money out before I even have the chance to make it. Where can I find info on being a sole proprietor? I really want to read up on this. Thanks for your valuabel info. I appreciate it.

Re: Starting small business, Should I form LLC or Corporatio

akgold — Fri, 11 Apr 2008 23:01:13 GMT

I agree with Lighthouse24. Being a Sole Proprietor means that you simply fill out a Schedule C at tax time. This is certainly the easiest option. A lot of people who have hobbies fill out Schedule C's as sole proprietors. It's the simplest and easiest way to simply get up and running.

Good luck!