ForumsHome

What is your vision of the future for the business? Do you have firm plans to expand, hire employees, open additional shops, seek investors, or franchise the operation - or is your plan to continue in the near future as a one-man show?

If you're growing and expanding, a C-corp has a lot of advantages. If this business will be continue to be just you, however, I'm not sure that changing your legal structure will accomplish what you want. In about 999 out of 1,000 instances, a single-member LLC will never be able to build more credit than the individual owner has personally. Creditors just don't work that way -- if you (the owner) ARE the whole business, they will essentially view you and your business as one in the same, regardless of whether the business is a sole proprietorship or single-member LLC.

Were there other reasons you wanted to change entities?

For what it's worth, from books and articles by small business attorneys Richard Keyt and Jay Adkisson:

Single member LLCs are very popular with internet entrepreneurs and webmasters who mainly seem to form them because it's cool. But single member LLCs are not very cool for asset protection planning. To the contrary, single-member LLCs are a very dangerous tool . . . because there are too many unknowns, and the cases involving them are consistently falling in favor of creditors.

It is easy for an attorney to successfully claim that the LLC is an alter ego of its owner. The courts recognize the absurdity of (the single member LLC structure).

Potentially more serious for the LLC member is that creditors rarely sue bottom up to get a judgment against the LLC. (A creditor) first sues and gets a judgment against the member because of the member's acts or omissions.

Not the ONLY perspective, but a credible one. Visiting an attorney is the only way to determine for sure what's right for your situation.