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19 Replies Last post: Oct 3, 2008 11:43 AM by Accting_Svcs

Starting a new business - Is "Sole Proprietorship" or "LLC" better?

Nov 21, 2007 11:39 AM

CLU925 26 posts since
Oct 11, 2007

My husband and I are starting a new business and I'm not sure which way would be the best to go ... Sole Proprietorship or LLC. It's a small retail store and in the beginning it will be only the two of us, but later on we hope to have a few employees (2 or 3) ... Any advice??

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slavaret 78 posts since
Oct 26, 2007

1. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 11:49 AM

Sole proprietorships and partnerships have UNlimited liability. You need to protect yourself through a corp or LLC. Besides, you can start building a credit history for your business. There are business directories such as Dun and Bradstreet that collect business data for that (and other purposes).

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Ed O'Gee 215 posts since
Oct 25, 2007

2. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 11:53 AM

I'd say the LLC because it will offer you the protection of a corporation versus a sole prop, plus you get the same flexibility tax wise that most sole props look for.

Speak to an accountant but their are tax advantages for both. But as a retailer you want to make sure that if someone gets hurt or injured in your store that in the event of a law suit they can only come after the business assets and not your home or personal assets. A LLC gives you that protection, a sole prop does not.

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CLU925 26 posts since
Oct 11, 2007

3. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 11:55 AM

in response to: slavaret

Very helpful - thanks!

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CLU925 26 posts since
Oct 11, 2007

4. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 11:57 AM

in response to: Ed O'Gee

Thanks so much. I haven't hired an accountant yet (but of course, I will) ... I'm trying to complete a Business Plan and needed to know which way to go. Your answer helped me out a lot.

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slavaret 78 posts since
Oct 26, 2007

5. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 12:04 PM

in response to: CLU925

Check with your state - you should be able to register an LLC online. They should have a form for the Articles of Organization - usually a one page document. You can do the Bylaws later. There is tons of free info online as to what should go into them. Again, the state may direct you. This will save you some $$.

You should also be able to reserve your buisiness name with the state online. But before you do - make sure you get a domain with the same name.

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CLU925 26 posts since
Oct 11, 2007

6. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 12:07 PM

in response to: slavaret

Thanks - I really appreciate the help!

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LUCKIEST 7,935 posts since
Aug 6, 2007

7. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 12:12 PM

Lets start by telling you about each. O K The Sole Proprietorship is the most common form of business,
Profits are taxed as income to the owner. The tax rate is usually lower.
The LLC is a Corporation and is subject to more govt. regulations. Corp earnings are subject to
"double taxation" and the ONLY way to take money out of a LLC is by SALARY.
Have you applied for a Federal I D Number?? Do you have an Accountant??
Good luck, Happy Thanksgiving, LUCKIEST

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Ed O'Gee 215 posts since
Oct 25, 2007

8. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 12:24 PM

in response to: LUCKIEST

Luckiest,

I will have to disagree with you. You can take money out of your LLC via a distribution. It is almost like paying yourself as a 1099 so that you are not subject to payroll taxes. Since with an LLC you file your business taxes as an addemdum to a personal return, distributions are allowed, although most accountants don't recommend them.

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CorpCons08 1,128 posts since
Nov 14, 2007

9. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 1:00 PM

in response to: Ed O'Gee

Agreed Ed.
I would recommend the LLC.

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LUCKIEST 7,935 posts since
Aug 6, 2007

10. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 1:10 PM

in response to: CLU925

If you are trying to complete a Business Plan, contact SCORE in person or online.
They could help you FREE Develop a Business and Marketing Plan.
You can also take FREE, a 26 online Seminar at "www.score.org"
Again LUCKIEST

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CLU925 26 posts since
Oct 11, 2007

11. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 1:15 PM

in response to: CorpCons08

Thanks for all the helpful information.

Your last comment, CorpCons08, had me laughing out loud.

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Ed O'Gee 215 posts since
Oct 25, 2007

12. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 1:18 PM

in response to: CorpCons08

Come on Corp - no need to get snippy, you provide some of the better replies on the board. I am sure there is enough business for everyone. We gotta respect everyone's right to promote their agenda's but hopefully for the most part we are all here to help each other.

Have a great Thanksgiving everyone!

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CorpCons08 1,128 posts since
Nov 14, 2007

13. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 21, 2007 1:20 PM

in response to: Ed O'Gee

Of course... My goal is always to help the individual.

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quality 11 posts since
Nov 19, 2007

14. Re: Starting a new business - Is "Sole Proprietorship" or "LLC" better? Nov 22, 2007 12:48 AM

Your best choice would be LLC it is exactly what they say if some one comes to you saying you ahve done some thing and they sue they will go after every thing they have not just your business.
Good luck and happy hollidays.
Quality

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ForumsStarting a Business

This Question is Answered

Starting a new business - Is "Sole Proprietorship" or "LLC" better?

Nov 21, 2007 11:39 AM

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