A family member recently asked why I haven’t set up an LLC for my business. Frankly, I’m not sure that it’s necessary for a sole proprietor; however, if I ever get into legal trouble (fingers crossed that I don’t), I may be singing a different tune.
But it did get me thinking about business structures, so I’ll pose the question here. Do you do business as a sole proprietor, LLC, or some other entity? And if you do have an LLC, I’m curious about your reasons for choosing this route. How long did the paperwork take and has your business benefited from this structure? Do clients view you and your business differently? Do tell!
Before publishing my blog, I setup Awkward Productions, Inc. mainly as a legal hedge.
Let's say I get really pissed at some company (GM for example) and write really bad things about them. Then let's say they decide to take me to court for slander and let's say they win. The judgment would go against Awkward Productions since I've personally signed a contract that the firm will indemnify me in these (and other) situations.
This protects me and my family from legal action that could put us in the poor house.
Now – that's an extreme example, and I'm sure a good lawyer could get around it, but in our litigious society I figure it's better to be safe than sorry. Like I said, it's a hedge.
I don't really believe there are real tax benefits to doing this though; unless you have a tax accountant who plays loose with the rules…
As always – IMHO.
Sid.
@Sid: I don't know if you heard about the Chicago management company that sued a tenant over a comment she on Twitter, but you're wise to protect yourself. I'm curious how involved the paperwork was to set up your incorporation? I've heard that for LLCs you have to file certain papers every year, and I'm wondering if you have to do something similar in your situation? Thanks for chiming in!
Hey Susan – I set up my company as an LLC because I needed to have some form of legal structure for immigration purpose.
It might vary from state to state but it really wasn't too much of a hassle. My accountant did all the paperwork for me (at not charge), and I know for a fact that there are a lot of Internet services that help you incorporate easily.
I'm not sure what the benefits are compared to sole proprietor, but all I can say is don't be scared by the paperwork.
I've been curious about LLCs, too. Some people have said setting up a corporation is good because the corp will pay your portion of the self-employment tax. But, really, doesn't it all come from the same place from writers? I've worked with an LLC that is also a B-Corp, which requires that you meet certain criteria (like using a local bank) to be a certified B-Corp. It's something I keep thinking about for the future.
I constantly struggle with this. I want to create a business name other than my own name. Since I can never choose one and commit to it my writing business is still just my name, Nicole LaMarco. It's a sole proprietorship, but I don't think I'll always keep it that way.
Go LLC…I've had 2 of them. Many corporation benefits w/o liability. I think it's about $200 on legalzoom.
$200 to get an LLC?