Washington state Sole Proprietorship vs LLC

Discussion in 'Business & Tax Advice' started by kryah, Feb 25, 2013.

  1. kryah

    kryah Newbie

    Nov 4, 2012
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    I am a single person doing some SEO, and reputation management work in Washington State. I have a Sole Proprietorship for my affiliate marketing stuff, and have been using this business license to conduct my other business out of convenience.

    My question is:

    Should I consider forming an LLC? I'm a bit of a worry wart. While my current prices never exceed more than $299/month, I'm still worried if a client isn't completely satisfied with my work that they may sue me for everything I got. People are vicious. While I've never had any threats (~5 active clients atm), I still want to cover my tracks should someone want money from me for whatever reason.

    If I form an LLC, what state should I file it out of? Washington state is pretty corrupt and the taxes here are ridiculous.

    Thanks! :D
  2. tax_guy

    tax_guy Newbie

    Jan 24, 2013
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    Small Business Advisor
    Chicago, USA
    I would ALWAYS recommend staying away from the Sole Proprietor if possible. LLC is a good business organization, you might also want to look up S Corp. Switching from Sole Prop to LLC or S Corp is a great way to protect yourself from lawsuits and such, and it usually ends up saving my clients more tax dollars.

    As far as location...you really wanna get it done in the state you are in. believe me on this one. there's people who swear that Delaware or Nevada is the best place to form a business b/c there is no corporate tax. That's understandable, but what about your personal taxes?? you will have to file Delaware personal taxes in many instances, ALONG WITH you own state taxes. not to mention the hassles of running a business that's technically in another state. There are also sales/use tax considerations you want to keep in mind.

    Bottom line: Stick to your current home state...that way your accountant wont hate you :) shoot me a pm if you have any questions, or send me your skype name