Discussion in 'Business & Tax Advice' started by Brainzzzz, Jan 30, 2014.
For those who chose LLC over sole proprietorship, could you share why you chose that route?
Sole proprietorship = zero protection.
An LLC is a easy way to incorporate and offer you protection. I don't know about legal malpractice, but if you are an attorney (one who would need such protection) then you would know which structure would protect yourself the best.
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Just wondering because i spoke to a CPA and what he said was LLC isn't worth it because it doesn't offer protection against legal malpractice so you might as well be a sole prop and get tax advantages. But don't LLC's turned into s-corps get the protection plus the same tax benefits?
I am an attorney and CPA. While an LLC often would not protect against malpractice, are you in an industry which faces malpractice suits? In the internet marketing industry, "malpractice" is often not a concern. You should also be aware that an LLC wont protect from regulatory enforcement actions, such as FTC suits. However, there are tax benefits to S corps as you mention. Feel free to contact me to discuss further.
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Limitedly liable ... you will only lose what you have invested if you are busted/bankrupt... nothing personal will be taken.
I went with an llc... do sole proprietorship have better tax advantages than llcs? I had no idea. I was advice to go either with an llc or a s-corp. Also on the side note, llcs can be taxed as s-corps for lower taxes so that flexibility is why I went with llc
What protection are you after ?
A limited company wont protect you if you are willfully breaking the law. It will however offer you personal protection in that the company is a seperate entity and you as a director are an employee of the company. If a partnership/sole trader gets into difficulty then he is personally responsible, ie you are chased personally for debt.
If a limited company experiences difficulty you as a director can appoint a liquidator to wind the company up according to company law and hold a creditors meeting. The outcome of which will relate to the companies accounts and assets and not the directors.
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