I created my company as a LLC here in West Virginia. The liability of the actions and assets of the company rests with the company itself. A LLC can be one individual, or it can expand to have more than one member. I don't know a whole lot about the law, but a few people with LLCs in other professions had done some research and stressed the importance of me creating a LLC.
My wife works for a dental office that has 3 doctors in the practice and about 12 employees. They were created as a PLLC (a LLC for people who need a license to practice) on the recommendation of their attorneys. So I figure the LLC version would be appropriate for me.
Long gone are the days that I went over this stuff in college business courses, so I'd have to research a bit to give you more info. But, Wikipedia is your friend: http://en.wikipedia.org/wiki/Limited_liability_company
I'm a sole prop. Far, far cheaper and easier to get and stay licensed.
I considered a corporation or LLC, but especially as the sole employee, judges are all too happy to pierce the corporate veil these days. Insurance covers my liabilities anyway, and the debts of the business fall on me whether I incorporate or not (many suppliers can and will go after you personally if the business fails to pay, not to mention the bank/credit card company/landlord), so there was really zero advantage to bothering with anything else.
If you plan on being sued for $15 million every other week, or plan on having employees, your needs may differ.
General Partnership. There are two of us. We considered one of the corporate options, but the overhead for that was not worth the extra expense and hassle. Also what colinm said.
I started out as Sole Prop but quickly changed to LLC. I never liked the idea that my personal life and business were intermingled to the point of liability. LLC is pretty quick and easy to do, doesn't cost much and gives you an extra layer of legal protection. You can still run it like a sole prop to boot.
Sole Prop.
Each state varies a bit, but I'm married and my wife has no interest in the business, and in PA assets that are joint-owned in a marriage cannot be taken in a court action.
So if a judge could ever decide damages exceeded my insurance coverage he could not take my house (or cars) anyway.
Not all states work that way.
I met with my lawyer to day and discussed this and even he says I'm probably better off as a sole proprietor (and my CPA agrees).
The lawyer says many LLC folks get in trouble because they just sign things as "joe schmoe' instead of "Joe Schmoe, President of Joe Schmoe LLC".
As to how much protection you can really get is still questionable...enron was incorporated but the officers still went to jail. You screw up a wedding to the point the bride sues she'll almost certainly sue the corp AND you personally as the 'artist'.
cavis wrote:
My wife works for a dental office that has 3 doctors in the practice and about 12 employees. They were created as a PLLC (a LLC for people who need a license to practice) on the recommendation of their attorneys. So I figure the LLC version would be appropriate for me.
And doctors where why LLC's were invented. Doctors weren't allowed to incorporate and shield themselves from the liability thing - likelyhood of permanently maiming someone or killing them I guess. LLC's are there to protect the OTHER partners if one screws up and gets sued.
