Elizabeth, you answered my most fundamental question on this video. You are not just a lawyer, but also a professional advisor and mentor. Really happy to find your videos. 👌👍🙏
Elizabeth, thank you, thank you, thank you soooooo much! I was so confuse as to which way to go until I listened to you. You were clear and straight to the point. All my friends who have money making businesses were encouraging me to go LLC; "Go LLC Bro, it's the right way. Good for taxes!" After listening to you Sole Proprietor is the right choice, I am a one owner, one person worker, I have no property or value other than my wife and kids. Thank you Elizabeth! Two (2) Thumbs up!
omg a legit video that's not just "5 reasons not to do a sole proprietorship" and than proceeds to provide shallow in-concise reasons with very few or just poor examples!? liked and subscribed!
Honest and nuanced information with context. Thanks so much for making this video. Everyone on RU-vid pushes the "LLC is the only way to go" narrative. I'm guessing a lot of that is due to the money to be made with LLC formation services. I've been binging you videos and found this and the sole proprietorship to LLC conversion video formative and helpful. I'm looking into a side gig making donuts at the local farmers market once a week. Do you think that's small and safe enough if I have insurance? My only assets are a 401k and roth IRA, no property etc. Thanks!
Yep I hear you about the LLCs. Well I'd say when selling food you want to have insurance to cover you in case something happens (someone chokes or is allergic etc).
Dammm you are very good in explaining! I would love to go as LLC but it requires all my cash to be transferred to my new business and I can’t do that,,, I’ll might transfer in the future until I make my money growth
Oh my goodness THANK YOU! I have been watching some of your videos to help as I try to get started and each one helps more than the last! I felt my anxiety rising because I do have assets to cover and do events but I am just starting out and making hardly any money so I was almost panicking but phew 😅 you ended it with converting after a time so 👏🏽👏🏽👏🏽 to you
You made it simple and understanding. I'm sure you get asked same question about LLC or Sole Proprietor. Based on your experience and clients you have what would work out if I'm staring a used dealer selling autos at a very very small location, LLC or Sole Proprietor? It just be me (wife and children as support) and no owned property or investments.
Hm for selling used cars I'd recommend an LLC -- there's a fair amount of risk because people physically there & test driving cars, and also people mad about a car & trying to sue. You should also get insurance too but an LLC will help shield your family from that risk.
Thankyou for sharing. I appreciate being able to get all the information clearly . I do not feel the need to review a few more videos to get the whole picture 😆
I've heard mixed opinions as to whether or not an LLC actually protects one's personal assets. I'm in Oklahoma and unfortunately find this question very confusing. Thanks for sharing your perspective.
You must follow the formalities to prevent a court from piercing the corporate veil. It's not difficult to do, but you must be aware and do them. "How to use limited liability companies & limited partnerships" by Garrett Sutton. One area covered is "follow the rules to keep your assets protected". Another point of much contention is which state to form. From my research, if your business primarily operates in your state, then form in your state. Why? 1) What does it look like you are doing if you form in another state?. It looks suspicious 2) It makes things complicated. You now have to register in your state as a foreign entity doing business. There are possible exceptions to these rules, like you or your business has valuable assets, or you have high risk exposure to lawsuits. Read the book, read other books, watch more videos, then consult with a good accountant and attorney.
Hello Liz, thank you so much 😊,you are very clear with your contents-- TODAY IS MY FIRST TIME OF COMING ACROSS YOUR CHANNEL and I just fell in love with your very simple way of explaining stuff. Thank you so much
Thanks Elizabeth!! Your videos are so informative. I dont know the way to go at this time, but you provided all the info I need to make the decision, I just have decide now. Nice job!
Thank you so much 🙏🙏, I am planning to start a small clothing bussiness and am very much confused about the permits I need . This video is very helpful.
Hi Elizabeth. I saw your video and it was very helpful. Thank you for explaining it so that I can understand it well even if I am not good at English, and for explaining the necessary parts well.
No I don't have a video on that, but I'll add it to the list. It does come up a lot, both switching from LLC to sole prop as well as how to properly shut down an LLC generally.
Im leaning more toward sole proprietor now that ive watched your video. But what would you recommend for starting a small landscaping business? I don't know how successful the buisness would be so i dont want to get an llc off the bat. Great video with a lot of great advice. Thank you
Well landscaping does have some risk since usually have employees and people can get injured, so if don't want to get an LLC then make sure you have adequate insurance to cover those risks
Confirming your saying I don't need a licenses or business permits with a Sole Proprietor? All I found was this which kind of halfway answers the question but not fully: A general business license is not required in Texas. However, it is important to determine necessary licenses, permits, certifications, registrations or authorizations for a specific business activity, at the federal, state and local level.
Whether or not you need a business license or permit has nothing to do whether the business is a sole prop or an LLC/corporation. In Texas, there isn't a general business license, but many industries / types of business need a permit or license. Here's a guide for that: gov.texas.gov/uploads/files/business/2020TexasLicensesPermits.pdf
This is just awesome info and great help for newbies like who are thinking of starting a business. What would you recommend an online guitar case - manufacturing and selling business? Thank you so much for these videos and for any tip/suggestions. Thank you again!
Glad it was helpful! Hm if you are manufacturing products, I assume that you will have inventory and contracts with the factories etc. That may be a good case for an LLC, because there's potential liability if something goes wrong with those agreements, if there's unsold inventory, if inventory gets lost or damaged in shipping, delays in shipping and customers want refunds, etc.
@@ElizabethPW Thank you again Elizabeth. I mistakenly wrote 'manufacturing', I will actually have the cases manufactured in India and then shipped to USA for online selling? Do you think I can start with sole proprietor or LLC will be a good idea since it involves international dealings? Thank so much I am totally lost on this hah..
Great information! If you paid for things like forming the LLC, the Registered Agent, and logo; should you pay yourself back from the business account?
Well you can handle it a few different ways. You can reimburse yourself, you can just count it as your "capital contribution" to "buy" the membership shares of the LLC, or you can count it as a loan and the LLC pays you back in the future. There's no one right way -- it depends on what makes sense financially/tax-wise
Hello Elizabeth, thank you for this video! I am a US Army Veteran that is wanting to open a credit repair company. Should I still consider opening up as a sole proprietorship vs a llc? I know there are some risk factors in credit repair. Thought you could guide me a bit. Thank you for your help.
If you're doing a business like credit repair, you need to make sure you have proper disclosures and terms & conditions (or written contracts) with your clients. In any business like that, expectations must be managed so people don't expect a miracle etc. Yes, having an LLC helps too, because if someone does file a lawsuit against you, that's another layer of protection for you personally.
Thank you so much. I so glad you are providing this information. I've been going back and forth for far too long with what to do...especially because we own a home now. However, I'm just starting out as a consultant and mostly online for now (due to the world events). However, I want to eventually do engagements in the future. So the 6 month starter I believe is the best option for me. Having an asset, would you advise the same? I really appreciate this. New subbie. PS. Would this also affect my husband's business?
Make sure you mitigate the risk by having solid contracts, insurance, and being picky about the clients to take (to avoid drama). If your husband's business is also a sole prop, then yes generally everything is liable for each other. But if it is an LLC or corporation, it is separate.
Hi Elizabeth, I enjoyed your RU-vid presentation. Very clear and succinct. I will appreciate you comment on out of State registration of LLC and the benefits/implication of such a registration. Thanks. Anil
Hi Anil - if you form your legal entity (LLC) in a state that's different than where you are located, then you'll need to file as a "foreign" or "out of state" LLC in the state where you're location. Most of the time you're better off just creating your LLC where you are located, so you don't pay fees, file forms, and pay franchise taxes to two different states. Occasionally it makes sense - for example, if you move every year.
California is an $800 fee a yr for an llc. Look into a delaware corporation as they are $100 and have a lot of perks, so many you can read the irs website for specific guidance.
@@kylahh4903 If you form a corporation in Delaware and you are located in California, you still have to pay the $800/fee to California as a "foreign" registered entity. Also all Delaware corporations have to pay an annual franchise fee of $400 to $200,000. Delaware corporations are best for companies that are looking for outside funding and/or plan to go public.
I live in CA and started a bookkeeping business in 2023. I was told by someone training me that I had to get a single member LLC. I ended up spending so much money trying to get the business going and didn't end up making any money at all. Now I'm told I need to pay $95 to redo my LLC paperwork for this new year by the attorney who set it up plus pay the franchise tax board $800 just because I have an LLC even though I have no clients and lost a bunch of money last year. I also have to spend a lot getting my taxes done just to show a large loss. What should I do with this situation? I'm a single mom trying to pay $1000 soon because of this LLC and I have no idea how to file my taxes. I'm told CA will take 30% of whatever I make each year.
I'm not sure what the $95 is for but yes the $800 is for each year. However if you set up the LLC in 2023 then there is no franchise fee for 2023 due (there was a special rule for the first year, it was a covid rule). www.ftb.ca.gov/forms/misc/3556.html#:~:text=Assembly%20Bill%2085%20provides%20a,and%20before%20January%201%2C%202024. You may want to shut down the LLC ASAP so you don't have to pay the tax for 2024 (if you do this within the first 14 days) www.ftb.ca.gov/about-ftb/newsroom/tax-news/december-2019/what-is-the-15-day-rule.html#:~:text=Since%20an%20entity%20that%20meets,close%20of%20the%20tax%20year. So I'd recommend shutting it down ASAP by filing a termination/cancellation on bizfileonline.sos.ca.gov/ and then you can just be a sole prop until you get the business off the ground, and you have more money
@@ElizabethPW Thank you for responding and the information you gave me. I got my LLC (the paperwork was complete and finalized) as of Feb 14, 2023. I just read your link about the 15 day rule and I'm not sure if I qualify for that?? I did no business last year at all. So I paid a lot of money to get my LLC and everything to start my business, including paying for additional education. So I spent a lot of money and made nothing. Now I have to pay a lot to get my taxes done for 2023 (to just say I lost money) and in April I have to pay $800 to the CA State Franchise Tax Board to just have my LLC, and I got my LLC from Prime Corporate and they are saying I need to pay $95 right away to redo (renew) my LLC for this new 2024 year. Do I still have the option of canceling my single member LLC and not paying the $800 to the State Franchise Tax Board this April and if so, I should be having a lot of right offs for money spent in 2023 to start my business and I was told I could roll them over to use towards my 2024 taxes for a bigger tax break. Is this true and if so, if I become a sole proprietor wouldn't I lose all the tax right offs from 2023 and 2024 since sole proprietors can't write hardly anything off? Also, my bank won't open a business checking account for me unless I have an LLC so I wouldn't have a way to set up a separate business account. How do I handle these things? Do I need to keep the LLC?
IM starting a business for my brand and family..first one will be an online retail fashion store. I will be getting it going and running it..everything will be done from my house, then shipped to customers. Should I do an LLC or sole..do you think?
Many of my clients start out as a sole to keep things less expensive/simple. The down side, when you have a product-based business, is you are personally liable for all those production / vendor agreements, and any debt you are taking on to purchase inventory. It really depends upon your tolerance for that kind of risk.
Great video. If the business is going to be one-person show, from home, but is IT consulting, do you consider that high-risk? A quick inquiry into insurance for liability came back with, "our underwriters don't have an appetite for that", but they were able to offer a quote on unemployment compensation insurance, which is required by the state. I only checked with one carrier so a ton more probably will or perhaps might cover the liability side, any experience dealing with that side of it? In other words, it sounds like going LLC is best for this particular industry (Information Technology to include security) just based on risk alone. Any recommendations on a national insurance carrier for SP or LLC liability insurance? Thanks so much in advance!!! Subscribed!
Elizabeth, thanks so much for this video, more helpful than anything else I've found online. Two questions if I may; I am starting a sales organization that will require me to hire independent contractors, no direct employees and no real risk, do I really need an LLC? AND, I will have a second DBA and would like to open two distinct bank accounts and I understand I can do that with one EIN as long as they are both sole props? Thanks so much for your channel, you are providing a great service!
For that type of business, you'd want to make sure to have well-written contracts so the contractors are indy contractors *for sure* and also require them to have insurance, business license (if they need that) etc. in the contract. Yes you can have multiple bank accounts for each DBA (with one EIN). Well unless that bank has some weird rule but that would not make sense.
Thank you so much for sharing this! Question: I am currently a sole proprietor and have a number of businesses - freelance interior designer with other designers, interior design, art photography, and I let out my house on Airbnb. My Schedule C's are elaborate! I don't own a house but live in my house of trust and have no employees. Should I transfer to an LLC or stay SP?
Hm switching to an LLC won't make it more simple really. I'd look at whether you'd get a tax savings from having an LLC-taxed-as-an-S-Corp ... whether you would really depends upon your exact income/expenses (great idea to have a tax person run the numbers).
Your videos are fantastic! I'm debating between forming an LLC or operating as a sole proprietorship. Sole proprietorship seems appropriate since I have minimal assets and am the sole owner. However, my business involves event rentals such as floral arches. As a sole proprietor, will my tax rate be equivalent to combining my salary with my husband's (we paid about 32% )? I am confused if it is worth or should I form a LLC.
Yes the income gets added on to your family taxes, but don't forget that is just on profit, after deducting expenses. Forming an LLC does not change that.
Thanks for sharing this video, Elizabeth. Should I start a sole proprietorship if I'm doing affiliate marketing and print on demand business? Meaning I upload graphics to a another companies website and they buy the product ex ( it can be a tshirt, a mug, an apron) etc. The company ships it out to the customer and that's it. Would it be better to start a sole proprietorship instead? I have no assets. I basically have a shopping mall with this company, am I'm also an affiliate for the company as well. If a customer wants to return an item for example? They will have to send it back to the company, not me. If they have customer service problems they call the company I'm affiliated with. If the customer wants to order in bulk, they call the company that my graphics are sold from which is my store. Do you think it's better to have a sole proprietorship???
Sole proprietorships are cheaper/easier in the beginning, so many of my clients starting out in an affiliate-type business, with no inventory, will choose the sole p. The risk is that if you are taking on any debt (loan or credit cards), or if something goes horribly wrong with the main company, you are personally liable (so make sure you have a good contract with them that doesn't hold you liable for stuff). I think the other potential risk is if any of your graphics are infringing on someone's copyright.
Thank you!!! I'm so happy, I seen this video before apply for my LLC. I buy hair from vendors overseas and using the product to make my own custom wig. I am using my own ordinary everyday income to make this investment. I am trying to get my self to a passive income to pay for those investments. In your opinion, starting out do you think a sole proprietor or LLC will be the better fit for me ??? Some of my customers who purchase my wigs, get an install. Im just not sure if my business is a high risk factor where i'll need liability from the LLC, at the moment.
It's a great question! Hm I'd look at how much money you are investing in this business, including how much credit the business will have. For example, some businesses have to order a lot of materials on credit, so if the products don't sell, they still owe for those materials. Some of the risk with the customers can be handled with insurance (like liability insurance if someone slips-and-falls at an appointment).
Hi Elizabeth, thanks for sharing your expertise on this topic. This is very helpful information. If you don't mind, what would you suggest I do as I start up a home staging/ interior design business as well as an event decor/ planning business? I know I'd need a team for either of them so my thought is to do an LLC but would I have to file different ones being that they have two different business names and provide slightly different services?
It really is up to you if you want them to be separate - you could have one LLC and just get a DBA/FBN for the other name (or both names, with the LLC as a holding company). The main issue is if you are comfortable with both biz being liable for each other's problems. I'd recommend getting adequate insurance since both biz have a physical in-person component.
Hi 👋🏾 First I love you videos. They are very helpful. Do you have any insights or tidbits about other states like VA? I do understand you work in CA and know more about that state. I just wanted to ask.
In most states, the costs of forming and having an LLC are much lower than CA. Here's a bit of info: www.northwestregisteredagent.com/llc/virginia/cost
Hi Elizabeth! Thank you for this video, so straightforward and helpful. I am looking into creating my own Nanny Referral Agency in near future. I’m 21 years old, and always dreamt of having something of my own. I plan on serving people locally. Do you suggest an LLC or Sole Proprietorship? Thanks!
You're welcome! Hm a nanny referral agency may be.a good example of a business where it makes sense to start out as an LLC, because you have increased liability. If you refer someone who does something wonky, you don't want the parents to come back and hold you personally liable. Obviously you also want contracts/releases and insurance to protect you, but since parents (especially wealthy ones) can be over-the-top, protecting yourself as much as possible is a good strategy.
@@ElizabethPW yes thank you for confirming that. I guess I’m more hesitant of the amount of documents because I’m new to this, but I know that’s apart of the process!
Yep you can get an EIN for your sole proprietorship, and it is a good idea. Here's a video about that: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-1fL9v85_8uw.html
Hello! I was thinking of starting a business of making healthy candy and sell them to people online. Also wanting to start a trading card grading business. From the two Sole P or LLC which route should I take for both businesses ideas? Also if I take Sole P should I get liability insurance as well? P.S. I saw your video and i liked it and I subscribe now. I really like how you answered and engage with the people on the comments. Thank you for that! We appreciate you.
You're welcome! Hm for a candy (or other food) business, yes get liability insurance but also an LLC would be helpful for potential liability issues. Trading card business could go either way -- that's probably more about whether tax planning makes sense (if you're making enough money to need that).
It really depends on your tolerance for risk. Starting as a solo will be less expensive / hassle but the LLC offers you personal asset protection from the business
Elizabeth, thank you for sharing your expertise. I am starting to fill out my application for my trademark when I came across your videos that left me with this question. If you start out as a sole proprietor and file a trademark under that but then later down the road switch to an LLC , do you need to update and notify the USTPO?
Yes, you need to file an "assignment" of the trademark. I talk about it in this video: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-DFnRadY40ok.html
Would you recommend a llc or sole prop for mentoring, coaching, and tutoring? I also asked this because the name for the LLC and the Sole are different. I really dont want to use my name or the DBA. I also dont want to get caught up with a tax issue with the LLC if im just starting out. My great advisor and many friends of mine have LLCs. A couple in the fields mentioned above are sole. Can you advise who provided the limited protection if sued by the LLC? Thank you in advance.
You can have a one-owner LLC that is taxed as a sole proprietor, which can keep the tax situation simple when you start out. For some of my clients starting a service-based business like coaching, they begin as a sole proprietor and then convert to an LLC when they make more money. You can have good contracts and insurance to handle some of the risk of being a sole proprietor.
Really appreciate this information. If I had a stock trading business, no employees or clients, just earning income trading for myself, would l always need to be a sole proprietor or would an LLC be necessary based on how much income is made? Also, would liability insurance NOT be needed with this type of business? I can’t think of what type of liability this type of business would create since there would be no clients or employees but thought I would ask. Thank you!
You may want an LLC or Corporation, to take advantage of S Corp tax savings (if you are making enough money). One aspect of liability insurance is that if your homeowners/renters insurance company learns you have a business with no insurance, they may cancel your policy. That's a good reason to get business insurance, if nothing else.
Thanks for the valuable information! I’m sure I want to have an LLC for my new business, should I have a single-member LLC? Or should I include at least one more person to get some benefits?
The big issue is honoring corporate formalities (separate bank account, paperwork, don’t commingle or use biz money for personal stuff). That’s why some single member LLCs have trouble - they don’t keep it proper & formal.
@@tishshamiller I just recorded a video about the common mistakes LLC owners make, including the formal paperwork issue - it will be coming in a week or two
Hi Elizabeth! Thanks for te awesome video. I am a hobby woodworker with a full time job. I have recently started building small pieces and will start selling them at various markets. I have a home, a nice savings, and multiple vehicles. Do you think llc would be best in my situation?
Thank you for the informative videos, they are very helpful. I have a question, I have started going to thrift stores and garage sales and reselling on eBay as a side gig. I have recently seen videos about big companies suing resellers with some kind of trademark angle even though it’s a legally purchased item. Any way with that in mind do you think it would be wise to get an llc for the protection and peace of mind? Does an llc even protect against anything like that? I wouldn’t want my reselling hobby to impact my family if a company decided do something like that however unlikely it may be.
Hi Elizabeth. Great video and information. I am going to set up a DBA and I will be getting errors and omissions insurance. This is for my notary and insurance business. I am the only employee thus far. Do you recommend DBA with E&O Insurance or does LLC sound safer?
Hm right for a notary business, you get E&O insurance for the biggest risks (mistake in the notarization). Also consider regular business liability insurance, to cover other stuff like a customer slipping-and-falling. LLC does add a bit of protection too, and that's more about your comfort level vs the expense of a CA LLC (including the $800/year franchise fee tax).
Just means that both businesses are liable to each other for debts / lawsuits (and you are personally responsible too). It can make sense to do that in the beginning when you are still testing an idea, to save money.
Hi! Thank you so much for this video! It really helped a lot! I have questions if you don’t mind answering them.. When you were talking about not using the money and pay yourself while having an LLC, is it the same when having a Sole Proprietorship? & For Sole P, we don’t need to have a separate business account? Is a personal checking account okay? Also, how do we go about collecting taxes in other states if we are doing print on demand with Shopify or Etsy? Would we need to apply for a business license in all states?
With a sole prop you are not legally required to have a separate account. But really it makes it hard unless you do, because it is hard to track your income and expenses so you can do your taxes later. If you have a separate bank account, then it is obvious what is your biz income and biz expenses. For sales tax, etsy is a marketplace facilitator so they handle it, but if you have a shopify store I think you have to set it up yourself -- I'd use a vendor like taxjar.com to handle it. For biz license it is state-by-state, city-by-city rules, but typically you'd need some physical connection.
Hi, My scenario My wife and I have created a it revocable trust for our home and a revocable trust for our savings both the children are the trustees I currently have an LLC however I am a single owner business and considering going back to sole proprietor because of the fact at the house is already secure and I have no assets and I do not want to pay the state of Massachusetts an additional $500 for record keeping. Any thoughts The business is less than part time work a side hustle if that. The thoughts back in 7-2023 was to register as a LLC and try growing the business. my health condition has put a hold on growing the business unfortunately. Thank you in advance for your feed back
Revokable trusts do not protect the assets from business creditors or other business risks. If you want to protect a house from the business creditors, the business needs to be an LLC or corporation.
Thanks for the good video and explanation. I am planning to start a mgmt. consulting business, if I want a name for the business does it have to be an LLC or can I still have a name and be a sole proprietorship? Thanks in advance.
What about for someone who is trying to basically be a RU-vidr ? I’m looking to of course at the moment have a lot of expenses due to have to create content etc and looking to open a business account as well. I have a business license and just realized it is sole proprietor should I switch to LLC ?
For a one-owner business just starting out as a RU-vidr, being a sole proprietor can make a lot of sense - saves you a bunch of time and money. Then when you are making more money and have a more complex business, can upgrade to an LLC. The only exception is if the YT business has a lot of risk, for example if someone is using copyright works or has employees.
@@ElizabethPW thank you so much. I make the cringeeeeee decision to pay $300 for the switch today. It sucks but for the risk and to have my name etc it is worth it.
@@ElizabethPW Regarding the RU-vid business that has a lot of risk, is there a list somewhere that gives a risk factor depending on the type of business? Or perhaps statistics on the types of lawsuits filed in the United States, so I can start a RU-vid channel with the least amount of risk/worry?
If it is possible to have an LLC sign a lease, that would be much better for you (just in case the airbnb arbitrage crashes like in 2020). But they may make you personally co-sign the leases anyway, if the LLC is new and has no credit. If you are going to do multiple properties over time, may make sense to start with an LLC that you have to co-sign, to build a history for the LLC so in the future it can sign its own leases.
Thank you so much for your videos, it was very helpful ! I am on my way to starting a Recruiting Agency, where I connect employees and employers for long term placement or short term placement. I Will be doing it from home and I might get a partner as the business will grow along the way. In his situation would I need any insurance ? Since I don’t have any employees? And between Sole proprietorship and LLC what would be the best for my type of business?
I recommend always getting general business insurance, probably something called "business owner's" policy that has a bunch of stuff included. Since you are just starting out, you probably don't need much tax planning yet, so you'd look at the risk/liability issues for whether you want to protect your personal assets from the business' liabilities. Also think about whether your potential clients would be more comfortable hiring an LLC vs a sole proprietorship (many larger companies want to only hire an LLC or corporation).
Hello, Thank you so much for the video! I have an 8-5pm job as a graphic designer in Tx and I'm also a freelance graphic designer, videographer and photographer. I plan to invest more time in my side hustles ( which don't make much income yet). I'm wondering which could be more beneficial for Taxes wise now. I want to set up a single-member LLC for legal matters but it might be more headache to set it up compared to Sole Proprietorship. Any advice in this case? Thanks for your helping hands.
For taxes, typically there isn't a big savings by being an LLC vs a sole prop until you are making enough money where being taxed as an S Corp makes sense (usually high five figures of profit, since the S Corp tax status also comes with more admin and costs).
Yes, you can still hire people. And yes, there is a risk, because you are personally liable for what the employees do and if they come to harm or have some other claim (wages, harassment, etc.). Some of that you can protect against via insurance, but I think with employees it is better to have an LLC.
Yes it does make sense for many people. I think the issue is that in some places, there are a lot of expenses for an LLC, like the $800/year franchise fee in California
Great video! I'm in the works to starting a press on nail business in NJ. I just got my EIN and went under as a sole proprietorship. Was this a good move or should I do I LLC ?
Hi Elizabeth. Very helpful and informative video. I want to start a stroller cleaning service out of my apartment (eventually renting a space for the cleaning). What do you suggest for this? An LLC or sole proprietorship?
Hm anytime there's a business that services parents (of children or even pets) it can be a good idea to have both insurance and also an LLC, because that's a category of people who can flip out if something goes wrong. You can reduce the risk a bit if you pick up the strollers yourself instead of having people drop them off.
Elizabeth, Great Information! I want to do online business and continue as sole proprietor until I figure out the Business works or not. Bought the items needed for Business through personal account.What forms I need to fill out in this case and can I deduct my expenses here? If so, they need to be itemized in 1040 schedule c. Thanks for your help on this?
If you are starting as a sole prop then yes you will put them on your 1040 schedule C and they will be deducted against the business income. You'd want to keep a good record of your expenses in a bookkeeping system or at least a spreadsheet or notebook.
If you are a sole proprietorship (a one-person owner business and you don't have a corporation/LLC) then yes you file for the fictitious business name with you personally/individually as the owner of the DBA/name.
@@ElizabethPW do you have to file paperwork for the dba if you are not using your name. I see where some people have and some people have not. I dont want to get taxed heavily and Im not making any money.
Thank you so much for your videos. I'm in the beginning stage of starting an Ayurvedic Health Counseling/life coaching/energy healing/wellness type business by myself. I will be recommending herbs, supplements, lifestyle changes. I will also be selling books and art. Sessions will be online or public spaces for now. I was thinking an LLC at first since I'm making health and herbal/supplements recommendations, but not entirely sure if thats the way to go vs sole proprietor? I dont have assets or anything of value. Thank you
An LLC is one way to protect yourself from personal liability. Either way though I'd also recommend having disclosures/waivers that you give to people (as part of a contract or a set of terms & conditions), specifying that you are not providing medical care, that they should seek the care of a professional for any health conditions, that it is at their own risk, etc.
@@ElizabethPW thank you so much for your reply. I do have an agreement stating those things but wasn't sure. Guess nervous more than anything. An LLC would probably be the way to go if I decide to also offer my services from local health centers as well? Thanks again.
My question is I want to start a contracting business and buying houses, fixing them up and selling more like home renovations. What would be the best for me starting off
It depends on how you will be financing. It would be great to have an LLC and use that, but it may be hard for a brand-new LLC to get the financing since it does not have a credit rating yet
