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re: Starting a business - please advise which type
Posted on 7/14/22 at 9:54 am to TXTIGERTAIL
Posted on 7/14/22 at 9:54 am to TXTIGERTAIL
quote:
I decided to set up a single member LLC for now.
Do you have a reason to do this? I'm sure Mingo can help you better, but you may not even need to be an LLC if you are just a single member single employee LLC? Single Member LLC's where you are the only employee offer very little protection.
You could just have them pay you directly into a separate business account, have a Debit/ credit card for that account, and pay for anything business related out of those accounts.
Get some extra liablity insurance.
I'm just saying, and I'm sure Mingo as a finance guy will tell me I'm not correct, but making an LLC is the hot thing to do but if you aren't going to get a benefit from it then it may not be necessary. For example, it'll cost you probably $1000 extra in fees and CPA charges you could in turn buy a couple extra mil in insurance.
Now given that, operating as a "business" will have some benefits.
Also, something to consider related to S Corps is that for things like personal loans banks much prefer W2 income over distributions. It doesn't make sense when you are the owner but I've continually ran into that.
Posted on 7/14/22 at 10:00 am to baldona
quote:
For example, it'll cost you probably $1000 extra in fees and CPA charges you could in turn buy a couple extra mil in insurance.
No it won't, it all runs through the same return. The LLC doesn't really provide that much protection, but it's cheap and doesn't hurt. Some companies will only contract with other "companies" as well so it may have been necessary, though that doesn't sound like the case.
I would go ahead and set up the LLC and run all of the Financials of the business through that should he want to convert to an S Corp of some other structure in the future as it makes it way easier since the records are clean.
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