What business form is ideal?

Question

I have been operating as a Sole Proprietor, but am considering an LLC form for my business. What do others like? For my investment property, is there a better form than an LLC? Also, for my internet business, or other business, I am thinking that an LLC is the best way to go. I don't want to spend the money to have a corporation. I do want to keep things as simple as possible.

Answer 1

Okay, there are three forms of business open to at this time.

   Corporation (either S or C)

   Limited Liability Company

   Sole Proprietorship

You don't want to form a corporation because you don't want to spend the money to incorporate and comply with reporting laws and you don't want the complexity.  Also since you are dealing with investment property I suspect you wouldn't qualify for an S Corp so you would be subject to double taxataion (ouch!)

You are now operating as a Sole Proprietorship and are familiar with all of the risks and benefits of doing so.  The fact that no changes are required and that you will not incur any additional taxes, fees or legal expenses should be one of your considerations.

Although you are now operating as a Sole Proprietorship for reasons you don't specify you are considering an LLC.  If you go that way you will be forming a single member LLC which MAY or MAY NOT protect you from some forms of liability.  For federal tax purposes there will be no change (as someone put it -- when it comes to the IRS the LLC is a disregarded form of business) you will still be treated as a sole proprietor.  I can't speak for Florida state and any local taxes.

Okay, you are talking about investment property.  What is your potential liability?  Can an LLC shield you from the liability?  Is insurance less expensive for an LLC than for a sole proprietor?

These are things you should take into consideration.

I believe that regardless of the legal form of your business you will have to protect yourself with liability insurance against all reasonable risks and hope for the best when it comes to rare and unreasonable risks

That being the case, I fail to see where forming an LLC will benefit you in either your investment business or your internet business.

Hope this helps

Jerry-the-bookkeeper