So this is a good question to which there are many factors to consider. The two biggest are taxation and personal liability protection. On the taxation side Sole Proprietorships, S-Corps, LLCs and Partnerships are flow-thru entities which mean the entity is not taxed (federal income tax) but the taxable income flows thru to the individual owners. C-Coporations are subject to federal income tax. C-Corps are said to be double taxed as the entity pays taxes on any profits it makes and shareholders are taxed on dividends paid out by the corporation.
On the personal liability protection side, Sole Proprietorships have no personal liability protection (meaning people can come after your personal assets), though you can buy insurance for this. S-Corps, LLCs and Partnerships and C-Corps are generally only liable (at-risk) up to their investment in the entity. Hence the term, limited liability company in the case of an LLC. Ultimately, you should consult a tax professional. If you are serious about starting a business tax and/or legal professional help, though seemingly expensive, will be worth the money in the long run. And I'm not just saying that because I used to be a tax accountant. kah On Thu, Aug 20, 2009 at 6:05 PM, Lloyd Wells <[email protected]>wrote: > Thanks Terry... great insight! > > I am actually at the point of deciding to move from a sole proprietorship > to some form of corp., but am in the process of weighing tax ramifications. > Can anyone offer any insight on that aspect? > > Thanks! > Lloyd > > Lloyd Wells > [email protected] > > www.swellgraphics.net > 512-213-4818 > > > > On Thu, Aug 20, 2009 at 5:30 PM, Holly Fortenberry < > [email protected]> wrote: > >> >> Yes, Terry, this is the way I've been leaning as well. It's great to >> hear your experience. Thank you! >> >> Terry Brown wrote: >> > Personally, I can speak from experience by saying that if you intend on >> > having people working for you on whom you will be relying to deliver >> work >> > then you should definitely invest in some level of incorporation - >> whether >> > that be a C-corp, S-corp, LLC, etc. The reason for this is that you >> will >> > personally be held liable if (more like WHEN) they fail to produce >> something >> > for a client and there is an unhappy camper on the other end. >> > >> > Ultimately, and obviously, you would like to avoid those situations >> > altogether. IF you are working by yourself and are confident in your >> > ability to deliver solid work then you can get by with a sole >> > proprietorship. >> > >> > HOWEVER, and this is a big however, even when you DO deliver high >> quality >> > work that doesn't fully protect you from some deviant people out there >> who >> > will sue just because they know it is more costly to defend a suit than >> it >> > is to settle. If you find yourself in such a situation it would be good >> to >> > have the protections of a corporate structure. >> > >> > You should bone up on running a company properly if you do so though. >> > Something as minor as paying for your dry cleaning or a personal dinner >> with >> > a debit card from your "company" account can pierce the corporate veil >> of >> > protection and expose you to personal liabilities you wouldn't have >> > otherwise. >> > >> > Hope that helps! >> > Terry >> > >> > >> > >> > -----Original Message----- >> > From: [email protected] >> > [mailto:[email protected]] On Behalf Of Holly Fortenberry >> > Sent: Thursday, August 20, 2009 5:07 PM >> > To: [email protected] >> > Subject: [Refresh Austin: 4343] business model >> > >> > >> > Hi folks, >> > >> > I've got a question I have not seen addressed yet. Which business model >> > (sole proprietorship, LLC, etc.) do you think works best for a small web >> > design firm? I'm planning to do my own design and basic development; >> > but, I will contract with experts when necessary for advanced >> > programming or graphic design needs. >> > >> > Thank you, >> > Holly >> > >> > >> > >> > > >> > >> >> >> > > > > -- Keith Aric Hall http://www.keitharichall.com/ twitter: keitharichall --~--~---------~--~----~------------~-------~--~----~ Our Web site: http://www.RefreshAustin.org/ You received this message because you are subscribed to the Google Groups "Refresh Austin" group. [ Posting ] To post to this group, send email to [email protected] Job-related postings should follow http://tr.im/refreshaustinjobspolicy We do not accept job posts from recruiters. [ Unsubscribe ] To unsubscribe from this group, send email to [email protected] [ More Info ] For more options, visit this group at http://groups.google.com/group/Refresh-Austin -~----------~----~----~----~------~----~------~--~---
