# Business: LLC, Sole Proprietor, S-Corp?



## Coyotex (Feb 10, 2019)

This has nothing to do with the current virus stuff, just general business practices.
Those who have done it, are you a....

Sole Proprietor?
LLC?
S-Corp?

I know there are pros and cons with each. But which did you choose and why?


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## akwunomy (Jan 12, 2020)

S-Corp...in case of litigation against you...your personal asset won’t be affected...there may be other pros...and cons...but can’t really go into it because...this lockdown and the fact that I am structurally broke...not helping...


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## #professoruber (Feb 19, 2018)

akwunomy said:


> S-Corp...in case of litigation against you...your personal asset won't be affected...there may be other pros...and cons...but can't really go into it because...this lockdown and the fact that I am structurally broke...not helping...


That is not true. Your business and you as the owner can be sued so your assets are really not protected.

If you have a partnership, this is when the liability is split between the owners of the company.

Sole proprietorship is the most efficient way to set a business legitimately.


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## sellkatsell44 (Oct 25, 2015)

#professoruber said:


> That is not true. Your business and you as the owner can be sued so your assets are really not protected.
> 
> If you have a partnership, this is when the liability is split between the owners of the company.
> 
> Sole proprietorship is the most efficient way to set a business legitimately.


Actually no.

I recall businesses setting up as a s-Corp for tax advantages

https://www.nolo.com/legal-encyclopedia/s-corporations-vs-sole-proprietorships.html
If anyone is inclined to read more.

I've opened far more accts for entities that are established as s-Corp then sole props.

LLC seems to be the most popular among restaurants/retail/rental still.

This is under taxes, not litigation re: below reply. &#128580;&#128580;


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## Lute Byrt (Feb 20, 2020)

None on it matters you are independent in the end...

Good luck, nice try...

Or dare I say an Inc.?

https://me.me/i/oise-doesawaterfall...ator-imgflip-3ee7d3ec04314178a633c468f24797b5


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## Coyotex (Feb 10, 2019)

Holy Crap! Thanks folks, but this is wild! Everyone has a different understanding of how each version works! I'll need to do some major research!


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## Jon Stoppable (Dec 11, 2019)

Bear has explained this before, but humans did not believe bear. Anyway, bear cannot give advice without knowing the type of business as well as the number, nature, and type of owners. Also, bear needs to be payed in food. Preferably up front.


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## sellkatsell44 (Oct 25, 2015)

Jon Stoppable said:


> Bear has explained this before, but humans did not believe bear. Anyway, bear cannot give advice without knowing the type of business as well as the number, nature, and type of owners. Also, bear needs to be payed in food. Preferably up front.


Will bear accept macaroons from France,


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## Jon Stoppable (Dec 11, 2019)

sellkatsell44 said:


> Will bear accept macaroons from France


Yes! Bear loves those! Please post to:

Jon Stoppable
c/o Great Dismal Swamp Visitors Center
2294 U.S. 17 N.
_South Mills_, _NC_ 27976

Once I receive them I will give your advice


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## Seamus (Jun 21, 2018)

I am a single proprietor LLC. You are taxed as a sole proprietor and have limited personal asset protection. There are some civil protections but no protections for "Negligence" lawsuits. The "N" word is always the basis for a good lawsuit.

S-Corps are better for tax purposes as the business is a completely separate entity. However, the owners are going to be treated the same as a single proprietor when they want to borrow or finance loans. The banks aren't stupid enough to allow owners of a small company to avoid financial liability for the corp. Therefore, they will make you sign a "personal guarantee" to finance loans, etc.etc..

Partnerships are a terrible idea in my experience. You are liable for whatever your partner does. I was in one once and caught my partner doing things I didn't want to be involved in. I quickly dissolved the partnership.


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## Jon Stoppable (Dec 11, 2019)

Seamus said:


> I am a single proprietor LLC. You are taxed as a sole proprietor and have limited personal asset protection. There are some civil protections but no protections for "Negligence" lawsuits. The "N" word is always the basis for a good lawsuit.
> 
> S-Corps are better for tax purposes as the business is a completely separate entity. However, the owners are going to be treated the same as a single proprietor when they want to borrow or finance loans. The banks aren't stupid enough to allow owners of a small company to avoid financial liability for the corp. Therefore, they will make you sign a "personal guarantee" to finance loans, etc.etc..
> 
> Partnerships are a terrible idea in my experience. You are liable for whatever your partner does. I was in one once and caught my partner doing things I didn't want to be involved in. I quickly dissolved the partnership.


Almost but not quite. "Single member LLC". Correct about personal negligence, that is true for any entity. You can't run over grandma and tell the judge (civil or criminal) that wasn't you driving, it was your LLC. Doesn't quite pass the smell test. And trust me, humans smell.

Whether S corps are better for tax purposes depends a lot on the nature and structure of business. For example, real estate is almost always better in an LLC because members can deduct paper losses from depreciation against the mortgage on the property. Not so with an S corp. Also, the treatment of self-employment/social security taxes on business income differ between the entities. If you are making lots of money off of OPL, S corps can be better. But then S corps are limited in the type of entities that can be shareholders. That's why bear asked for the business details. And a box of bonbons.

You aren't personally liable in a partnership unless you are a general partner (in either a general partnership, or if you're the GP in a limited partnership). LPs have pretty much gone the way of the dodo (tasty) since LLCs came around, because they are otherwise identical for tax purposes, without the need in an LLC to form a shell corp to be the GP, as was common with LPs.


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## JohnnyBravo836 (Dec 5, 2018)

Jon Stoppable said:


> Almost but not quite. "Single member LLC". Correct about personal negligence, that is true for any entity. You can't run over grandma and tell the judge (civil or criminal) that wasn't you driving, it was your LLC. Doesn't quite pass the smell test. And trust me, humans smell.
> 
> Whether S corps are better for tax purposes depends a lot on the nature and structure of business. For example, real estate is almost always better in an LLC because members can deduct paper losses from depreciation against the mortgage on the property. Not so with an S corp. Also, the treatment of self-employment/social security taxes on business income differ between the entities. If you are making lots of money off of OPL, S corps can be better. But then S corps are limited in the type of entities that can be shareholders. That's why bear asked for the business details. And a box of bonbons.
> 
> You aren't personally liable in a partnership unless you are a general partner (in either a general partnership, or if you're the GP in a limited partnership). LPs have pretty much gone the way of the dodo (tasty) since LLCs came around, because they are otherwise identical for tax purposes, without the need in an LLC to form a shell corp to be the GP, as was common with LPs.


Hmm. You seem to know a lot about this. I'm beginning to think you must be one of them eccentric, contrarian types who likes to short stocks and actually _prefers_ bear market conditions.


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## observer (Dec 11, 2014)

Jon Stoppable said:


> Almost but not quite. "Single member LLC". Correct about personal negligence, that is true for any entity. You can't run over grandma and tell the judge (civil or criminal) that wasn't you driving, it was your LLC. Doesn't quite pass the smell test. And trust me, humans smell.
> 
> Whether S corps are better for tax purposes depends a lot on the nature and structure of business. For example, real estate is almost always better in an LLC because members can deduct paper losses from depreciation against the mortgage on the property. Not so with an S corp. Also, the treatment of self-employment/social security taxes on business income differ between the entities. If you are making lots of money off of OPL, S corps can be better. But then S corps are limited in the type of entities that can be shareholders. That's why bear asked for the business details. And a box of bonbons.
> 
> You aren't personally liable in a partnership unless you are a general partner (in either a general partnership, or if you're the GP in a limited partnership). LPs have pretty much gone the way of the dodo (tasty) since LLCs came around, because they are otherwise identical for tax purposes, without the need in an LLC to form a shell corp to be the GP, as was common with LPs.


There's also a higher cost involved, at least in California. Here it's a minimum yearly fee of 800 bux plus set up and accounting charges.


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## Jon Stoppable (Dec 11, 2019)

JohnnyBravo836 said:


> Hmm. You seem to know a lot about this. I'm beginning to think you must be one of them eccentric, contrarian types who likes to short stocks and actually _prefers_ bear market conditions.


I do enjoy bear markets, but I don't understand investing really. I just like it when prices go down because humans sometimes jump out of windows afterwards, and that can make for good eats.

I only invest in the food that goes in my stomach so I can last through the winter.


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## akwunomy (Jan 12, 2020)

Coyotex said:


> Holy Crap! Thanks folks, but this is wild! Everyone has a different understanding of how each version works! I'll need to do some major research!


Well...is good to do research...a member said that sole proprietorship is the best that protects your personal assets...I rest my case because he wanted to tell me that my 2 years in college studying business is a waste...secondly, that my hard working professors don't know what they are talking...thirdly that the business text book I paid several hundreds of dollar to purchase...which I still have is lying....but I come to think about it...why argument about Business and economics in UP...I rather argue about RS here.,.



Seamus said:


> I am a single proprietor LLC. You are taxed as a sole proprietor and have limited personal asset protection. There are some civil protections but no protections for "Negligence" lawsuits. The "N" word is always the basis for a good lawsuit.
> 
> S-Corps are better for tax purposes as the business is a completely separate entity. However, the owners are going to be treated the same as a single proprietor when they want to borrow or finance loans. The banks aren't stupid enough to allow owners of a small company to avoid financial liability for the corp. Therefore, they will make you sign a "personal guarantee" to finance loans, etc.etc..
> 
> Partnerships are a terrible idea in my experience. You are liable for whatever your partner does. I was in one once and caught my partner doing things I didn't want to be involved in. I quickly dissolved the partnership.


If you are a LP...Limited Partner: Your liability is only the fund you invest..,If the general partner(s) does anything that warrant liability...you will not be involved pass your equity in the business...like you said...S-Corp remain the best set up for business....


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## JohnnyBravo836 (Dec 5, 2018)

Jon Stoppable said:


> I do enjoy bear markets, but I don't understand investing really. I just like it when prices go down because humans sometimes jump out of windows afterwards, and that can make for good eats.


I guess that fresh carrion _could_ be quite the treat under the right circumstances, and the caloric expenditure necessary to acquire same is negligible. No chasing, and no screaming and shrieking. It also reduces the clean-up for others afterwards, so it appears to be a win-win.


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## Coyotex (Feb 10, 2019)

Here are some details. A single person business. Doing rideshare and a few other side gigs (all legal). Person wants to, basically, protect any personal assets in case something bad happens and someone attempts to sue said person. This is priority. Secondly, tax breaks and, of course, pay as little as possible with taxes. Does that help and answer some questions?


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## Jon Stoppable (Dec 11, 2019)

Coyotex said:


> Here are some details. A single person business. Doing rideshare and a few other side gigs (all legal).


The first trick is to get the RS companies to pay your LLC instead of you. I dunno if they do that. The second trick is to transfer ownership of your car to your LLC (not that hard). The third trick is to get commercial insurance for said vehicle owned by LLC. Not hard, but more expensive.

For your other side gigs, that would depend on the particulars of the gig.



> Person wants to, basically, protect any personal assets in case something bad happens and someone attempts to sue said person.


Are you the driver? If so, you can't. They will sue you for your personal negligence and go after your personal assets. Buy adequate insurance and consult an attorney as necessary.

The unasked question is what assets are you protecting? A typical RS driver would only have assets that would be protected in bankruptcy (and thus, is relatively judgment-proof). If you have more than that, get an umbrella policy. If that's not adequate, I would question your need to be a RS driver.

But if you are determined, the entity you probably want to look into is a revocable trust, not an LLC.

Bear gave that advice to some human who insisted bear was wrong, so bear said go talk to attorney and report back what they advise on LLC vs. trust. Human never did. Probably they got eaten by some other bear before their meeting with their attorney. If only they had set up that trust before they got eaten, their assets would not have passed through probate, or potentially worse, through intestacy. But humans don't often take legal advice from bears, so ...



> Secondly, tax breaks and, of course, pay as little as possible with taxes. Does that help and answer some questions?


A single-member LLC becomes a "disregarded entity" for tax purposes, meaning that it's identical to being a sole proprietor. Even if it was taxed as a partnership, if you're the only partner, it's still the same as being taxed as a sole proprietor, with the added annoyance of filing a Form 1065 every year. Of course, less the annual fee you'll pay to your state for the privilege of having an LLC.


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## Coyotex (Feb 10, 2019)

If you can't protect your assets, what's the point in putting the car in the LLC?


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## JohnnyBravo836 (Dec 5, 2018)

Jon Stoppable said:


> But if you are determined, the entity you probably want to look into is a revocable trust, not an LLC.
> 
> Bear gave that advice to some human who insisted bear was wrong, so bear said go talk to attorney and report back what they advise on LLC vs. trust. Human never did. Probably they got eaten by some other bear before their meeting with their attorney.


Or very possibly _at_ that meeting, by a shark.

Just tryin' to cover all the bases . . .


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## Jon Stoppable (Dec 11, 2019)

Coyotex said:


> If you can't protect your assets, what's the point in putting the car in the LLC?


That's an outstanding question!


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## FLKeys (Dec 27, 2018)

Coyotex said:


> Here are some details. A single person business. Doing rideshare and a few other side gigs (all legal). Person wants to, basically, protect any personal assets in case something bad happens and someone attempts to sue said person. This is priority. Secondly, tax breaks and, of course, pay as little as possible with taxes. Does that help and answer some questions?


Do you have a state income tax? In Florida we have no individual state income tax however we do have state income tax for businesses. I do several side gigs myself and it would not be worth it if I formed a corporation and had to pay state sales tax as well. As far as personal protection a decent insurance policy is a good way to go.


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