How do I get started changing my business from a sole propriatorship to a 2 employee business?

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How do I get started changing my business from a sole propriatorship to a 2 employee business?

I own a part-time taxidermy business. I am looking at adding my wife and I as employees in my business. I am just wondering how to facilitate this.

Asked on December 2, 2010 under Business Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

A sole proprietorship can have employees; a "sole proprietorship" means that (1) one person owns it, and (2) that there's no separate legal entity for the business (e.g. a corporation), but it doesn't mean that only one person can work there. If you want to hire people as employees, just do it--offer them jobs and pay them. You should probably let ADP  or some other service handle payroll--otherwise, you'll have to deal with withholding and tax reporting, which, as someone who's done it for his own small businesses, I can tell you is a pain and a time sink. You'll also need worker's comp, which a payroll service can help you with.

That said, you probably should set up a limited liability company (LLC) or a sub-chapter S corporation. Both of them get the same tax treatment as a sole proprietorship, but will help protect your personal assets from any business debts or claims against the business, including liability claims (e.g. suppose a customer is injured by a knife or scissors, or some chemical, at your premises will visiting). You can probably do this yourself fairly easily at your state's dept. of state or corporations website (names vary; "google" "incorporate Wisconsin" and you should be able to find it). Or an attorney can set it up for you for a modest fee.


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