LLC or Sole Proprietorship?

UPDATED: Sep 30, 2022

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LLC or Sole Proprietorship?

I want to start a small real estate photography business later this year. I will
be the only member of the business and I plan on working only part time to start.
Once I’m finished with school Which will be in a few years I plan to expand if
the business goes well. I don’t see too much of an income due to my low prices
and only working part time.
My question is should I be an LLC or Sole Proprietorship?

Asked on February 8, 2017 under Business Law, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

You want to form an LLC:
1) If you elect "partnership," not "corporation," tax treatment when you form it, there is no separate or double taxation: your revenue is simply taxed as part of your income, like wages would be.
2) As a "limited liability company" it will protect you from most (not all; no protection is perfect) business related debts or obligations; it will therefore help protect your home, money in th bank, etc. You won't have to worry about a lawsuit against the business taking your personal savings.
3) By having a separate entity and separate bank accounts, it will be easier to track expenses and use them as business tax deductions.
4) It generally looks more "professional" to many people to do business as an LLC.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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