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What is better when starting a business

EntrepreneurialMexEntrepreneurialMex subscriber Posts: 9
edited December 2007 in Selecting a Business
A Sole proprietorship
A Limited liability company
A Corporation
 
Why
 
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    computthiscomputthis subscriber Posts: 0
    A sole proprietorship is cheapest, but offers no protection - your business is you, in a legal sense.  Meaning that if your business is liable for something  - say it is sued and loses - then all of your personal assets are at risk.  On the plus side, there is no double taxation.
     
    A corporation and LLC are very similar in that they are both legal entities and therefore limit liabilities to the company, protecting your personal assets.  Corporations have greater filing requirements and are required to have formal shareholders meetings and maintain the minutes of the meetings.  LLC`s have the meetings, but don`t have the formalities and lesser state filing requirements.
     
    I personally prefer LLC`s.
     
    John
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    NuevolutionNuevolution subscriber Posts: 30 Bronze Level Member
    A sole proprietor is the easiest type of structure, but again it doesn`t offer you any protection from lawsuits, or losses. As a sole proprietor, your EIN ( is your social security number, per say). So let`s say you want to fund your business and the only way to do it is if you take out a personal loan, this loan is attached to your credit. Meaning you are 100% liable for that loan and if you don`t pay it on time or don`t pay it at all, guess what? You used your FICO to get the loan now your FICO score is down the drains...
    As a Limited Liability Corporation, well you have the same benefits as a Corporation, and it`s the newest and most sough, type of structure when conducting business.
    Here is why:
    1. You separate your Personal from your Business expenses (credit, Credit Cards, Loans, Car Leases, Office Leases, and much more)
    2. You can deduct everything as a loss, or break even at the end of the year.
    3. In an event of a Lawsuit, you are protected (As long as stay compliant)
    4. The company has it`s own EIN (Establish Corporate Credit)
    Should I go on?
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