Small business owners???? LLC??

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LaRue Medlin

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Sumter, SC
My CPA says I don't need one.. So for 10 years I have been just a sole proprietor. But with all the law suits and other crap going on in the world, every one now is telling me to LLC my locksmith business. I've watched all the videos I can find,and I think I should. Any suggestions, It's 110$ to file here in SC. What about taxes? Would this make my life more complicated as far as taxes go? Right now I file under my name. Any help would be great.
 
I think it is a additional cost that you don't need. I have a small business and just use my name, then DBA before my business name. I also file federal and collect state taxes under my SS#. I have a zero liability business, but carry a million dollar personal liability policy for about $350 a year.



The only reason you might want a LLC is to help with supplies and merchandise discounts from suppliers.
 
LaRue,

I suspect your money would be better spent on Insurance and Bonding. Your business is fairly low risk since people do not come to your place of business, rather you take your business to them. Insurance and bonding would eliminate virtually all possible liability that you might encounter in your business.



I cannot even think of what you could do wrong in your line of work that would possibly result in a lawsuit?



Your line of business has nearly zero possibility of causing anyone injury or death, except when driving your van, and as long as you have adequate insurance you are covered If you acidentely damaged an expensive Door on a customer's house the most they would get in a lawsuit is the cost to repair or replace the door which is what the insurance would pay....There is no pain & suffering or punitive damages.



Check with other locksmiths and see what kind of Insurance they carry and if they have faced any lawsuits related to their business.



...Rich







 
Robert, Richard..... that's what my CPA keeps telling me... It's just that I keep hearing from my "backyard" lawyer friends (that don't have a business) to become a LLC. I have 1.5 mill in business insurance and bonding,, Extended coverage on my vehicle and it's contents.
 
If you are the only owner and employee of your business, and you feel you aren't likely to be sued, then from a taxes/$$ standpoint, your CPA is probably right. However, if you can think of reasons that you may be sued, your personal assets are protected in an LLC (unless you do something illegal or fraudulent). Also, as a corporation, should your business "take off," or if you get tired of doing it one day, it can be sold easier. Its assets and your personal property can be easily separated.



As far as taxes and complications? If you run a successful business, then I'm sure you can do the taxes for it. Might even be easier as an LLC. You still file your income from the LLC on your personal taxes, and the LLC reports it's financials as an "informational return" just to make sure the members (owners) of the LLC report the same numbers on their returns. If you are the sole member of the LLC, then that's easy.



My taxes are complicated, but my wife and I own several LLCs and file in several states. My wife does our taxes and I handle all the other financial duties. That's our agreement, and we both like it. If she didn't do them, I'd use an accountant. She uses Turbo tax for businesses, and gets the audit insurance.



There are other advantages/disadvantages to LLC vs sole proprietor, but if you want my advice - don't take advice from posters of online forums that deal with trucks. :bwahaha:
 
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Years ago the Corporate Veil must pretty difficult to break. Specifically, when sued you lost your business, not your life as the corporation was all they could get (in most cases).



In somewhat recent years, case law has been established that makes it easier to break the veil. As such,,, you are only minimally better protected with an LLC as compared to without one...



Our shop was/is doing about 2 million tons of scrap a year when I left. The money was simply to big for us not to be an LLC. Up until then, we were doing as a DBA..
 
LaRue,



If you can file for an LLC for a small fee, and if it makes you feel more comfortable to have the protection of an LLC, then it might be worth it. Since you already have a CPA that is recommending the LLC, let him tell you the pros and cons of an LLC.



I know that TurboTax has a version of their Tax software for Small Businesses, so I don't think it would be much harder to do your own taxes, but if you have a CPA now, I suspect he would be already doing your taxes now, so there may not be much for you to worry about ?



...Rich
 
Richard, it's a one time fee of $110. "I" would feel better about it, but I need to talk with my cpa and see what the tax preparation would be different? It costs me about 300$ a year to do our taxes. If it's going to cost 50-100$ more per year,,, then I probably won't do it. Thanks guys for all the advise... EVEN IF IT DID COME FROM A TRUCK SITE!:bwahaha:
 
Hey LaRue,

People who drive trucks are people too, and they come from all walks of life. There are so many people here with so much experience and knowledge....why pass up some free advice.

...:bwahaha:



...Rich
 
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