# Sole proprietor?????



## maverick17 (Sep 15, 2006)

Business debts? What bank is going to give your one man show a corporate loan? You are gonna sign personally for that debt and there goes any liability protection.

If you are the one doing the work, or supervising the work, and you own the company, you are personally liable for any any wrongdoing, so again, if you are a one man show, no liability protection.

Where an LLC does give you protection is if you screw up personally, and the injured party comes after you, they will not be able to get the assets in your LLC. But even then, if they can prove your LLC did not act as a corporation, but rather as a sole prop, the veil is torn and the injured party can get it all.

There are tax benefits to being an S-corp or a partnership (especially if its you and your wife, and you trust her), but really only if you make more money than a "standard wage" you would have to pay someone to do the job you are currently doing.

If I were just starting out and only had plans of doing this part time, I would get the LLC through the state, for the official business name, but know that it means nothing.

I would then buy a personal umbrella policy along with business liability insurance (some insurance companies sell the business liability as a rider to a personal umbrella to one man shows) and keep my eyes open.


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## osstaffleasing (Jan 16, 2010)

the advise i got from my accountant was 1 man show needs to file LLC along with the the S-corp election. this creates the seperation or, 'corp veil' referred to above. it is correct that there is no shelter of liability for a 1 man show LLC who DOES NOT file the S-corp election. many states allow you to file your own paperwork online for an llc or corp, ie in florida it is called sunbiz.org. 

you will probably want to file for a Federal EIN (tax id #). This can be done in minutes online at irs.gov. Just follow tabs to 'apply for EIN' or something or the sort. they will email your EIN to you when the process is complete.


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## hiteams (Nov 23, 2007)

Customer can sue ...

NJCarpenter, LLC
and NJCarpenter (personally), since you were doing the work.

People say that an LLC protects your personal assets to some degree. True, at least until they decide to sue you personally also.

Dean


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## Anti-wingnut (Mar 12, 2009)

Anti-wingnut said:


> That is correct, but any good lawyer can also easily pierce and dismantle the corporate shield of any type of incorporated sole proprietorship.


 


KennMacMoragh said:


> O.k but "easily" isn't correct according to what I was told by an attorney


I said "good attorney", not "your attorney". Didn't your lawyer hurt his neck when that ambulance jammed on it's brakes?


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## Anti-wingnut (Mar 12, 2009)

http://www.corsinet.com/braincandy/jklaw.html


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## donky (Jan 1, 2010)

LLC is the way to go. It protects your ASSets from attack unlike a sole prop. The minute you think it is not a big deal is when you will get smoked. In minnesota it cost about 175 dollars to form a LLC through the secretary of state. LLC stands for Limited Liability ( Think about it)
Your taxes work in your favor as some of the other post suggest.


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## kubie (Oct 19, 2008)

hiteams said:


> Customer can sue ...
> 
> NJCarpenter, LLC
> and NJCarpenter (personally), since you were doing the work.
> ...


start another corp and sell your house, cars, ect to it..............now you own almost nothing.



just an idea


what lawyer is going to waste there time when you are dirt poor and dont own anything of value.


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## Anti-wingnut (Mar 12, 2009)

kubie said:


> start another corp and sell your house, cars, ect to it..............now you own almost nothing.
> 
> 
> 
> ...


Of course the lawyer could go click click, and find out that you are an officer of two corporations, and go after that corporation.

Your idea is really a non starter


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## mechanical guy (Feb 9, 2010)

I am a young guy starting out, and have read all the posts in this thread. I am a sole prop as of now, but want to protect my personal assets. It seems that it is a matter of opinion more than legal fact on S-corp vs. LLC vs. Sole prop. I am in PA and am wondering if anyone from my state has any more specific advice. Thanks.


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## George-NJ (Feb 12, 2010)

For starting out as a one man band, here is my (and my attorney's)opinion.

Asset protection is the name of the game and insurance is the key. Most lawyers are looking for the easy buck, if you look uncollectable / judgement proof your not an attractive target. By not attractive, you don't personally own much, or what you do show to own is equity striped (mortgaged). 

Buy good insurance and an added umbrella policy, as much as you can afford / find.

With llc / corp you'll feel better protected, but are you? If you really screwed up something (and sh#t happens), someone/ people die, do you think just because you have an llc or corp they are gonna sheild you? You better not be sitting on alot of equity anywhere readily visable...

Banks and llc/corps, unless your a big time, long time biz, you'll be personally signing for any bank notes for your llc / corp anyway.

A true one man show has 100% control of your work safety, once you get helpers/ employees, the chances of something happening is a lot greater.

Even with a llc / corp, you still need the best & highest amount insurance you can find, umbrella policy & to hide your equity / assets.


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## noahweb (Feb 9, 2010)

I would think an LLC, but only a licensed accountant can tell you the best way to structure your business

Different ways of structuring your business have different tax implications, etc.

Every good team needs a good lawyer and a good accountant. Seek one out. They could save you thousands (if not more) your first years


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## Duck042 (Aug 19, 2008)

Bob Incollingo said:


> Disadvantages of Sole Proprietorship
> - unlimited personal liability for all debts and liabilities of the business
> - limited ability to raise capital
> - termination of the business upon the owner's death


...and the "disadvantages" in this case are negligible:

Regarding #1: From what he's said, he's doing all the work himself, so he has unlimited personal liability whether or not he's an LLC (see the piercing the corporate veil posts above). 

Regarding #2, it doesn't sound like his business has a lot of collateral so he's going to have to personally guarantee all loans anyway. 

Regarding #3, He has no partners and he personally owns his tools and vehicle, which will pass to his heirs on his death anyway. In fact, the LAST thing he'd probably want is for his wife to have to figure out how to unwind a business still engaged in unfinished projects.

EDIT: Two more points:

1. Everyone crowing about LLC's protecting your assets as a sole propreiter needs to grab their own neck and pull down until they see daylight. If YOU are personally negligent and get sued, the LLC WILL NOT protect you from your own negligence. The only thing that will protect your assets is a large ($10M at least) umbrella policy. Call your insurance agent, don't waste your time with an LLC.

2. As I read the rest of the posts, Maverick and George already said this. Surprised the construction attorney didn't catch that... 

3. Nothing. There is no third thing.


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## Electric_Light (Nov 25, 2007)

Anti-wingnut said:


> That is correct, but any good lawyer can also easily pierce and dismantle the corporate shield of any type of incorporated sole proprietorship. Not that there is no reason for a sole proprietor to incorporate, but they are not nearly as shielded as one would like to believe


That's why the personal use of business asset should be minimized. If you took your WORK TRUCK off-roading, you get into an accident and the passenger is injured. With the truck meant for business purpose, the insurance may or may not cover the passengers' expenses. If the insurance pays, the insurance company will likely come after you. If they don't, the passenger will probably come after you personally.

So, obviously LLC does not provide you any kind of protection for such things.


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