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Evan
08-06-2008, 10:23 PM
One of the hardest choices in starting a small business is figuring out which type of legal entity do you want to form.


Sole Proprietorships are easy to form and don't require a lot of paperwork. Perhaps just registering with the city. But beyond that, you're free to do whatever you want for business, and there is no distinction between you and your business.
Partnerships allow you to work with a friend or investor to pool your resources and start a business. Like sole proprietorships, they're pretty easy to start and allow a great deal of freedom for the partners to act on behalf of the business.
Corporations give your business a bit more professionalism. It can provide you some tax advantages in addition to legal protections should you ever be sued. It may be a bit more complex to manage, but can be well worth it for some businesses.
LLCs are relatively new, but allow for your business to have the "simple" taxation much like a sole proprietorship or partnership (or corporation should you choose), but do have more formalities than a SP or partnership. They are easier to maintain than corporations and contain the same legal protection.

So having known all of your options, what legal entity did your business choose? What was the biggest decision that led to that choice? Would you maintain your business today as that type of legal entity or change it to another?

vangogh
08-09-2008, 01:34 AM
I'm a sole proprietor and the reason was just the ease of starting up. In a previous business I had a partnership with a friend and at some point I'll probably form an LLC to have the extra layer of protection it offers.

Blessed
08-14-2008, 02:28 PM
I'm a Sole Proprietor, it just makes sense for me right now.

My husband and I were in a partnership once. Never. Again. we're still trying to dig out of the financial mess that made...

My brother-in-law became a LLC or a Corp (I don't remember which) and it's ended up costing him so much in fees and taxes and etc... that it's ridiculous - his wife says their tax man "looked at the numbers and this is better" but my BIL isn't making any money even though he's getting good jobs, is charging the right rates and is staying busy - every time they turn around they are having to send more money to the government. My BIL thinks they jumped from sole proprietorship into the LLC/Inc. too soon.