OT: Incorporate or LLC

[LaRue Medlin]

I know there is a lot of private business owners here. I need to make a decision on which way to go for my locksmith business. Any help would be greatly appreciated. pros - cons TANX

 

[Pedro Hernandez]

this might help.

 

[Kevin Palmer]

Years back, being Incorporated was very protective to you and your personal stuff, (home, cars, money etc etc).



However, the corporate vail can now be penetrated by nothing more than a simple court hearing.



You still get some protection, just not as strong as it use to be.

 

[Rich Wavrik]

LLC protection and requirements do vary from state to state also. Just remember that a lot of your suppliers will make you do a personal guarantee for any credit that is extended.

 

[LaRue Medlin]

I'm not worried about credtors or suppliers,, I just need to know which is better at protecting/seperating my stuff from the business. Right now, everything is all attached to "me" and "my" credit and possessions.... does this help explain???:huh:

 

[Tom Schindler]

LaRue,



A few years back, a friend and I stated a buisness. We went LLC. There are benifits to both. An LLC is easier then INC. LLC's aren't recognized in all 50 states (when we started the buisness).



Another thought is an S-Corp. It is more like an incubator corporation.



After 1 year, when the buisness became very profitable, I bailed. I did not want to be tied down. He is still going strong.



Your best bet is talking to a lawyer.





Tom

 

[Nathan Potance]

Do you trust your wife?



Alot of times the business is in one spouses name, and everything else is in the other...But again...talk to a lawyer.

 

[Thomas Rogers]

I did C-Corp (incorporated). Was going to do S-Corp, but the timing was off (missed a April whatever deadline).



I prefer C-Corp myself and I have done EVERYTHING myself, the incorporation, each years taxes, you name it. The big difference between LLC, S-Corp, and C-Corp to you will be one of rigor and paperwork (latter less, former more). Yes, the added protection of the corporate vail of the C-Corp is appealing. Furthermore, if you think the company will "take off" and be attractive one day for selling, C-Corp "done right" makes more sense.



Talk to a lawyer.



TJR

 

[Dale Carter]

Depends on the size, type and success of the business. If it is a sole proprietorship, you may be better off with neither LLC or Inc, just buy a large umbrella policy for catastrophic liability coverage. If you are a small corp and someone sues you, the previous posters are correct about the weakness of the corporate veil (so called because it was meant to hide or shield the assets of the partners). Our business operated tow trucks and we felt like there was a higher risk of a large lawsuit than most small businesses. We felt it best to take the tax savings and admin costs related to incorporation and buy LOTS of insurance for protection. We could have paid higher tax rates and higher admin costs and still not been protected. The fact is, if your assets are large enough, an enterprising lawyer will find a way to get to them. The problem with a corporation is insulating the parnters and mingling of funds. For instance, you borrow money to buy equipment, who signs the loan, you as President of ABC Corp or you as LaRue? Most of the time the bank will not allow you to sign as an officer and, congratulations, by signing as LaRue, you have just mingled corporate and private assets giving a foolproof avenue to removing your corporate protection and exposing ALL of your assets to the suit.



This is a complex question best answered y LOTS of research and conultation, which you have just begun. Good luck!