Whether to apply for a business LLC, C-Corp or sole proprietorship?

I’m looking to legalize my clothing business. I’ve been running as it starts to get more customers. I’m interested in selling to boutiques and stores but I’m not sure if they require a EIN.

Asked on February 26, 2019 under Business Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

Best would be an LLC:
1) LLCs and corporations protect you from being personally liable for most business debts and obligations, so you are much safer having one than a sole proprietorship.
2() An LLC gives you better tax treatment (if you select "partnership" or "disregarded" or "pass through" tax treatment when you form it) than a C-corporation, because unlike with a C-corp, there is no double taxation: profits (or losses, for tax deduction purposes) drop directly to your personal bottom line and are taxed once with your income, instead of first paying corporate taxes then paying personal income tax on the money you take out.
3) An LLC involves less formalities and paperwork than a corporation.


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