LLC or Sole Proprietorship?

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LLC or Sole Proprietorship?

I want to start a small real estate photography business later this year. I will
be the only member of the business and I plan on working only part time to start.
Once I’m finished with school Which will be in a few years I plan to expand if
the business goes well. I don’t see too much of an income due to my low prices
and only working part time.
My question is should I be an LLC or Sole Proprietorship?

Asked on February 8, 2017 under Business Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

You want to form an LLC:
1) If you elect "partnership," not "corporation," tax treatment when you form it, there is no separate or double taxation: your revenue is simply taxed as part of your income, like wages would be.
2) As a "limited liability company" it will protect you from most (not all; no protection is perfect) business related debts or obligations; it will therefore help protect your home, money in th bank, etc. You won't have to worry about a lawsuit against the business taking your personal savings.
3) By having a separate entity and separate bank accounts, it will be easier to track expenses and use them as business tax deductions.
4) It generally looks more "professional" to many people to do business as an LLC.


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