How do I know if I should pick an LLC or Sole Proprietorship?

Get Legal Help Today

 Secured with SHA-256 Encryption

How do I know if I should pick an LLC or Sole Proprietorship?

My wife is opening a small used clothing boutique with local items like honey, soaps etc. and we are trying tofigure which is best way to go. She is using only saved money to start and operate business, no loans, so we are thinking Sole Proprietorship but we are concerned about being sued for any reason. Should she remove her name from our personal accounts and just have the business account.

Seems like its quicker and less expensive to start with sole prop. Tough decision maybe you can help clarify not sure which way to go.

Asked on February 13, 2017 under Business Law, New Hampshire

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Removing her name from the personal accounts would do nothing to stop a lawsuit against her or prevent you and your wife from having to pay a judgment against you; if she were sued and lost in court, the judgment would order her to pay--if she did not, they could go after your real estate, any vehicles or personal property you own, and even against the personal bank accounts if they learned that she was either directly or even directly receiving money from them (i.e. even through you), since that would show that money in the accounts was hers, or if they learned or suspected that she had deliberately removed her name from the accounts, since that would be an act done to defraud creditors (hide assets) and so could be reversed by the court.
Form an LLC: you can do it online in an afternoon, for a few hundred dollars, and it will provide a great deal of protection for your personal assets. The expense to open it is even a deductible business expenses.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption