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RE: Sole Proprietor or LLC

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Based on my own research and minimal discussion with corporate attorneys, and of course my own limited understanding of the sum:


The real liability advantages of LLC aren’t that great for the small (one person, low gross) business.  Some personal property is protected, but if push comes to shove the highest paid attorney wins.  And if assets were purchased in any part with “corporate funds” it’s fair game.  That includes any property which may otherwise have been protected as a homestead.  So keep good records.


Then there’s both the corp. income tax and personal income tax, on which I’m not clear as I’m an SP.  And the State of Texas (technically speaking) has no personal state income tax.


On the plus side, 100% of the corporate expenses are deductable, some of which may not be deductable as an SP.  Business expense deductions for an SP begin after expenses exceeding 7% (I think that’s the figure.  TurboTax calculates it for me) of gross.  A sizeable sum if you make very much.


Sole Proprietorship is MUCH easier: no BOD, no corporate paperwork to file, same income tax forms and effort as personal biz.


Keep in mind that pro’s / con’s change each tax year and every time a litigation case changes precedent law.



IMHO, the rough idea is that if the number of people exceeds one (two if they’re married filing jointly) or when gross income starts getting over about $100K to $150K, it’s time to switch to LLC.  Until then, SP is better.


Now, wasn’t that easy?


Jerry D. Coombs, P.E.
Coombs Engineering Services


From: Joe Venuti [mailto:jovenengr(--nospam--at)]
Sent: Wednesday, March 03, 2010 12:21 PM
To: seaint(--nospam--at)
Subject: Sole Proprietor or LLC


Hello All


A non technical question………from your own personal perspective and experience; what are the Pros and Cons Sole Proprietor or LLC ?




Joe Venuti,  P.E.

Joven Engineering

La Quinta,  CA