JUST STARTING UP MY BUSINESS AND NEED TO GET SOME INFORMATION. I NEED TO KNOW THE BEST WAY TO SET UP THE COMPANY AND INFORMATION ON LIABILITY ISSUES FOR THE ENTITY.
It would seem to me that the answer to your question would best be answered by your CPA, the attorney setting up your business entity, and a qualified insurance agent. They have the knowledge and experience to guide you through the advantages and disadvantages of various forms of ownership vehicles including ownership transfers, liability and tax implications.
The reason accountants and lawyers use LLC's is because most states prevent them from incorporating in a traditional manner. Because of their fiduciary obligations they are not given the full legal protections of the corporate veil to hide behind.
If you have assets, beware of something called "piercing the corporate veil" Once you set up the corporate entity the corporation has to function as a corporation. That is officiers and board meetings and minutes are necessary. Should your corporation fail to function as a corporation and you get sued in a liability situation the "corporate veil" can be pierced and your personal assets put at risk.
All very good points. LLC is the way to go thought becasue it is setup to allow money to be taken out of the company if different avenues which allows you to pay a lower tax rate than your normal tax bracket. Also keeps you from paying Franchisee Tax (in TX). Also think of it this way...as a sole lets say you get sued...all of your possessions are fair game. With the LLC your COMPANY would be sued and things you own personally (vehicles, etc) would be protected. Lot of things to weight out!
LLC OR SOLE PROPRIETOR
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Posted - 03/31/2004 : 19:36:39
