LLC vs Sole Proprietorship for One Owner | Should a 1 Owner Business be an LLC or a Sole Proprietor?

[@ericvigen]

Elizabeth, you answered my most fundamental question on this video. You are not just a lawyer, but also a professional advisor and mentor. Really happy to find your videos. 👌👍🙏

[@ElizabethPW]

You are so welcome!

[@janaesaffold2531]

yes you answer mines tooo@@ElizabethPW

[@johnbriscoejr9738]

Elizabeth, thank you, thank you, thank you soooooo much! I was so confuse as to which way to go until I listened to you. You were clear and straight to the point. All my friends who have money making businesses were encouraging me to go LLC; "Go LLC Bro, it's the right way. Good for taxes!" After listening to you Sole Proprietor is the right choice, I am a one owner, one person worker, I have no property or value other than my wife and kids. Thank you Elizabeth! Two (2) Thumbs up!

[@ElizabethPW]

Glad you found it helpful! :)

[@Ashley21138]

Right, everyone is so pushy about getting a LLC, sole prop it’s is

[@glorias.2930]

This has got the be the most clear, concise and complete video on the topic! Thank you!

[@ElizabethPW]

You're welcome! :)

[@kev-othegamer]

I Agree.

[@yummyfunnybunny5167]

omg a legit video that's not just "5 reasons not to do a sole proprietorship" and than proceeds to provide shallow in-concise reasons with very few or just poor examples!? liked and subscribed!

[@ElizabethPW]

Glad you liked it!

[@gaeseki1]

Honest and nuanced information with context. Thanks so much for making this video. Everyone on KZbin pushes the "LLC is the only way to go" narrative. I'm guessing a lot of that is due to the money to be made with LLC formation services. I've been binging you videos and found this and the sole proprietorship to LLC conversion video formative and helpful. I'm looking into a side gig making donuts at the local farmers market once a week. Do you think that's small and safe enough if I have insurance? My only assets are a 401k and roth IRA, no property etc. Thanks!

[@ElizabethPW]

Yep I hear you about the LLCs. Well I'd say when selling food you want to have insurance to cover you in case something happens (someone chokes or is allergic etc).

[@brendaotey539]

The absolute BEST video that I've seen on this subject!!! Helped me make my decision on which one to go with. Thank you!

[@bishchi606]

How about one owner of an apartment (2-flat) renting out a unit in the building? Is it better to go Sole Proprietor vs LLC? If I already started as a Sole Proprietor, what do I do now to make it easier to transition to an LLC? Would appreciate your advice.

[@lakcunha7654]

You are amazing, was so hard to find this information like u said, most don't realize what they get themselves into.

[@ElizabethPW]

Great to hear!

[@JesusLopez-sb3ir]

This was the best advice someone ever gave me . Thank you..

[@ElizabethPW]

Great to hear!!

[@electromejia3889]

Dammm you are very good in explaining! I would love to go as LLC but it requires all my cash to be transferred to my new business and I can’t do that,,, I’ll might transfer in the future until I make my money growth

[@MiriamR09]

Thank you Elizabeth this was so helpful specially as a start up.

[@ElizabethPW]

You are so welcome!

[@B58_Bless]

You made it simple and understanding. I'm sure you get asked same question about LLC or Sole Proprietor. Based on your experience and clients you have what would work out if I'm staring a used dealer selling autos at a very very small location, LLC or Sole Proprietor? It just be me (wife and children as support) and no owned property or investments.

[@ElizabethPW]

Hm for selling used cars I'd recommend an LLC -- there's a fair amount of risk because people physically there & test driving cars, and also people mad about a car & trying to sue. You should also get insurance too but an LLC will help shield your family from that risk.

[@B58_Bless]

@@ElizabethPW Thank you for your prompt reply! I actually did go with an LLC. God bless🙏

[@primex3497]

I'm on a Elizabeth video spree and sponging all of your information, there is a lot of value here :)

[@ElizabethPW]

Glad you found it helpful! :)

[@ShrandaM]

Thank you Elizabeth for sharing this video.

[@ElizabethPW]

You are so welcome!

[@kme1435]

Oh my goodness THANK YOU! I have been watching some of your videos to help as I try to get started and each one helps more than the last! I felt my anxiety rising because I do have assets to cover and do events but I am just starting out and making hardly any money so I was almost panicking but phew 😅 you ended it with converting after a time so 👏🏽👏🏽👏🏽 to you

[@ElizabethPW]

That's great to hear! Glad I could help.

[@sivhuskycarrillo8395]

Thanks for a great info

[@justin4000]

Direct and very helpful. Thank You!

[@jayleahhg]

Ok this video definitely taking some stress off of me whew thank you

[@ElizabethPW]

I'm so glad!

[@allenschneider1847]

I've heard mixed opinions as to whether or not an LLC actually protects one's personal assets. I'm in Oklahoma and unfortunately find this question very confusing. Thanks for sharing your perspective.

[@ElizabethPW]

Welcome! Yes there's a lot out there that confuse the issues

[@enekneya7378]

Great information! If you paid for things like forming the LLC, the Registered Agent, and logo; should you pay yourself back from the business account?

[@ElizabethPW]

Well you can handle it a few different ways. You can reimburse yourself, you can just count it as your "capital contribution" to "buy" the membership shares of the LLC, or you can count it as a loan and the LLC pays you back in the future. There's no one right way -- it depends on what makes sense financially/tax-wise

[@enekneya7378]

@@ElizabethPW Wow! Thank you for answering so thoroughly!

[@routinedrop4692]

Thank you so much for this 🙏

[@dabneyoffermein595]

Great video. If the business is going to be one-person show, from home, but is IT consulting, do you consider that high-risk? A quick inquiry into insurance for liability came back with, "our underwriters don't have an appetite for that", but they were able to offer a quote on unemployment compensation insurance, which is required by the state. I only checked with one carrier so a ton more probably will or perhaps might cover the liability side, any experience dealing with that side of it? In other words, it sounds like going LLC is best for this particular industry (Information Technology to include security) just based on risk alone. Any recommendations on a national insurance carrier for SP or LLC liability insurance? Thanks so much in advance!!! Subscribed!

[@ElizabethPW]

No, I don't consider consulting high-risk, but have a good written contract and insurance. I use Next Insurance

[@lakshmiumabharathirachakon8416]

Thank you so much 🙏🙏, I am planning to start a small clothing bussiness and am very much confused about the permits I need . This video is very helpful.

[@ElizabethPW]

great to hear!

[@lakeville1853]

Hi, My scenario My wife and I have created a it revocable trust for our home and a revocable trust for our savings both the children are the trustees I currently have an LLC however I am a single owner business and considering going back to sole proprietor because of the fact at the house is already secure and I have no assets and I do not want to pay the state of Massachusetts an additional $500 for record keeping. Any thoughts The business is less than part time work a side hustle if that. The thoughts back in 7-2023 was to register as a LLC and try growing the business. my health condition has put a hold on growing the business unfortunately. Thank you in advance for your feed back

[@ElizabethPW]

Revokable trusts do not protect the assets from business creditors or other business risks. If you want to protect a house from the business creditors, the business needs to be an LLC or corporation.

[@captainbagels]

Very helpful and straight to the point, thank you

[@ElizabethPW]

You're welcome, glad it was helpful!

[@BoujeeGlam]

Your videos are fantastic! I'm debating between forming an LLC or operating as a sole proprietorship. Sole proprietorship seems appropriate since I have minimal assets and am the sole owner. However, my business involves event rentals such as floral arches. As a sole proprietor, will my tax rate be equivalent to combining my salary with my husband's (we paid about 32% )? I am confused if it is worth or should I form a LLC.

[@ElizabethPW]

Yes the income gets added on to your family taxes, but don't forget that is just on profit, after deducting expenses. Forming an LLC does not change that.

[@julietaduarte-be7in]

Hi Elizabeth. I am a stay-at-home mom. Thinking about selling handmade jewelry. I feel a bit overwhelmed because I really don't know how the business will go and creating an LLC seems to big for me right now. I really would like to test the field before. Do you think selling jewelry online can be risky?

[@ElizabethPW]

I think if you have good policies (like you provide written terms & disclaimers about shipping, allergies, etc.) and have insurance, then it can make a lot of sense to start out as a sole proprietor and then upgrade to an LLC once you are making more money

[@JeffrStarkey]

This is such great knowledge. Thank you for sharing.

[@ElizabethPW]

Glad it was helpful!

[@chriscal8201]

Thankyou for sharing. I appreciate being able to get all the information clearly . I do not feel the need to review a few more videos to get the whole picture 😆

[@ElizabethPW]

Glad it was helpful!

[@rww4624]

I live in CA and started a bookkeeping business in 2023. I was told by someone training me that I had to get a single member LLC. I ended up spending so much money trying to get the business going and didn't end up making any money at all. Now I'm told I need to pay $95 to redo my LLC paperwork for this new year by the attorney who set it up plus pay the franchise tax board $800 just because I have an LLC even though I have no clients and lost a bunch of money last year. I also have to spend a lot getting my taxes done just to show a large loss. What should I do with this situation? I'm a single mom trying to pay $1000 soon because of this LLC and I have no idea how to file my taxes. I'm told CA will take 30% of whatever I make each year.

[@ElizabethPW]

I'm not sure what the $95 is for but yes the $800 is for each year. However if you set up the LLC in 2023 then there is no franchise fee for 2023 due (there was a special rule for the first year, it was a covid rule). www.ftb.ca.gov/forms/misc/3556.html#:~:text=Assembly%20Bill%2085%20provides%20a,and%20before%20January%201%2C%202024. You may want to shut down the LLC ASAP so you don't have to pay the tax for 2024 (if you do this within the first 14 days) www.ftb.ca.gov/about-ftb/newsroom/tax-news/december-2019/what-is-the-15-day-rule.html#:~:text=Since%20an%20entity%20that%20meets,close%20of%20the%20tax%20year. So I'd recommend shutting it down ASAP by filing a termination/cancellation on bizfileonline.sos.ca.gov/ and then you can just be a sole prop until you get the business off the ground, and you have more money

[@rww4624]

@@ElizabethPW Thank you for responding and the information you gave me. I got my LLC (the paperwork was complete and finalized) as of Feb 14, 2023. I just read your link about the 15 day rule and I'm not sure if I qualify for that?? I did no business last year at all. So I paid a lot of money to get my LLC and everything to start my business, including paying for additional education. So I spent a lot of money and made nothing. Now I have to pay a lot to get my taxes done for 2023 (to just say I lost money) and in April I have to pay $800 to the CA State Franchise Tax Board to just have my LLC, and I got my LLC from Prime Corporate and they are saying I need to pay $95 right away to redo (renew) my LLC for this new 2024 year. Do I still have the option of canceling my single member LLC and not paying the $800 to the State Franchise Tax Board this April and if so, I should be having a lot of right offs for money spent in 2023 to start my business and I was told I could roll them over to use towards my 2024 taxes for a bigger tax break. Is this true and if so, if I become a sole proprietor wouldn't I lose all the tax right offs from 2023 and 2024 since sole proprietors can't write hardly anything off? Also, my bank won't open a business checking account for me unless I have an LLC so I wouldn't have a way to set up a separate business account. How do I handle these things? Do I need to keep the LLC?

[@OURFAMILYRIOS]

hi I have a question. Iam starting two businesses but under two different DBA'S they are both in sells, one is a clothing store and the other is a candy shop/ food services. I have a sellers permit do I need an addition sellers permit per business? or just two additional DBA'S? both under sole proprietor.

[@ElizabethPW]

My understanding is that you have one seller's permit but you need to add the additional info. But ask them to check 1-800-400-7115

[@CasaDeGarcia]

IM starting a business for my brand and family..first one will be an online retail fashion store. I will be getting it going and running it..everything will be done from my house, then shipped to customers. Should I do an LLC or sole..do you think?

[@ElizabethPW]

Many of my clients start out as a sole to keep things less expensive/simple. The down side, when you have a product-based business, is you are personally liable for all those production / vendor agreements, and any debt you are taking on to purchase inventory. It really depends upon your tolerance for that kind of risk.

[@AskYourComputerGuy]

Love your content! Thx for tbe great info

[@ElizabethPW]

Glad you enjoy it!

[@brandonthomas6880]

Im leaning more toward sole proprietor now that ive watched your video. But what would you recommend for starting a small landscaping business? I don't know how successful the buisness would be so i dont want to get an llc off the bat. Great video with a lot of great advice. Thank you

[@ElizabethPW]

Well landscaping does have some risk since usually have employees and people can get injured, so if don't want to get an LLC then make sure you have adequate insurance to cover those risks

[@brandonthomas6880]

@@ElizabethPW awesome thank you so much! Your videos are really educational

[@MelissaLovesJESUS]

GOD bless! If i get an EIN and Sole Proprietor with a DBA filled, does that mean I’m still responsible with all my assets in any case?

[@ElizabethPW]

Yes!!

[@lynnwillow6048]

Hi Elizabeth. I saw your video and it was very helpful. Thank you for explaining it so that I can understand it well even if I am not good at English, and for explaining the necessary parts well.

[@ElizabethPW]

Glad it was helpful!

[@Ngocly_Toyama]

Love your videos. Super informative and thorough but short!

[@ElizabethPW]

Glad you like them!

[@skaterblader30]

Thank you for the informative videos, they are very helpful. I have a question, I have started going to thrift stores and garage sales and reselling on eBay as a side gig. I have recently seen videos about big companies suing resellers with some kind of trademark angle even though it’s a legally purchased item. Any way with that in mind do you think it would be wise to get an llc for the protection and peace of mind? Does an llc even protect against anything like that? I wouldn’t want my reselling hobby to impact my family if a company decided do something like that however unlikely it may be.

[@ElizabethPW]

Hm well yes running the business as an LLC would shield you from personal liability (assuming you observe all the corporate formalities).

[@sgriswold110]

Thanks Elizabeth!! Your videos are so informative. I dont know the way to go at this time, but you provided all the info I need to make the decision, I just have decide now. Nice job!

[@ElizabethPW]

Great to hear!

[@eaglesfly2457]

Hello Liz, thank you so much 😊,you are very clear with your contents-- TODAY IS MY FIRST TIME OF COMING ACROSS YOUR CHANNEL and I just fell in love with your very simple way of explaining stuff. Thank you so much

[@ElizabethPW]

You are so welcome!

[@lashannawilliams7721]

Thanks for making that so clear.

[@ElizabethPW]

You're very welcome!

[@nanz3878]

Hi Elizabeth, I cook and sell food within my home, but would like to open a small family restaurant with no employees, what would you suggest???

[@ElizabethPW]

Hm for a food business I'd form an LLC because there's a lot of potential risk there

[@littlesunflower5483]

Hi Elizabeth love your videos they’ve all been so helpful! Do you have a video on how to switch from LLC to sole proprietor?

[@ElizabethPW]

No I don't have a video on that, but I'll add it to the list. It does come up a lot, both switching from LLC to sole prop as well as how to properly shut down an LLC generally.

[@matthewstaten4932]

Confirming your saying I don't need a licenses or business permits with a Sole Proprietor? All I found was this which kind of halfway answers the question but not fully: A general business license is not required in Texas. However, it is important to determine necessary licenses, permits, certifications, registrations or authorizations for a specific business activity, at the federal, state and local level.

[@ElizabethPW]

Whether or not you need a business license or permit has nothing to do whether the business is a sole prop or an LLC/corporation. In Texas, there isn't a general business license, but many industries / types of business need a permit or license. Here's a guide for that: gov.texas.gov/uploads/files/business/2020TexasLicensesPermits.pdf

[@danielmaldonado6388]

Ihave 4 mobile homes and thinking to do an llc,(just me ) and transfer title to llc ,it is worth it or beneficial? I'm thinking of doing it to grow in both side and try to get a BLOC too

[@ElizabethPW]

That may be helpful to protect against risk, but also make sure to have insurance

[@dustincrawford5753]

Hi Elizabeth! Thanks for te awesome video. I am a hobby woodworker with a full time job. I have recently started building small pieces and will start selling them at various markets. I have a home, a nice savings, and multiple vehicles. Do you think llc would be best in my situation?

[@ElizabethPW]

Hm yes if you have some assets it may make sense to have an LLC. Also get insurance too

[@alfonsorodriguez7010]

Hello Elizabeth, thank you for this video! I am a US Army Veteran that is wanting to open a credit repair company. Should I still consider opening up as a sole proprietorship vs a llc? I know there are some risk factors in credit repair. Thought you could guide me a bit. Thank you for your help.

[@ElizabethPW]

If you're doing a business like credit repair, you need to make sure you have proper disclosures and terms & conditions (or written contracts) with your clients. In any business like that, expectations must be managed so people don't expect a miracle etc. Yes, having an LLC helps too, because if someone does file a lawsuit against you, that's another layer of protection for you personally.

[@readyeddie_]

Hi Elizabeth. As someone who’s is interested in turning a side hustle with photography in a small business. Nothing crazy just casually shooting sr pics or family photos now and again. Does it make since to go straight to llc if I am not earning loads of cash. Would a sole proprietor be okay with issuance, just in case. I have my full time job and just want to be legit, rather than doing it on the side. Thank you.

[@ElizabethPW]

It can make sense to just do a sole prop with insurance, and have contracts. It does depend on your tolerance for risk

[@jreillw.1219]

Great i see this i have just Did a quote For my LLC ... but because I sell product I went for my LLC

[@ElizabethPW]

Good to hear that the video was helpful! That makes sense.

[@AlyoshikMr]

Your voice sounds like a song - I enjoy your English! Thanks so much. :)

[@ElizabethPW]

Welcome!

[@anakein]

How to use a holding LLC to reduce taxes of a subsidiary? Could you publish a video on that topic?

[@ElizabethPW]

I'm not the best person for tax strategy -- look for a CPA or tax advisor

[@michellemick8245]

Hi Elizabeth. Great video and information. I am going to set up a DBA and I will be getting errors and omissions insurance. This is for my notary and insurance business. I am the only employee thus far. Do you recommend DBA with E&O Insurance or does LLC sound safer?

[@ElizabethPW]

Hm right for a notary business, you get E&O insurance for the biggest risks (mistake in the notarization). Also consider regular business liability insurance, to cover other stuff like a customer slipping-and-falling. LLC does add a bit of protection too, and that's more about your comfort level vs the expense of a CA LLC (including the $800/year franchise fee tax).

[@Javs588]

At what point financially do we decide between LLC and S-corp for real estate?

[@ElizabethPW]

I typically do S Corp when the business makes mid-high five figures of taxable profits

[@TheAngelsr413workz]

My question is I want to start a contracting business and buying houses, fixing them up and selling more like home renovations. What would be the best for me starting off

[@ElizabethPW]

It depends on how you will be financing. It would be great to have an LLC and use that, but it may be hard for a brand-new LLC to get the financing since it does not have a credit rating yet

[@CocinandoConEsmeYMuchoMas]

I really love your channel 😍, thank you so much for share all this knowledge 🤗

[@ElizabethPW]

Glad you enjoy it!

[@never2late2win]

Elizabeth, thanks so much for this video, more helpful than anything else I've found online. Two questions if I may; I am starting a sales organization that will require me to hire independent contractors, no direct employees and no real risk, do I really need an LLC? AND, I will have a second DBA and would like to open two distinct bank accounts and I understand I can do that with one EIN as long as they are both sole props? Thanks so much for your channel, you are providing a great service!

[@ElizabethPW]

For that type of business, you'd want to make sure to have well-written contracts so the contractors are indy contractors *for sure* and also require them to have insurance, business license (if they need that) etc. in the contract. Yes you can have multiple bank accounts for each DBA (with one EIN). Well unless that bank has some weird rule but that would not make sense.

[@whitenailsnguitars]

Thank you for this. Seriously.

[@ElizabethPW]

Welcome!

[@Bossbabemindset]

My question is I already have an Llc for a boutique but I have a financial literacy business as well would you suggest getting another Llc and ein for that business or can I operate that side under my boutique Llc

[@ElizabethPW]

You can operate as a side gig. The main issue is that each business is liable for the other. So you just need to be okay with that, and make sure to have insurance that covers the risks etc.

[@Bossbabemindset]

@@ElizabethPW thank you so much

[@Milap2005]

Thanks for the good video and explanation. I am planning to start a mgmt. consulting business, if I want a name for the business does it have to be an LLC or can I still have a name and be a sole proprietorship? Thanks in advance.

[@ElizabethPW]

Yes you can just have a name and be a sole prop. You probably would then need a DBA unless the name includes your own name

[@Milap2005]

Thanks

[@sgsha]

Elizabeth, Great Information! I want to do online business and continue as sole proprietor until I figure out the Business works or not. Bought the items needed for Business through personal account.What forms I need to fill out in this case and can I deduct my expenses here? If so, they need to be itemized in 1040 schedule c. Thanks for your help on this?

[@ElizabethPW]

If you are starting as a sole prop then yes you will put them on your 1040 schedule C and they will be deducted against the business income. You'd want to keep a good record of your expenses in a bookkeeping system or at least a spreadsheet or notebook.

[@JusRay]

What about for someone who is trying to basically be a KZbinr ? I’m looking to of course at the moment have a lot of expenses due to have to create content etc and looking to open a business account as well. I have a business license and just realized it is sole proprietor should I switch to LLC ?

[@ElizabethPW]

For a one-owner business just starting out as a KZbinr, being a sole proprietor can make a lot of sense - saves you a bunch of time and money. Then when you are making more money and have a more complex business, can upgrade to an LLC. The only exception is if the YT business has a lot of risk, for example if someone is using copyright works or has employees.

[@JusRay]

@@ElizabethPW thank you so much. I make the cringeeeeee decision to pay $300 for the switch today. It sucks but for the risk and to have my name etc it is worth it.

[@ElizabethPW]

Right if someone is risk adverse, it can make sense

[@generic_official]

@@ElizabethPW Regarding the KZbin business that has a lot of risk, is there a list somewhere that gives a risk factor depending on the type of business? Or perhaps statistics on the types of lawsuits filed in the United States, so I can start a KZbin channel with the least amount of risk/worry?

[@LuckyYouDude]

This is just awesome info and great help for newbies like who are thinking of starting a business. What would you recommend an online guitar case - manufacturing and selling business? Thank you so much for these videos and for any tip/suggestions. Thank you again!

[@ElizabethPW]

Glad it was helpful! Hm if you are manufacturing products, I assume that you will have inventory and contracts with the factories etc. That may be a good case for an LLC, because there's potential liability if something goes wrong with those agreements, if there's unsold inventory, if inventory gets lost or damaged in shipping, delays in shipping and customers want refunds, etc.

[@LuckyYouDude]

@@ElizabethPW Thank you again Elizabeth. I mistakenly wrote 'manufacturing', I will actually have the cases manufactured in India and then shipped to USA for online selling? Do you think I can start with sole proprietor or LLC will be a good idea since it involves international dealings? Thank so much I am totally lost on this hah..

[@ElizabethPW]

Yes it may be better to have the LLC because of those dealings, shipping, inventory, etc

[@andreabarnett2015]

Hi 👋🏾 First I love you videos. They are very helpful. Do you have any insights or tidbits about other states like VA? I do understand you work in CA and know more about that state. I just wanted to ask.

[@ElizabethPW]

In most states, the costs of forming and having an LLC are much lower than CA. Here's a bit of info: www.northwestregisteredagent.com/llc/virginia/cost

[@andreabarnett2015]

Thank you for this. I appreciate it.

[@Jesse.1776.]

how about if I am trying to start building credit? should I stay sole prop or go llc?

[@ElizabethPW]

If you build credit as a sole prop, it will not transfer to the LLC. So start with what you want in the end, if building credit is important

[@misora0]

Hi Elizabeth, I run an Airbnb from the second story apartment of my own home. Trying to figure out if it makes sense for me to form an LLC to protect my biggest asset. Some people say that the protection I get from Airbnb and my own personal short term rental insurance is enough but others have said I should form an LLC. Would love to get your opinion.

[@ElizabethPW]

Hm I'd think about how the LLC could protect your real estate from the business -- you might also be able to do some interesting tax planning too

[@rainyakennedy4651]

Do you have to get a new duns number when changing your LLC from sole proprietor to LLC

[@ElizabethPW]

My understanding is that when you form an LLC you'd start over with a new credit rating so you'd need a new number, but check with Duns & Bradstreet to confirm www.dnb.com/contact-us.html

[@tinatee3724]

Thank you for this content! I'm starting my own bookkeeping business from home. It will be just me........LLC?

[@ElizabethPW]

It really depends on your tolerance for risk. Starting as a solo will be less expensive / hassle but the LLC offers you personal asset protection from the business

[@tishshamiller]

Would you recommend a llc or sole prop for mentoring, coaching, and tutoring? I also asked this because the name for the LLC and the Sole are different. I really dont want to use my name or the DBA. I also dont want to get caught up with a tax issue with the LLC if im just starting out. My great advisor and many friends of mine have LLCs. A couple in the fields mentioned above are sole. Can you advise who provided the limited protection if sued by the LLC? Thank you in advance.

[@ElizabethPW]

You can have a one-owner LLC that is taxed as a sole proprietor, which can keep the tax situation simple when you start out. For some of my clients starting a service-based business like coaching, they begin as a sole proprietor and then convert to an LLC when they make more money. You can have good contracts and insurance to handle some of the risk of being a sole proprietor.

[@tishshamiller]

@@ElizabethPW thank you very much. Which website builder do you recommend-wix, fiver, ect?

[@ElizabethPW]

@@tishshamiller I don't have a website builder that I recommend really (I personally have a website based on wordpress, hosted at wpengine)

[@purplebutterfly360]

Thank you so much. I so glad you are providing this information. I've been going back and forth for far too long with what to do...especially because we own a home now. However, I'm just starting out as a consultant and mostly online for now (due to the world events). However, I want to eventually do engagements in the future. So the 6 month starter I believe is the best option for me. Having an asset, would you advise the same? I really appreciate this. New subbie. PS. Would this also affect my husband's business?

[@ElizabethPW]

Make sure you mitigate the risk by having solid contracts, insurance, and being picky about the clients to take (to avoid drama). If your husband's business is also a sole prop, then yes generally everything is liable for each other. But if it is an LLC or corporation, it is separate.

[@kev-othegamer]

Thank you, very clear and understanding.

[@ElizabethPW]

Great to hear!

[@hardart-]

Hello I have a question but 1st, here's my situation. My LLC will own Intellectual Property. There's a chance that no significant money will be made from this Intellectual Property but it is important to keep the LLC in good standing because it must maintain ownership of the Intellectual Property. It's more about asset protection for me right now. I will set up a business bank account & pay for some advertising but nothing significant. My question is, what tax election would you choose in this situation?

[@ElizabethPW]

If a one-owner LLC business is not making much money, I'd usually keep it as a pass through sole prop. How you do the tax does not change the asset protection. The main aspect is to treat the LLC as separate and honor corporate formalities.

[@hardart-]

@@ElizabethPW thank you for your insight.

[@stephaniedumas6496]

Hello!!! What is the resource for information on converting from a sole proprietor to an LLC. I would like to keep the same business name.

[@ElizabethPW]

here's a vid on that: kzbin.info/www/bejne/n3qaqKyNd6drr7s

[@40isbeautiful]

So helpful! Thank you!

[@ElizabethPW]

Glad it was helpful!

[@elevatewithsilvaline]

Thank you, so can a Digital products business and a physical product business be registered under one LLC?

[@ElizabethPW]

Yep! You can do that

[@doris043]

Hi thanks for the video, very helpful! What do you suggest for a small business for Tie Dye DIY Kit that planning to start in few months? LLC or sole proprietorship? Live in LA County, Cali. Would you suggest to form LLC from Jan 1st 2022 as it's almost Q4? Than you.

[@ElizabethPW]

If you are not going to get your business up--and-running until 1/1/2022 then yes it can be good to register it so it is effective as of 1/1/2022, so you can use 2022 as your "first year" (and get the $800 franchise fee tax waiver for that year). For a product business, it depends upon whether you are making them yourself or if you are ordering/manufacturing a lot of inventory -- when someone has lots of inventory, having an LLC can protect you in case you are not able to sell the inventory.

[@jenallesandoval1881]

Great info!!!! Do I create an llc first then file for a general business license?

[@ElizabethPW]

If you want the LLC to be the entity with the biz license, yes you'd get the LLC first

[@Priagiri666]

Hi I am thinking to start my sole proprietor business of jewellery. I make artificial jewellery. Need guidance.

[@ElizabethPW]

Not sure of your question? I'm not taking new clients right now but you can get on the waiting list here [e-mail]

[@aliciainbloom]

Hi Elizabeth. The more I research about this topic the more understanding I’m starting to have but I keep getting mixed messages. I am a lactation consultant in CA about to open a private practice to help moms with breastfeeding. Some say I need an LLC and some say sole prop. I will be getting malpractice insurance no matter what. I’ve been told to get a sole prop starting out since I won’t be making a lot of money at first but I also worry about being fully protected. Which do you think is best for me?

[@ElizabethPW]

If you are really risk averse then an LLC may be right for you, but just be aware that it will be a bigger expense (especially after 2023, when you will start to pay $800/year minimum franchise fee tax). There really isn't a "right" answer, it is more about how much risk you are okay with vs how much money you are able to spend.

[@aliciainbloom]

@@ElizabethPW ahhh. I see. Ok thank you so much!!!!!

[@valenemadrid1238]

Thanks for the video!

[@ElizabethPW]

You're welcome!

[@nananjdz]

I started y business in September 2022, i have no employees and I am not making money yet. I do pop-up events and I do carry a BOP. I was thinking of doing an LLC but when I heard there is $800 annual fee in California that I can't afford. Does this fee vary in California and is forming a corporation an option (not sure what fees are involved)

[@ElizabethPW]

The $800/year annual franchise fee (minimum tax) is for both LLCs and Corporations. There is currently a rule that the first *calendar* year it is waived. Assuming you have adequate insurance and have people sign contracts / waivers, it may make sense to just stay as a sole prop until you are making money and can afford the LLC or Corporation setup and fees.

[@FS-yc4hq]

Hi can you help if you have an LLC and you have Court violations towards the LLC and you're planning to dissolve to put as a sole proprietorship can you do that and can the violations go towards your own name as owner sole proprietorship so you can address the violations in your own name because as LLC you cannot represent yourself or your company you can only represent yourself in your name so was going to go back to sole proprietorship anyway might as well do it now can you verify what the violations currently also be transferred to my name or no?

[@ElizabethPW]

Hm in theory the sole prop can be the successor in interest of the LLC and buy the assets/liabilities, but not sure if that will work with whatever government gave the court order -- there may be an order to not dissolve the LLC. Might need to have the LLC declare bankruptcy to shut it down.

[@florendipity]

Thank you so much for sharing this! Question: I am currently a sole proprietor and have a number of businesses - freelance interior designer with other designers, interior design, art photography, and I let out my house on Airbnb. My Schedule C's are elaborate! I don't own a house but live in my house of trust and have no employees. Should I transfer to an LLC or stay SP?

[@ElizabethPW]

Hm switching to an LLC won't make it more simple really. I'd look at whether you'd get a tax savings from having an LLC-taxed-as-an-S-Corp ... whether you would really depends upon your exact income/expenses (great idea to have a tax person run the numbers).

[@ranzerthomas8869]

Hi Elizabeth- When setting up a sole proprietorship do you recommend we open a separate business bank account for tax purposes?

[@ElizabethPW]

Yes, set up a separate business bank account. Makes it easier to track everything for tax purposes.

[@englishcarmouche278]

I own a party rental business and right now my kids and myself are the only workers. Is it necessary to go for an LLC or remain solely? I would also like to start business credit?

[@ElizabethPW]

Hm if you want to have the business build credit, then it needs to be its own legal entity - so either an LLC or corporation. Otherwise, if it is a sole prop then it is really just your credit.

[@ssy2263]

Really appreciate this information. If I had a stock trading business, no employees or clients, just earning income trading for myself, would l always need to be a sole proprietor or would an LLC be necessary based on how much income is made? Also, would liability insurance NOT be needed with this type of business? I can’t think of what type of liability this type of business would create since there would be no clients or employees but thought I would ask. Thank you!

[@ElizabethPW]

You may want an LLC or Corporation, to take advantage of S Corp tax savings (if you are making enough money). One aspect of liability insurance is that if your homeowners/renters insurance company learns you have a business with no insurance, they may cancel your policy. That's a good reason to get business insurance, if nothing else.

[@VlogginTherapy]

Thanks for sharing this video, Elizabeth. Should I start a sole proprietorship if I'm doing affiliate marketing and print on demand business? Meaning I upload graphics to a another companies website and they buy the product ex ( it can be a tshirt, a mug, an apron) etc. The company ships it out to the customer and that's it. Would it be better to start a sole proprietorship instead? I have no assets. I basically have a shopping mall with this company, am I'm also an affiliate for the company as well. If a customer wants to return an item for example? They will have to send it back to the company, not me. If they have customer service problems they call the company I'm affiliated with. If the customer wants to order in bulk, they call the company that my graphics are sold from which is my store. Do you think it's better to have a sole proprietorship???

[@ElizabethPW]

Sole proprietorships are cheaper/easier in the beginning, so many of my clients starting out in an affiliate-type business, with no inventory, will choose the sole p. The risk is that if you are taking on any debt (loan or credit cards), or if something goes horribly wrong with the main company, you are personally liable (so make sure you have a good contract with them that doesn't hold you liable for stuff). I think the other potential risk is if any of your graphics are infringing on someone's copyright.

[@Eli_Raine]

Hi! Thank you so much for this video! It really helped a lot! I have questions if you don’t mind answering them.. When you were talking about not using the money and pay yourself while having an LLC, is it the same when having a Sole Proprietorship? & For Sole P, we don’t need to have a separate business account? Is a personal checking account okay? Also, how do we go about collecting taxes in other states if we are doing print on demand with Shopify or Etsy? Would we need to apply for a business license in all states?

[@ElizabethPW]

With a sole prop you are not legally required to have a separate account. But really it makes it hard unless you do, because it is hard to track your income and expenses so you can do your taxes later. If you have a separate bank account, then it is obvious what is your biz income and biz expenses. For sales tax, etsy is a marketplace facilitator so they handle it, but if you have a shopify store I think you have to set it up yourself -- I'd use a vendor like taxjar.com to handle it. For biz license it is state-by-state, city-by-city rules, but typically you'd need some physical connection.

[@Eli_Raine]

@@ElizabethPW thank you so much!

[@christinabondonga4753]

Thank you so much for your videos, it was very helpful ! I am on my way to starting a Recruiting Agency, where I connect employees and employers for long term placement or short term placement. I Will be doing it from home and I might get a partner as the business will grow along the way. In his situation would I need any insurance ? Since I don’t have any employees? And between Sole proprietorship and LLC what would be the best for my type of business?

[@ElizabethPW]

I recommend always getting general business insurance, probably something called "business owner's" policy that has a bunch of stuff included. Since you are just starting out, you probably don't need much tax planning yet, so you'd look at the risk/liability issues for whether you want to protect your personal assets from the business' liabilities. Also think about whether your potential clients would be more comfortable hiring an LLC vs a sole proprietorship (many larger companies want to only hire an LLC or corporation).

[@GloryBeToGodForever]

Muchas gracias. Well explained. Glory to *Christ Jesus.*

[@godanerafle393]

Hello Elizabeth I am trying open transport wheelchair transport and I confuse where do start I have already ein number But I confuse llc and so forth

[@ElizabethPW]

Sounds like you got an EIN (tax id number) as a sole proprietor. You can totally do your business like that. Or, you can form the legal entity LLC (which would get its own EIN / tax id number) to have more liability protection.

[@dezertrecon819]

Very helpful information thank you!

[@ElizabethPW]

Glad it was helpful!

[@tomdoughty5328]

Hi! I’m starting a side hustle piano tuning business. I have invested in insurance, but for this would you suggest starting as a sole prop or going directly to an llc?

[@ElizabethPW]

For that type of a business (where you are handling something expensive owned by your client) yes insurance is the first item. Then second I'd work on having solid contracts with your clients, including disclosures and waivers. Yes since you are dealing with something expensive that someone could accuse you of damaging (especially wealthy clients who can afford a lawyer), it may make sense to get an LLC earlier rather than later. It is most vital if you are having others do some of the work.

[@anewcreation7297]

Hi Elizabeth, thanks for sharing your expertise on this topic. This is very helpful information. If you don't mind, what would you suggest I do as I start up a home staging/ interior design business as well as an event decor/ planning business? I know I'd need a team for either of them so my thought is to do an LLC but would I have to file different ones being that they have two different business names and provide slightly different services?

[@ElizabethPW]

It really is up to you if you want them to be separate - you could have one LLC and just get a DBA/FBN for the other name (or both names, with the LLC as a holding company). The main issue is if you are comfortable with both biz being liable for each other's problems. I'd recommend getting adequate insurance since both biz have a physical in-person component.

[@ashleyt3241]

Hello Elizabeth! Great video! So under sole proprietorship, can one still hire people? Is there risk to that?

[@ElizabethPW]

Yes, you can still hire people. And yes, there is a risk, because you are personally liable for what the employees do and if they come to harm or have some other claim (wages, harassment, etc.). Some of that you can protect against via insurance, but I think with employees it is better to have an LLC.

[@diamondclay5021]

Thank you!!! I'm so happy, I seen this video before apply for my LLC. I buy hair from vendors overseas and using the product to make my own custom wig. I am using my own ordinary everyday income to make this investment. I am trying to get my self to a passive income to pay for those investments. In your opinion, starting out do you think a sole proprietor or LLC will be the better fit for me ??? Some of my customers who purchase my wigs, get an install. Im just not sure if my business is a high risk factor where i'll need liability from the LLC, at the moment.

[@ElizabethPW]

It's a great question! Hm I'd look at how much money you are investing in this business, including how much credit the business will have. For example, some businesses have to order a lot of materials on credit, so if the products don't sell, they still owe for those materials. Some of the risk with the customers can be handled with insurance (like liability insurance if someone slips-and-falls at an appointment).

[@scienceofcuteness2133]

This video is super helpful! I am wondering if I should be a sole proprietor or LLC for my business. I am a contractor who does UX/UI design work (seems pretty low risk). The income is decent this year but may not be as high next year if I find a full time job. I do have personal assets which I would like to protect. Should I go the LLC route even though I may not have much income next year and my work is pretty low risk for debt or lawsuits? If I start as a sole proprietor with a dba name, can I use the same dba name for my LLC if I want to change structure later? Or do I have to use a different name for my LLC because it's been registered with my state business license as that name?

[@ElizabethPW]

I'll answer the easy question first -- as long as the name is available, you can use the same name for the LLC as your current DBA. Hm it really is a personal comfort level for whether you need the LLC - I do agree that UX/UI is fairly low, except for intellectual property disputes about design or code. If you go the sole prop route to save money and make it simple, make sure you get business liability insurance and have a written contract with every client.

[@latriceprice6426]

Hi!! What about an tshirt e-commerce biz? I started two and I decided on sole proprietorship. Is this wise?

[@ElizabethPW]

Just means that both businesses are liable to each other for debts / lawsuits (and you are personally responsible too). It can make sense to do that in the beginning when you are still testing an idea, to save money.

[@GabrielleSelz]

HI Elizabeth, Thank you for the informative video. I have a question. I'm an art appraiser and trying to decide between sole proprietorship and LLC. I don't own a house, but I have assets (inheritance in stocks) that is in a Trust in my name. So, do I need an LLC to protect those assets in the Trust? I do have an umbrella insurance policy. Perhaps I should get an E&O policy? Thanks, Gabrielle

[@ElizabethPW]

Whether the trust protects those assets depends on how the trust is set up (you'd need to talk to that estate planning attorney about that). It would not protect the income you get from the trust, most likely. Yes I do agree to get an E&O policy for your appraising work. The most conservative bet is to have an LLC for the business, yes.

[@GabrielleSelz]

@@ElizabethPW Thank you for your prompt and helpful reply! Much appreciated.

[@hopeisbesideme1]

Thank you for the clarity, I do have a question. As a sole proprietorship, can I get a EIN # for my photography business?

[@ElizabethPW]

Yep you can get an EIN for your sole proprietorship, and it is a good idea. Here's a video about that: kzbin.info/www/bejne/Z5evaqluasRrq9k

[@khalidabbas9820]

Hi, what do you suggest for a company that imports raw herbs in US for sales locally in US.

[@ElizabethPW]

When selling products to be consumed like raw herbs, it can make sense to be an LLC to help with any liability from the customers consuming the products.