I am making goals for 2014 and working on my business is one of my goals. My hubby says I should do a LLC. Right now it’s a sole proprietorship. Can you help me understand the difference and tell me which is better? Thanks for your help.
-Lee Ann in Indiana
Limited Liability Company (LLC) status is granted by your state to limit your liability from a lawsuit to your business assets. LLC is a legal status. Sole proprietorship is a tax status from the IRS.
Think of your sole proprietorship business as a single family house. It has one owner. Pretty simple. LLC status is like a fence around that house, protecting it.
You must protect your LLC status for it to protect your assets. Here are some tips:
Finally, it goes without saying, but don’t commit fraud. Even LLC status can’t protect you if you’re a crook!
In my book Business Tips and Taxes for Writers, I devote a chapter to LLC status. You can read the chapter here http://taxesforwriters.com/book/.
Also, in the 2014 edition of Writers Market is an article I wrote titled “Should My Writing Business be an LLC?” You can order a copy here.
I hope that helps!
Carol Topp, CPA