Should I choose LLC or sole proprietorship?

[leahjade]

for our new retail business? If someone gets hurt could they sue us personally or is that what insurance is for? So confusing!

 

[bumbershoot]

You need to sit down with some professionals before going a step further into this venture. PLEASE, I beg of you. You don't know the answer to this, and you want to take out a home equity loan....please get some professional advice. And don't link a small business (which will likely fail inside of 5 years) to your home. Please.

 

[Marionnette]

for our new retail business? If someone gets hurt could they sue us personally or is that what insurance is for? So confusing!

Molly is right. You need to talk to a professional about this instead of relying on the members of a Disney fan website for your information. Too much is at stake for you to do otherwise.

Perhaps you should get in touch with the small business administration in your area. You can network with other business owners your area and they can make recommendations as to where to begin looking for answers.

 

[cornflake]

This is a question for your lawyer. The lawyer who's doing the title search, the records search, trademark and etc. searching and crosschecking all those other things you need before you open a business... that lawyer will answer this question.

You really need a lawyer for this. You leave yourself so open to 1,000 problems and 1,000 lawsuits if you don't have one. The money upfront will save you tons more later.

 

[Shanna-like-Banana]

just pipping in here.

I also advise you speak to a professional about which to choose.

My mom onces owned a LLC. It worked for her, hence Limited Liabiality, usually upto like 100k max.

 

[scrapquitler]

for our new retail business? If someone gets hurt could they sue us personally or is that what insurance is for? So confusing!

Our business is set up as an LLC so that we have the protection of partnership in case there is some sort of an issue...therefore we are not personally liable.

Even if you have an LLC you need insurance.

Like everyone else has said: contact a professional for advice. We paid a lawyer to set up our legal paperwork, and we had a relative who owns several businesses (and whom we trust) give us some guidance. We alsi consulted with a good CPA. You'll have to be aware of the tax implications (and possibly need to get a sales tax certificate and you'll need a federal tax id) and you'll have to be sure you have your bank account(s) set up properly as well to avoid legal problems later.

 

[rentayenta]

LLC here. Get a good accountant.

 

[Eeyore98]

for our new retail business? If someone gets hurt could they sue us personally or is that what insurance is for? So confusing!

I'll definitely echo the advice to talk to professionals first, because I haven't seen your other threads, and opening a business means taking on legal and financial risk and you need to make sure you're fully aware of everything you're taking on and what your best choices are.

That being said, I owned a side business for almost 4 years, before moving out of the state I'd opened it in and deciding not to continue/reopen in my new state. I opted for an LLC. With an LLC, if someone sues you, they can only go after the assets in your business and not your personal assets. I'm pretty sure homeowner's insurance, while it does cover some general liability (say, you're out walking your dog at a park and it bites someone), will NOT cover liability for any business you start, even if it is run from your home. If you get insurance specifically for your business, yes, the insurance would be the first payor for any claims against you, but if someone wins a judgement against you for more than the insurance pays out, your personal assets will be on the hook to make up the difference.

BUT - I am not a lawyer, an insurance agent, or any other sort of business expert, so please talk to a professional before making these sorts of choices.

 

[Cheshire Figment]

Several years ago I had a Podiatrist as a client who had been advised by someone else to incorporate. I told him it was a bad idea and would cost him a lot more than operating as a sole proprietorship.

If he borrowed any money for supplies or equipment he would be asked to personally guarantee the payment even though the purchase was for the corporation. If he injured someone he would be personally sued for medical malpractice, as well as the corporation being sued. And if one of his employees injured someone, technically it would be done under his direct supervision (even if he was not in the same room) and he would personally be sued for medical malpractice.

And if he had a corporation he would have to have separate Federal and State tax returns, as well as state fees related to the corporation.

Mike (CPA Retired)