LLC or Sole Proprietorship?

[Mikho]

Hello everyone,

I am obtaining a loan in July, 2016 and opening officially June, 2016 for my cafe. I was wondering if any of you (with business/entrepreneurship experience) know what is recommended for USA filing, an LLC or Sole Proprietorship? It's a Cafe (coffee house and baked goods) so I was wondering what you all would recommend for a Cafe filing within the states! I live in Illinois (in case that helps). I am opening by myself, the only owner, and I plan on expanding to other states. Let me know if any other information is needed for a correct recommendation.

THANKS!

 

[Mr.Peaberry]

You need to consult a lawyer. The biggest reason for incorporating, is to insulate yourself from negative aspects of business ownership in this country...primarily lawsuits. There are just too many risks to consider that, in reality, you should seek only the advice of a competent business attorney.

 

[BoldJava]

You need to consult a lawyer. The biggest reason for incorporating, is to insulate yourself from negative aspects of business ownership in this country...

+1, though I went with LLC. Shields our personal assets without the red tape of incorporation. Do it.

 

[Koffee]

I went with an LLC to protect my personal assets. But I'd talk with a lawyer, they would know what's best for your situation.

 

[Mikho]

Interesting, is the intent of LLC to expand, where as sole proprietorship doesn't? I've done research on both, I'm just curious of the stance of current owners.

 

[PinkRose]

Interesting, is the intent of LLC to expand, where as sole proprietorship doesn't? I've done research on both, I'm just curious of the stance of current owners.

In this day and age, you'd be wise to have a LLC. It doesn't limit your ability to expand, but it does limit your personal liability in case something goes wrong (lawsuits, bankruptcy, etc.). You won't lose your house and your personal assets if the business goes bottom up.

 

[nv305]

Mikho,

By default a single member (owners of an llc are called members) LLC is taxed as a sole proprietor and I wouldn't advise either due to self employment tax.

Sole proprietor is also not the way to go due to liability. By incorporating, the entity and its assets become liable should anything arise and not you personally.

Given the information mentioned above I would advise the LLC and convert to s-Corporation. This way you have the protection of the entity and tax savings offered by the s corp.

This is just scratching the surface. Didn't want to bore you with the code.

Hope this helps and good luck,

Nv305

 

[Mikho]

Thanks nv305! I filed as an LLC, thanks!