Q&A: Should I go with an Inc or LLC?
I am starting a small business that I have been running for a while, I create business websites and also sell hosting to those clients and others who find my website. My income is very small, maybe less than $8k a year, but I think I need to establish some kind of business in order to open a merchant account and a bank account.
LLC stands for Limited Liability Company.
It is a form of corporation.
is short for incorporated.
Esquire is a designation that some lawyers use.
If you were to use Esquire or its abbreviation of Esq.
as your business name, you will likely get in trouble.
It depends on where you are located.
Some states don't fully recognize LLCs and will require tax returns in addition to your personal income tax return.
As the sole owner of an LLC, you will have what is known as a Single Member LLC, which is considered a disregarded entity.
You would file a Schedule C with your personal income tax return, just as you are supposed to be doing now.
Before you do anything, meet with a local expert in taxes.
Get an estimate of how much it would cost for you to form an LLC
and any annual fees/taxes you would have to pay.
The primary reason for you to form an LLC as opposed to being a sole proprietor is appear more stable and professional to potential clients.
The corporate shield would provide only limited protection for you because you would still be responsible for anything you do.
If you hire employees, then you may get some protection if an employee is in a car accident while on the job for you.
You need to have a separate area within your home in order to take a deduction for using it.
Any computer would have to be separate from the one you use for personal uses.
You would be able to deduct long distance calls for which you are charged separately, but the monthly bill for the phone would not be deductible.
The IRS publication 535 goes through a lot of the potential allowable expenses.
More Q&A's:Can you start an LLC without a lawyer?How to setup a cleaning business?What business form is the best for us?Buy investment property as an LLC?Should I incorporate as a self-employed person?