Wednesday, December 01, 2004

[info] Incorporate or sole proprietorship

After days of research I have come to the conclusion about whether to incorporate or not:

- Inc and LLC limit an owner's liability to the extend of her investments. Most useful in these cases:
- If the company has a lot of debt, the owner's personal assets are protected from the repayment of debt.
- If the company gets sued for a lot of money, the owner's personal assets are protected from the judgement against the company.

- Inc and LLC also gives you the ability to deduct medical insurance. Not sole proprietorship.
- However, since I don't expect to make money from this for a while, having business deduction doesn't mean much.

- California charges an $800 a year minimum tax for Inc and LLC, regardless whether you make money or not. The fee is waived the first year, so use that wisely.

So in conclusion, until the business really looks like it will take off and after I have a couple of more customers, I can just stay sole proprietorship for now and save a few dollars and some headache.