LLC or Sole Proprietorship

His accountant will probably say LLC so they can charge him for payroll services. Lol.

 

What s the difference of inc. Vs LLC?

 

LLC (Limited Liability CORPORATION) IS incorporating. Just one of the possible options among corporations (others are Subchapter S and "C" corporations).

LLC is just a very inexpensive way to incorporate, with very easy accounting rules.

As a lone ranger, there is no legal or fiscal reason to incorporate until your NET (taxable) income exceeds about $70,000, because the expense of maintaining the LLC (primarily filing annual taxes) is higher than the savings in Self Employment tax. And, as mentioned by @Long FLD, if you are the driver, you're on the hook anyway. In theory, you could protect assets in case of bankruptcy, but nobody is going to lend money to a one man corporation without a personal guarantee on that loan, so that argument is moot.

 

If you do not keep personal finances 100% separate from your business, a good lawyer will always find a loophole thru the LLC and still come after your personal assets. Don't pay any personal bills, or use business card to pay for personal things under an LLC

 

If I had it to over again I would have gone sole proprietorship instead of wasting the time, money, and having to occasionally jump through a few red tape hoops because I created an LLC. If you plan to stay a one man show, I'd go sole P. You gain nothing with an LLC but a few more headaches.

 

Wrong. Only passive shareholders enjoy limited liability under US law.

If you have anything to do with the operation of a company then you are liable for the consequences of what you do. Executives and board members of public corporations typically have officer and director liability policies to protect them in case they get personally sued.

 

Once your income is above about $70K a year, the LLC can shelter enough of your income from self employment taxes to make it worthwhile to go through the exercise.

 

I tend to agree that sole proprietor makes sense for just starting out. It looks like I need an EIN (because I will pay excise tax) is that correct? How does that work when I file taxes? Does the return have my social and an EIN at the same time?