Is your business an LLC or sole proprietor/DBA

I set up my business as a DBA/sole proprieror but am thinking about switching to an LLC to help protect my personal assest in case of litigation. I am unsure though if this will subject me to more taxes. How is your business set up and why?

I'm set up as a sole proprietor to avoid the hassles of quarterly IRS filing mainly. My suggestion would be to remain sole proprietor unless you are planning on hiring multiple employees. You can purchase performer's insurance to protect against litigation in the event of injury or insult. Hope that helps! Love your winter avatar pic!

Sole proprietor... like Angie said, liability insurance is available.

I've actually decided not to register this business until I absolutely have to... I've had a few in the past and it's been a royal pain in the butt that I didn't really need to do. Around here, you don't NEED to register as a business until you are making a certain amount per year (I think it's something like $30,000). It just means you have to charge taxes.

I still file my income on my taxes, but until I have to do it, I'm going to avoid that road for now.

Thanks guys, I was wondering about switching also! Will stay with DBA. Just a question--I am sending out others to events at times. It has always just been a referral thru me, & they get their own checks, or if I mistakenly get one in my DBA name, I give them an even cut--so they are NOT employess technically, right?

Second question, if I take a bit to cover my time & expenses (web/phone/fax, etc.) that MAKES them employees, which I DON't want to do. Am I correct?

S corp.

BUT my suggestion is BEFORE you consider a corp or LLC, really make sure you understand the tax, accounting and paper work ramifications. Can be a bit much to deal with.

Anniel- you don't say where you are. In my state, they MIGHT be employees, but more than likely would be classified as Sub Contractors. (Which is preferable)

Colorado. Bank already made me switch to DBA for checks that were made out to my business logo. (I used to just run them thru the atm for years & it was fine, but they changed policies on me...)

ALL businesses in NJ MUST now be registered. That being said I am a sole/DBA

I'm also set up as a DBA/sole proprietor. It's the bare minimum that's required and I feel that it fits my needs. As others have mentioned, liability insurance will cover possible litigation...plus I don't really have any personal assets so there's nothing for an LLC to protect Ahh, to be young and penniless.

Tamara, quick question... did you also get a local tax reciept from Miami-Dade County? I called to make sure i wasn't breaking any laws, but they said we need one.... hmmm. We can use our social, but we definitely need to get a tax reciept. I'm all confused! I thought because we're sole proprietors, we didn't need to get one! This business mumbo jumbo is crazy!

Jennie - Yep, we need that too.

This is from the county website: "Any person doing business in Miami-Dade County must obtain a Miami-Dade County Local Business Tax Receipt. Businesses also need to obtain a city Business Tax Receipt from the municipality where the business is located...Persons who provide merchandise, entertainment, or services to the public, even if only a one-person company or home-based business, must obtain a Local Business Tax Receipt before starting to operate."

Apparently there are all sorts of fun consequences if we don't do as we're told.

Here's the rest: http://www.miamidade.gov/taxcollector/ol_home.asp

I'm LLC and have performer's liability insurance. Even with the insurance you and your assets are not personally separated from your business. So someone could potentially sue you both personally as well as sue your business. Yeah it's unlikely but I'm not willing to risk my home and personal assets and there are too many crazies out there.

I've considered going LLC (I'm currently an SP) for the exact reasons that Sparklyone listed. I use the performer's group liability insurance. That's great in case something minor happens, but would absolutely not adequately protect you in the case of a major lawsuit (damaged a kid's eye with a paintbrush, major civil lawsuit, etc).

Although I don't have a lot in savings or personal assets, someone could potentially lose their home, savings, spouse's assets, etc in a major lawsuit if they weren't protected as an LLC.

Sooo... if you are an LLC, do you need to have insurance as well?

@Sweetjen, yes. LLC's advantage is that a lawsuit against your business is limited to the business' assets, but that doesn't protect you in case of non-lawsuit liability.

Let's say you spill paint all over someone's expensive rug. Your insurance may cover this depending on your policy, but if you didn't have insurance as an LLC, you'd be paying for it out of pocket (fewer $$ for split cakes!)