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Is it Better to Be a Sole Proprietor or an LLC?

Attorney Thomas B. Burton answers the following reader question: Is it Better to Be a Sole Proprietor or an LLC? Attorney Burton answers this question and discusses some of the factors you should consider when deciding whether opening your business as a sole proprietor or an LLC is right for you, including liability protections, ease of set up, costs and fees.

Interested in forming your own Wisconsin LLC with the guidance of a licensed attorney? Check out Attorney Burton's brand new Form Your Own Single Member Wisconsin LLC Video package here.

This package contains over one hour of instructional videos, where Attorney Burton guides you through the following steps to successfully set up your new LLC in the state of Wisconsin.

Video 1: File Articles of Organization with the State of Wisconsin

Video 2: Obtain EIN Number from the IRS

Video 3: Adopt Custom Operating Agreement for New LLC

Video 4: Wrap Up and Overview of Steps to Take to Maintain Limited Liability Protection for Your New LLC.

In each video, Attorney Burton shares his desktop screen with you, and walks you through the exact questions the state of Wisconsin or the IRS asks you to successfully file and obtain your LLC and EIN. Attorney Burton also discusses the factors you should consider when making the above choices to file the proper documents with the state of Wisconsin and the IRS.

This package was created in order to help young entrepreneurs and business owners, who are on a tight budget and feel comfortable learning and doing things themselves online. This package is designed to give you the guidance and instruction you need to successfully complete the above steps on your own, for less than the cost of one hour of Attorney Burton's time. This package is designed for a single member LLC owned by one individual, or by a married couple in the state of Wisconsin. More complex situations should be discussed with your attorney before proceeding. Please review the package details thoroughly before purchasing and contact the office by email if you have any questions before purchase.

To view the complete details on what is included in this package, please visit this page on our website.

Transcript of Video: Is it Better to Be a Sole Proprietor or an LLC?

Hello I'm attorney Thomas Burton and today's question

is the following is it better to be a sole proprietor

or an LLC? This is a great question and one that many entrepreneurs should

ask themselves so let's define the term LLC first

an LLC is a limited liability company and in Wisconsin these type of entities

have been around for the last several decades

and have quickly proven to become one of the most popular forms of business

entities in Wisconsin and that's also true what I

hear in many other states now in Wisconsin to be a sole proprietor

there is no formal registration process

you can begin operating a business under your name

as a sole proprietor in the state of Wisconsin

some states have a registration process where you go about this

but in Wisconsin there isn't a separate registration

you can open up a business checking account as a sole proprietor and you can

even obtain an EIN as a sole proprietor from the IRS

but what you should be aware of is if you're operating a sole proprietorship

you have unlimited personal liability for the actions of your business

what this means is there is no separation between the business and its

assets and liability and your personal assets

so for many people you need to evaluate what type of business you're going in

often the sole proprietorship seems like the cheapest

type of business entity to start because you don't have to

file any paperwork or pay any fees however

it could prove costly down the road now if you're a business where

you've obtained business liability insurance

you can evaluate the limits on that liability and perhaps you feel that's

enough for your initial sole proprietorship

however for many folks with any type of business

liability it's a good idea to start off on the

right foot with a limited liability company

what the limited liability company does is it separates your personal

assets from your business assets and your business liability

so for anyone hiring employees right away I for sure recommend you consider a

limited liability company because it's not only your own actions you could be

liable for it's those of your employees and pairing

a limited liability company with business insurance is

also a great idea however at the very least

a limited liability company can help establish those

limits between the errors omissions assets and liabilities of the business

and your own personal assets and the goal here would be let's say

this great idea for a company you have it's a great idea but it doesn't take

off and unfortunately someone ends up suing

the company well you would like to shield your

personal assets so you don't lose your home from

that lawsuit and that's one thing you can do with a

limited liability company so again for many people it makes sense to start off on

the right foot with this and in the state of Wisconsin I've heard

in some states LLCs can be quite expensive to form and maintain

Wisconsin it's relatively affordable it's only a hundred

thirty dollars if you file your LLC online

and there's a twenty-five-dollar annual maintenance fee to keep

your LLC the annual report and keep it current with the state of Wisconsin

so the filing fees are not that onerous on a year-to-year basis now

I know many young entrepreneurs who are concerned with startup costs

and you can pay a lawyer like me to help you with it and those fees are fully

deductible against business income in the first

year however if you're really looking to save money

some people want to do it themselves I've created a new LLC startup package

that contains four videos with over one hour of instruction from me

guiding you through the state of Wisconsin website how to set up your LLC

properly the state of Wisconsin has an online process you can file your LLC as

I mentioned and you pay a 130 dollar filing fee at the end via credit or

debit card or you can file paper articles of

organization but then you pay more 170 dollars

so my video walks you through how to do it directly on their website

and walks you through the questions they answer talks about

wait I talk about what you want to consider

to help you decide how to answer each question and at the end

you can have your legally valid LLC formed

and you can do it in under half an hour now the video shows you my desktop you

can watch me going through it and you can do it on

your computer at the same time and then pause the video if you're stuck

on a screen thinking about the question also

included is a video that shows you how to file and obtain your EIN from the IRS

which is often important for opening a business bank account

and is a must if you plan to hire employees

then included in the package is an operating agreement a custom

attorney drafted by me operating agreement you can adopt for your llc

and finally there's a bonus video talking about the steps you should take

after you form and file your articles of organization

to maintain the corporate formalities of your LLC

so all of this is in one bundle and it's over an hour of an

instruction it costs less than you would pay me for one hour of my time

now this is best for a single member LLC either one person or a married couple in

the state of Wisconsin forming the LLC if you have a more complex matter you

might want to contact me or another lawyer for help setting it

up to make sure you get everything correct

but I created this package as a way to help young entrepreneurs

and give them good advice throughout the process without costing

a lot of money.

© 2020 Burton Law LLC. All Rights Reserved.

Transcript and captions provided for ease of access for the hearing impaired.

For questions about this topic, or to suggest a topic for a future blog post, please contact the office.

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