Sole Proprietorship vs. LLC

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Museum Hack News July 17, 2013 Featured Image

Most Entrepreneurs Should Not Incorporate by Jeff Unger

The the above video by eMinutes CEO Jeff Unger discouraged me from forming an LLC before I began my business operations. I’m glad that I watched it.

Forming a Sole Proprietorship was an easier way for me to legally do business and test the market with a “Doing Business As,” or DBA. After two months of giving a few paid tours and talking to our customers and partners, we changed the company name and even some of our business strategy. Now – better informed and a little experienced – we have filed for an LLC as “Museum Hack.”

Notes on Jeff’s speech below.

Most Entrepreneurs Should Not Incorporate

Incorporating does not make your company any more real. It does nothing to legitimize your business (compared to a DBA).

  • Don’t let legal stuff make your business any harder than it already is to run.

The incorporation tax savings is sort of a myth.

Should you incorporate? It costs money and involves some hassles.

  • Tax savings benefit high wage earners 250k or more only.
  • Most legitimate business expenses can be written off whether or not you’re incorporated.
  • Often times an increase in taxes are seen after incorporation because of the minimum annual franchise tax.

Two GREAT reasons to incorporate or make an LLC:

  1. Document your relationship with your partners.
  2. Liability protection against your personal assets.  (but first you need to determine if you are even in a potentially risky business and if you actually have any assets to protect).

In summary: You have a choice to say no to things that make your business more complicated, especially the legal tasks.

written with 💖 by Museum Hack

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