Entities: LLC vs Sole Proprietorships
Updated: Jan 17, 2019
Choosing the correct entity is important for any new business.
Any LLC (limited liability company), PLLC (professional LLC), partnership or corporation function as a separate entity and hold a separate tax identification number (EIN) from your personal social security number with respect to filing taxes.
A sole proprietorship is simply a person, doing business as, the business name. For example, Jessica Kelly is DBA (doing business as) Kelly & Associates. Here, so new tax id is issued. I simply file my taxes under my social security number.
As always, consult a tax professional, attorney, or CPA before making any decisions about your business.
How do I file a DBA or Sole Proprietorship?
To file a sole proprietorship, go to the local courthouse and ask to fill out DBA paperwork. It costs $40 and you will have to select a business name no one else has claimed. Then, you can go to the bank and open a small business bank account in the DBA name. Now you can cash checks made out to the business name, instead of your personal name. It shows maturity to the business and also is an appropriate practice when keeping finances separate from personal monies.
An attorney is not necessary for this process, although always welcome. Consulting with your accountant is wise, however, in tax planning for the future.
How do I file an LLC, Corp, or Partnership?
Seek the advice of a trusted attorney to file one of these new tax entities. Paperwork is required to file with the Secretary of State. The cost is typically around $1500. We can assist you with selecting a trusted attorney and help prepare documents if needed.