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  • Question From Doug

    Doug wrote us and asked "I would like to know what the pros and cons are in running a small business under a ficticious name or my name, with a federal tax i.d. number or my social security number. I'm very unclear about the LLC or Inc. and what others there may be. I apoligize for making this such a broad general question, but I'm just trying to get all of the legalities correct and taken care of. Thank you in advance.

    dougowensjr@aol.com
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  • #2
    Hi Doug,

    Thanks for your question. It is quite a tall order, however, because there are lots of differences between all the possible legal structures for your business. I would recommend doing a little reading & research to fully understand the implications of choosing the structure that you end up choosing. Most books on starting a small business will cover this subject and my book, 'Start & Run a Landscape Business', provides a good overview too.

    Just to get you started I have provided a few bullet points below on some of the options available but please do a little reasearch and ask your financial advisor for additional advise (regulations may vary from state to state).

    Sole Proprietorship
    - Easiest and cheapest to set up. Good one to start out with.
    - You can use your own name or a ficticious name.
    - You personally assume all liability to do with your business
    - Lacks tax flexibility

    Partnership
    - Put everything in writing
    - Allow for graceful termination of agreement in the event that things don't go well.
    - Otherwise, much the same as proprietorship

    Limited Liability Company
    - aka LLC or incorporated company
    - More difficult and costly to set up and maintain
    - Provides some protection against creditors
    - May be tax advantages.

    Good luck with your business!
    Joel LaRusic
    Consultant/Author, Start & Run a Landscape Business
    www.mowboy.com

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