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.
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).
- 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
- 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!
Consultant/Author, Start & Run a Landscape Business www.mowboy.com