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Is a LLC best for me?

Asked by: Audrey - 14 October, 2011 I am starting a business that I am sole owner and operator of. I will be assisting a small business with office work from my home and will only operate through phone, email, and fax. Is a LLC best for me? Will I need an EIN?
Answered by: Robert Kowalski - 15 October, 2011 Audrey,

LLC could work well for you, and if you are a sole owner with no employees you might not even need an EIN (you could use your SSN as the tax ID). You do need an EIN if you would choose to elect your LLC as an S-Corporation or C-Corporation.

With that being said you might as well just do it as a sole proprietor under a DBA (or even without a DBA). The choice of forming a limited liability company for your business is more a question of whether your business comes with much risk or not.

From tax perspective when your LLC is taxed as a disregarded entity it is not different from sole proprietorship. However the advantage of an LLC is in the flexibility of that entity to be taxed differently if that better suits your tax needs at a given year (by electing it to be taxed as S- or C-Corporation). An accountant familiar with your financial situation would be in a position to advise you if and when to elect your LLC to be taxed differently.


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