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Which company type is best?

Asked by: peggy - 10 October, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 For a cleaning business, whats the best option LLC, DBA, or corporation?
Answered by: Monique Blanchard - 11 October, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/50.jpg-60aa8d118f025d90495307344c27caa8 Peggy,

Actually I see two questions here:

1. Should I organize your cleaning business as a limited liability entity (such as LLC or Corporation), or run it as a sole proprietorship (or general partnership) under a trade name (DBA)?

The answer to this question lies mostly in the nature of your business. If the type of business is prone to litigations (like food related businesses) then you definitely should consider organizing it under a limited liability entity.

In your case that decision would depend on what type of cleaning you do and whether you have employees that could potentially sue the company for whatever reason. Bottom line is, you should evaluate the risk of your business to be sued.

2. If choosing a limited liability entity which type should I choose - LLC or Corporation?

In case of a cleaning business I would go for LLC simply because this type of entity gives you all the tax benefits of a corporation or a sole proprietorship (partnership), while at the same time being easier to maintain. With the exception of a few states (most notable New York and Illinois) the cost of forming LLC is not much different that that of a corporation.

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