LLC, S-Corp, or C-corp?

[iMuf]

Hey guys, so I'm looking at starting up a detailing business. I am going to start calling around and get some insurance quotes. But I also am looking at making my company "legit". What are the differences in going with an LLC, C-Corp, or S-corp? What would be best for someone who is just going to be doing this by himself? Thanks for the help guys

[Flash Gordon]

What would be best for someone who is just going to be doing this by himself? Thanks for the help guys

Untill you hire an employee, sole proprietorship (d.b.a. just you) will do you just fine

[Rmd]

I wrote a lengthy response to this exact situation previously here on AG, but can't figure out how to link to it as this response is coming from my phone.
The bottom line is as stated above, if you have no employees then you really don't need an entity. You are completely fine operating as a sole proprietorship, which means that all the business transactions are reported under your SSN. Keep excellent records of expenses and income because all the money that you spend related to detailing are likely business expenses. Get a good accountant so you can file a schedule C to your 1040 at year end and you will be good.
If you are already operating and doing this, then sorry for going on about things you already know.
Did I mention to keep good records and save receipts? I should say it at least twice.

Regards.

[tkendrick]

Here's a thought:

Instead of asking for legal advise on this forum, how about bartering a detail for some legal advise from a real attorney?

In my experience, seeking guidance from a professional most always makes sense.

(Not trying to be a wise guy....just offering a different viewpoint)

[iMuf]

I wrote a lengthy response to this exact situation previously here on AG, but can't figure out how to link to it as this response is coming from my phone.
The bottom line is as stated above, if you have no employees then you really don't need an entity. You are completely fine operating as a sole proprietorship, which means that all the business transactions are reported under your SSN. Keep excellent records of expenses and income because all the money that you spend related to detailing are likely business expenses. Get a good accountant so you can file a schedule C to your 1040 at year end and you will be good.
If you are already operating and doing this, then sorry for going on about things you already know.
Did I mention to keep good records and save receipts? I should say it at least twice.

Regards.

Thanks, i really appreciate it. That helps out a lot

[rustytruck]

I am a sole proprietor. That would be your best bet if you are a one man show.

[iMuf]

Here's a thought:

Instead of asking for legal advise on this forum, how about bartering a detail for some legal advise from a real attorney?

In my experience, seeking guidance from a professional most always makes sense.

(Not trying to be a wise guy....just offering a different viewpoint)

I see where you are coming from completely and I plan on doing that. but as of right now this tropical storm is over us and it is raining something crazy right now haha. So in my downtime I figured I would ask on here and maybe get some good information, which it seems like that is about all you get on here, everyone is really knowledgeable on this site.

[erichaley]

A LLC is a smart way to go (though not the only way to go) if you need to protect your personal assets. Say, for example, you put dressing on someone's running board and the customer's foot slips off, they get hit by a bus, and they die. Or, say you use something to clean their interior and the customer has an allergic reaction. Or, say you're polishing an exotic sports car and you burn through the custom million-dollar paint job. Or...

Yes, some of those examples are pretty out there, but what happens if one or any of them happens and your insurance policy doesn't cover it or doesn't cover it fully? They sue your business. What happens if your business is only worth X dollars, but you're ordered to pay XXXX dollars? They come after your personal assets. A LLC will protect you from this. When a particular business model is vulnerable to a high level of liability, such as a detailing business, a LLC is a good way to go if you do or will have personal assets to protect in case something unspeakable happens - which it can. People are litigious and they'll sue for the just about everything. Remember the McDonald's hot coffee lawsuit?

Note, however, that a LLC does not protect you from financial liability. If you default on your business loans or credit cards, they'll come after you personally. If you business goes bankrupt, so do you. No business structure will truly insulate you from financial liability. Trust me, I know from personal experience, and I doubt I will ever want to own another business again.

Anyway, that's just my opinion on the matter, but don't quote me on it. I'm not a lawyer, nor do I play one on TV, nor do I do detailing for one. Do your due diligence and don't seek the advice of a lawyer, seek the advice of two or three lawyers.

[tkendrick]

I see where you are coming from completely and I plan on doing that. but as of right now this tropical storm is over us and it is raining something crazy right now haha. So in my downtime I figured I would ask on here and maybe get some good information, which it seems like that is about all you get on here, everyone is really knowledgeable on this site.

Maybe the question that should have been asked instead...To those giving legal advise: Have any of the sole proprietorships been sued for their business endeavors? And if so did the other attorney try to go after their personal assets.

I think there is outstanding advise on this site on a wide variety of subjects. However, I don't think anyone on here short of an attorney is qualified to give legal advise.

I'll leave legal, medical and accounting counsel to the pros.

[erichaley]

Just to give a concrete example of how litigious people can be and how much it can cost you... I know someone who has a quarter of a million dollar judgment against them for libel and slander because of, not the blog post that they wrote, but the comment someone left on that post that supposedly had a negative financial impact on the company they were posting about... All of this started because the blogger sued the company for $2,500 in unpaid wages and got a judgment against the company. And, yes, they went after the bloggers personal assets, of which they had none. Just to clarify, that blogger was not me.

[Rmd]

Actually, I am an attorney. But I'm not giving legal advice to your specific situation because I don't know where you are and I am only licensed in CA. That being said, federal taxes are the same everywhere and are the reason for the election between S and C for a corp.
As for exposure, a sole prop can certainly obtain and carry commercial liability insurance. And it would be insanely stupid not to do so.

[iMuf]

Actually, I am an attorney. But I'm not giving legal advice to your specific situation because I don't know where you are and I am only licensed in CA. That being said, federal taxes are the same everywhere and are the reason for the election between S and C for a corp.
As for exposure, a sole prop can certainly obtain and carry commercial liability insurance. And it would be insanely stupid not to do so.

Is there a difference in commercial liability insurance and general liability insurance? I had been looking at getting general liability and garage keepers insurance

[rustytruck]

In the case of one man operations I was told by both my lawyer and account that forming an LLC will not separate me from my business. I'm Afterglow and Afterglow is me with or without an LLC. If someone is going to go after your company and you are the only person involved then it is you they are coming after.

It is very hard to hide behind a company when you are the company. Before you spend $500+ forming an LLC make sure you talk to a lawyer.

[Rmd]

Is there a difference in commercial liability insurance and general liability insurance? I had been looking at getting general liability and garage keepers insurance

No, just terminology I was using. Commercial general liability ins (CGL) is the typical name. Covers basic business exposure. If you own a home your homeowners policy or umbrella won't cover your business pursuits.