How do you know what type of business you should start?

[Okapi]

So an old boss wants me to do some consulting work for him DH suggested looking into starting a business, but how do you know what type of business you should be? I've heard about LLCs before, but then there's also Sole Proprietorships, Partnerships, Corporations I'm sure it varies by state, but I am having a hard time reading through them. It seems like the LLC is sort of a "best of both world," but if it was that clear-cut, why would they have the other types? Also, once you do decide, how long does it take to get everything cleared (again, I'm sure it varies, but are we talking days or months)?

[Austin'smom]

In my opinion an LLC is the best of both worlds. It offers the liability protection of a corporation, which a sole proprietorship doesn't not. If you are working alone ( no partners ) then the income you make is reported directly on schedule C of form 1040. A S Corporation is similar but you have to file a separate tax return for the Corporation, and you are subject to double taxation ( once on corporate earnings and then on whatever the corporation pays you). The actual formation of an LLC in my state took less than an hour. Setting up everything ( Business name search, LLC filing, requesting an EIN, applying for business licences county and city) took me less than a couple of days. Feel free to send me a PM if you need more info.

[Jael]

Originally Posted by Austin'smom

In my opinion an LLC is the best of both worlds. It offers the liability protection of a corporation, which a sole proprietorship doesn't not. If you are working alone ( no partners ) then the income you make is reported directly on schedule C of form 1040. A S Corporation is similar but you have to file a separate tax return for the Corporation, and you are subject to double taxation ( once on corporate earnings and then on whatever the corporation pays you). The actual formation of an LLC in my state took less than an hour. Setting up everything ( Business name search, LLC filing, requesting an EIN, applying for business licences county and city) took me less than a couple of days. Feel free to send me a PM if you need more info.

Austin's Mom knows her stuff and is 100% correct.

A lot of people get confused on this subject and it can seem a bit overwhelming, but really taking the time to learn and understand it can save you so much time and headache down the line.

Here's more info if you need it:

http://kandubiz.com/needtoknow1.html