Reasons for setting up a legal business

[johned]

This might sound like a silly question but what is the benefits of setting up a business legally rather than just working under a name you give yourself?
I am originally from the UK and moved to the states where I work as a personal trainer and trained my clients in a local park.
I then set up a LLC which costs $800 a year that I pay for CA tax just for having a LLC.
Right now unfortunately business is very slow so was thinking if I should dissolve the company and still work under my company name (maybe copyright the name so no one can take it).
Right now this year I have only made around $350 pounds and I do not see business picking up soon and the $800 is due in April unless I dissolve my company.
So with the fact I am right now making next to no money through my business what benefit is it having a LLC rather than just running a personal training business still suing my company name but it is not technically a legal company?
I appreciate any input. I really want to keep my company and have it grow but I am wondering if it is just a waste of $800 per year right now.

[vangogh]

Is there a reason why you need to be an LLC? You could dissolve the LLC and become a sole proprietor and still be a legal business. You don't need to be a corporation to be legal. The advantages of an LLC are the limited liability protection and I think some tax benefits. As long as you're ok without those you don't need an LLC. Make sure you keep your trade name. I assume it's registered with the state. You'd want to renew it every year. If someone doses you, you'd be a legal company. You would lose some of the protection of the LLC, but you'd be a legal company. I also find the best way to avoid potentially being sued is to not give anyone a reason to sue you.

[johned]

Thanks for the reply. If I set up a sole proprietorship I will still have to pay the $800 tax voucher though which would cost me the same as the LLC.
So the only benefit of having a legal business for example a LLC is the protection so they cannot sue me? As a trainer I have insurance and they sign a waiver covering me if they try and sue so I am covered there.
So I am covered as far as being sued goes so what would be there difference between me just working under my business name (but not filed it a legal business) thus saving the $800/per year CA tax and having a legal businss and paying the $800/per year CA tax?

[tallen]

So you are saying you want to run an illegal business?

You will eventually run into problems trying to operate a sole proprietor business under a name other than your own name without registering that name with the state (and paying whatever fees and taxes go along with that) -- for example, you probably will not be able to open a bank account in the name of your business (you will only be able to open a bank account in your own name), which means that your customers won't be able to write checks to your business name for payment (they'll only be able to write checks payable to you).

[BizAdvisor]

Johned, who told you that you'd still have to pay the $800 tax if you operated as a sole proprietor? I believe that is false. You see, unlike an LLC, a sole proprietorship isn't technically a legal business entity. Because of this, when you file taxes as a sole proprietor, the IRS allows you to simply add your earnings to your personal, individual return. There is no separation between you and your business... Thus, there is no $800 business tax because you are not filing as a business.

Not to mention, under law, you are not obligated to file with the IRS if your business doesn't make any money... Period.