LLC vs. Corporation start-up fees?

[mochaheart]

So I was looking into registering an LLC rather than going the route of sole proprietorship, but in my state the initial and annual update fees are big. At this point, the business income would barely be enough for the registration fee, let alone the annual update filing fees! So, would it make more sense to begin operation as a sole proprietorship and then transfer it to LLC after it has been established...?

Also, thought it was a bit odd that corporate startup and annual fees are more than half as less as LLC fees.

[Harold Mansfield]

An LLC IS a corporation. Different corporate structures have different fees and standards to abide by. And it could also vary by state. If you're a one man show without much risk, nothing wrong with operating a sole proprietor. No need to get ahead of yourself with things that you don't need. As you do more and better, you change and adjust to your needs.

[tovipolk]

I'm going to have to agree with Harold. If you are just starting out and do not possess a lot of assets(both business and personal), it is easiest to begin as a sole-proprietor. However, if your business presents a potential risk to your customers and/or their property, and you own a house, car, boat, etc, it would be best to consult a business attorney as those assets could be lost in a suit against you.

[nealrm]

Talk with a lawyer about if you need to be an LLC. My lawyer told me straight out that in my state there is really no advantage for me to be form an LLC. She did state that if/when I sell that the LLC could help with the sale but the LLC could be formed at that point. But as far a liabilities go, there was no benefit.

This may not be true for your state, each state is different. That is why you should discuss this with a lawyer how can give you advise specific for your state.

[BizAdvisor]

LLCs are popular with many business owners because they offer similar liability protections of a corporation, but without having to deal with all the formalities that come along with operating a corporation.

The liabilities of your industry should determine whether or not you should file as a sole proprietorship or LLC. Generally, if you are in a trade-based industry; plumbing, construction, electrician, handyman... etc, it's a good idea to file as an LLC right off the bat. If your business is primarily online or has no real public risk attached to it... Then a sole proprietorship should suffice.