January 23rd, 2017
Andrew in RI asked the following:
For a real estate photographer just starting out like myself is the typical path to creating a business use the Sole Proprietor option? I work out of my home and have no employees. There is a lot of risk in a Sole Proprietorship so would an LLC be better?
We’ve talked about this subject before and that discussion raised a lot of good points.
In general, yes organizing your business as an LLC separates your personal assets from your business so if your business is sued your personal assets are protected. But there are a number of things to consider:
- Setting up an LLC has some costs involved so you probably want to make sure you are serious about it before setting up the LLC.
- You can either setup the LLC yourself, have a lawyer do it (~$1000 or more) or use LegalZoom (~$150).
- There is also a registration fee you must pay to your state. This registration fee varies widely. In Oregon, it is $100/yr but check with your Secretary of State office to find out the requirements in your state.
- As Ken points out in our previous discussion of this subject, many creditors may require a personal guarantee for loans and leases made to an LLC so an LLC may not give protection from debt if the company fails.
When you setup your company either as a sole proprietorship or LLC there will usually be state and local registrations and licenses required.