What type of business structure would be good for someone who wants to open their own laundromat?

Question

Business structure/ business entity examples:
Sole proprietorship
partnership
LLC
C-Corporation
S- Corporation
and what's the difference?

Ok thanks for the response, but my friends mind is already made up that this is the kind of business he wants to open, but this is his first business and doesn't really know the steps to take so I'm trying to find out what type of business structure would be best for that type of business.

I would like to thank you also for your answer and a extra thanks goes out for the website. Thanks. It's actually two of my friends wanting to open this laundromat so what all do they need to know to get this thing off the ground. Helpful tips anyone?

Answer 1

I can unequivocally say that the answer to your question is "it depends." It depends on whether you have partners. It depends on your tax bracket. It depends on the taxes in your state. It depends on how much you will be paying yourself. It depends on what state you are in. It depends on so many things that there is no way anyone could intelligently answer your question in this forum. I endeavor to give you general ideas and a general direction because you need to do some serious research or obtain competent counsel who can be apprised of your entire financial situation and the structure of your deal before making the decision.

Generally, sole proprietorships are not the way to go. You have unlimited liability. In some cases, that liability can be insured against and reasonable people could decide that the insurance costs and coverage is a better deal than the taxes associated with another entity. Partnerships also have unlimited liability and someone else can bind you and cause you to lose everything. General partnerships are not very popular.

LLC's are rather popular and very flexible. Almost any deal can be done within an LLC, but sometimes state taxes throw a wrench into it. C corporations are taxed twice (at the entity level and at the individual level), but in some cases, those taxes might be worth paying if you want certain types of other benefits and/or you are in a high bracket already. S-corps are taxed at the individual level. The liability protections afforded by LLC's, s-corps and c-corps are essentially the same. Some will say that LLC's are untested, but that is probably no longer true. In some cases, LLC's may provide greater protection.

There are plenty of online resources under searches for "choice of entity". I have reproduced one below.

EDITED TO ADD: If it is two friends, usually an LLC or an s-corp is the answer. If an LLC is used, they will need a good operating agreement. If it is an s-corp, they will want a good shareholders agreement. Both of these need to include buy-sell provisions so the parties can get out easily WHEN it blows up. It is rare for two people to be able to work together and be successful for a long period of time.

Answer 2

I've been self employed for over 20 years, 15+ in a traditional brick and mortar sole-proprietor business and 5+ network marketing. From one who has been there.... EASIEST? It is WORK. Profitable? We get out of it what we put in it. Going in with the mindset that it's easy is going to lead you one direction - it's easier to lose money online than make it. Any business with the right plan can be profitable, but it still all goes right back to WORK. ~good luck

Answer 3

I would work at a laundromat first....then you can ask about going in on the business...or you can take out a small business loan and either rent or buy a piece of commercial property...and then go from there..the bank will walk you through it..