Me and my brother are opening our own auto repair shop. What's the best way to go? General partnership or LLC? Thanks
2007-03-05 13:36:44 · 5 answers · asked by Claude B 2 in Business & Finance ➔ Small Business
Claude,
The other two answers you have received are wrong. There is a benefit to LLC in that it protects against liability.
The tax situation for LLC is also better in that all profits in partnership are subject to self employment tax, only salary in LLC is generally subject to employment taxes according to my attorney. There is a state filing fee to do LLC, but is it very much worth it.
Do the LLC and ignore what the other two told you. It is no easier nor more difficult to deal with LLC breakup than partnership breakup. Both are tough.
Good Luck with your new business!
Dana B.
2007-03-05 14:26:46 · answer #1 · answered by planningresult 4 · 0⤊ 0⤋
A general partnership means basically that you each own one half of the business, as well as one half of the liabilities. If you and your brother are on really good terms, that can be a fine arrangement. Your business income is what you earn before expenses and taxes. The balance is divided between the two of you and that is reported as your income. If there is a legal problem with your business, you and your brother would be personally liable. That's the downside.
An LLC is a limited liability corporation, which is done on smaller businesses, but gives some protection to the owners. Any legal issues would involve the corporation and not you personally. Your assets are protected.
Even in small businesses, the LLC is generally the better way to go because of the protection it affords your personal assets.
2007-03-05 13:48:34 · answer #2 · answered by David L 6 · 0⤊ 0⤋
LLC is the way to go. Partnerships do not have enough in it's charters to avoid future problems.
2007-03-05 14:46:10 · answer #3 · answered by ACTS 4:12 4 · 0⤊ 0⤋
I completely accept as true with the above answer and sense such as you would be sensible to style a LLC whether somebody does no longer purchase into your corporation. otherwise, one single lawsuit ought to probably thoroughly wipe you out in my view. there are maximum of reward to installation an LLC yet do study your state codes. finally, i've got a pair myself and located it plenty low-cost to have my CPA set it up rather of a criminal expert. in spite of the incontrovertible fact that, on your sate that's distinctive. solid luck!
2016-10-02 11:04:53 · answer #4 · answered by ? 4 · 0⤊ 0⤋
Your tax situation likely will be a determining factor. . .so talk to an experienced local business accountant/CPA.
2007-03-05 13:40:06 · answer #5 · answered by Jim K, small business columnist 2 · 0⤊ 1⤋