LLC vs Sole Proprietor: Which is best for YOUR business?

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Graham Cochrane

Graham Cochrane

3 yıl önce

►► From no audience to income in 30 days. Download my FREE 30 Day No Hustle Business Plan → GrahamCochrane.com/30days

One of the biggest questions I get as a business coach is “Should I run my business as a Sole Proprietor or setup an LLC?”

Maybe you’ve asked that question yourself. Perhaps you’ve been confused about which one makes sense from a tax perspective for your business.

Or maybe you actually thinking: “I don’t even know what either of those are and why should I care?!”

Today I want to simply explain the differences between the two and give you a simple and easy framework to know which is the right entity for your business.

YORUMLAR: 895
Diplomat
Diplomat 13 gün önce
I’ve made so much under the table money unreported. Oops!
vanessa ortiz
vanessa ortiz 14 gün önce
Thank you!!!
Joseph Carrino
Joseph Carrino 15 gün önce
I'm only doing taxes to get vehicals and a house
Mark Wexler
Mark Wexler 16 gün önce
This dude still do Christian music production?
Tylor Goshorn
Tylor Goshorn 17 gün önce
Im a bit stressed at the thought of staying a sole proprietor for a while. I make sculpted candles and there is so much that can go wrong. I can see how being a sole proprietor for other crafts would make sense but im super stressed. Any advice? Can i put a warning on the product and make sure i make them well and be done with it?
Tim Daniel
Tim Daniel 18 gün önce
Awesome video!
Hannah Dao
Hannah Dao 20 gün önce
The music background is so annoying
Dwayne Gee
Dwayne Gee 23 gün önce
Great video!
Norma Lee Studio
Norma Lee Studio 25 gün önce
This just saved me a $150 consultation fee ~ Thank you!!!
Devin Morales
Devin Morales Aylar önce
Will If I used other people money will I still be taxed?
Dana Shipp
Dana Shipp Aylar önce
This was such a big help. Thank you!
RW McMilllan
RW McMilllan Aylar önce
I have to listen to this video. The music is at the same volume as his voice and it’s making it rough for me to get to his valuable tracing. I will definitely listen later when I have a better chance of not being distracted by the music. Can’t wait to get to it.
Ay Hess
Ay Hess Aylar önce
Great Video! Very clear like others said. I want to start a trucking & transport business. I see value in starting an LLC & being able to claim the truck, equipment, fuel, maintenance and expenses under the LLC. Anyone have any advice? Pros/Cons please.
Vance N
Vance N Aylar önce
Why is it the right thing to do? Why is it. We are punished for supporting ourselves and family? That's mob rule. You have to give me money. Because you make money. I'm not playing their fraudulent game. I'm not giving money to an illegitimate administration. Who do nothing but line their pockets. And, Give it to other countries. We pay enough taxes with goods and services we pay for. That's enough tax for them.
Nataliya Chepurnova
Nataliya Chepurnova Aylar önce
super helpful!
Dutch Leussink
Dutch Leussink Aylar önce
Thank You Sir 👍
Cristina Lacera
Cristina Lacera Aylar önce
This was great, definitely guided me on the direction I should go in with my fashion business. I’m starting as a sole proprietor since I’m doing this alone an starting small.
Randy Lee
Randy Lee Aylar önce
Its now 2021 and this info is still good
Dominic Cabrera
Dominic Cabrera Aylar önce
Goddang taxes are such a scam
Red W.
Red W. Aylar önce
And check with ur state because the state I live in if u make 10.000 or less u don't have to pay taxes
Nan
Nan Aylar önce
If you run your business as sole proprietor is the legal downside your personal assets could be taken if sued? Thanks
Alex Bullard
Alex Bullard Aylar önce
Looking at his eyes in this video hurts my eyes.
Missbnatural
Missbnatural Aylar önce
I just did a llc . Because I have a house .
Journey to Healing
Journey to Healing Aylar önce
I feel like you're in my room speaking to me.
KoCo Virgil
KoCo Virgil 2 aylar önce
Can I change for sole to LLC
Kim Thompson
Kim Thompson 2 aylar önce
What.if I'm starting my bussiness and I haven't done anything just starting and I got a LLC and probably shouldn't have can I change that a sole proprietor
Justin Miller
Justin Miller 2 aylar önce
I'm currently looking at buying a liquor store and weighing my options. I'm hoping to profit more then $50k, although this is a struggling store that I'm going to try and save. Thank you for the info!
DREWS HOMESTEAD
DREWS HOMESTEAD 2 aylar önce
Is dba a sole proprietorship?
EdensGardenShed
EdensGardenShed 2 aylar önce
What if i did a llc or sole proprietor for say building doghouses. Then I also wanted to paint houses or something completely different on the side. Does that have to be a separate business or could that be part of the doghouse llc or sole proprietor?
Ssan
Ssan 2 aylar önce
Im a silkscreen printer ,designer ,and illustrator .I recently registered as a sole proprietor .Do you think it was the right move?
Ivan Martinez
Ivan Martinez 2 aylar önce
Thanks for explaining it so good. Came here after filing as sole proprietor before understanding the difference. Making changes to become LLC. 👍 Thanks for your knowledge.
Alonso López
Alonso López 2 aylar önce
My Recently Deceased Wife and I Have an LLC and I would like to keep The Name of The Company, what should I do?
InaktiveShooter
InaktiveShooter 2 aylar önce
This is stupid. Completely glosses over personal liability.. Clicktard
Lakeisha Gilchrist
Lakeisha Gilchrist 2 aylar önce
This was very helpful information!
Raina Jones
Raina Jones 2 aylar önce
so helpful, thank you
Chrissy White
Chrissy White 2 aylar önce
I am in the planning stage of starting a business and have not decided whether to go LLC or Sole Proprietor. One thing I am considering is the types of insurance and associated costs. Could lay out basic info on this?
William Hernandez
William Hernandez 2 aylar önce
I am a host for Turo Car Rental. If I am renting my personal vehicle (paid off) through Turo, should I be sole proprietor or LLC. I expect to make less than 50k, therefore, sole proprietor would be better, but if I set up as an LLC wouldn't I get more protection from guest who may have an accident or property damage with my vehicle during their rental. Thank you in advance. This is just to get a general idea. I do plan on using a legal company to help set this up.
Mya's Science Craft & Makeup World
Mya's Science Craft & Makeup World 2 aylar önce
This was very helpful. Was gonna start a LLC until a friend informed me about sole proprietor
Scott Allen
Scott Allen 3 aylar önce
Do you live in Florida?
Amanda Lassila
Amanda Lassila 3 aylar önce
Thank you!! Really appreciate the clarity and break down of this video!
Merit Holding, LLC
Merit Holding, LLC 3 aylar önce
This is a dumb starting premise as you can start an llc taxed as a sole proprietorship.
Hassan Hall
Hassan Hall 3 aylar önce
if i am a designer and i sell x print silk screen clothes ?
JADES ELINOVA
JADES ELINOVA 3 aylar önce
Im an independent contractor But I also have a little retail business Can I use the same sole propietor EIN?
Francis TV
Francis TV 3 aylar önce
I need to make a least 50k profit or gross to get an LLC?
Dennis Grace
Dennis Grace 3 aylar önce
Forming the LLC, don’t you then have to obtain WOrk Comp insurance and pay into unemployment insurance for your self?
Queen Bee
Queen Bee 3 aylar önce
Should an independent insurance broker have an LLC for protection from possible liability claims. Also I am planning on traveling a lot and I would like to be able to deduct travel expenses.
Jonathan Sherman
Jonathan Sherman 3 aylar önce
FINALLY! Someone explained this to me in a way that makes sense. Thank you!!
Vaquerito F
Vaquerito F 3 aylar önce
what about a small construction company? llc or sole prop?
Laurel Berryman
Laurel Berryman 3 aylar önce
if u have a brick and mortar does it go by different rules
Dr. Marco Britton
Dr. Marco Britton 3 aylar önce
Good information….Here’s a step-by-step guide how to apply for an llc fully online in Texas and get results much quicker! trshow.info/watch/ntH95FAOCzg/video.html
Riley Royer
Riley Royer 3 aylar önce
Loved the video brother! Didn't have to put up with any interruptions, commercials or click bait nonsense! Thank you for the information! You got my sub!
anoldlady8
anoldlady8 4 aylar önce
You’re incorrect on how tax brackets work.
Clipsmusic 11
Clipsmusic 11 4 aylar önce
what if your a sole proprietor in a different country ?
Nia Abdu
Nia Abdu 4 aylar önce
This was very informative however the music in the background so distracting i had hard time focusing in the info 😩
ffl ooak
ffl ooak 4 aylar önce
I’m a sole proprietor, income less than 10k yearly…very educational video, thank You!
HighCastle of Geek
HighCastle of Geek 4 aylar önce
Hey Graham! Didn't realize you also had a financial channel (long time Recording Revolution subscriber). Thanks for some great info! I'm just starting with online marketing, so I'm going to go sole proprietor for a while until my business income justifies the need for an LLC.
Aeriel Ferguson
Aeriel Ferguson 4 aylar önce
This is the most effecient clear explanation and advice to new entrepeneurs out of all the vidz on youtube.....thank you
Filament Monkey
Filament Monkey 4 aylar önce
Thank you all this tax stuff is crazy
Vin D
Vin D 4 aylar önce
LLC is the safest way to start because even though you may or may not save money in taxes just having peace of mind that your safe in the event you get sued. In a sole proprietorship, the person listed is liable, so someone can sue you for your personal assets. LLC if sued someone is suing the company not the person. It would be wise to consult a tax professional.
Amy Vang
Amy Vang 4 aylar önce
Can you hire someone such as a family member to be an employee as a sole proprietor? If anyone knows the steps to doing so please share. I’m planning to start a small business from home, but would like a family member to work as an employee. Just not sure how to do that as a sole proprietor.
Kierra Cheray
Kierra Cheray 4 aylar önce
This video was very helpful. I have a LLC. but thank you for explaining the difference.
Mike Rothleutner
Mike Rothleutner 5 aylar önce
You don't file your federal taxes as an LLC! You have to elect to file as a sole proprietor on a 1040 or partnership 1065 if more than one member! Your LLC isn't regarded by the IRS. You have to decide which status you wish to file as. A single member LLC attaches a form C to their personal 1040 tax form. A multimember LLC attaches a form k-1 to each member's personal 1040 tax form. The multimember LLC is actually filing a 1065 partnership tax form with the IRS which is not a special LLC tax form. It is used for all partnerships. You still file as an individual (single member LLC as a sole proprietor), a partner (member of a multi member LLC) or a shareholder (shareholder of an LLC that has elected to file tax as an s-corp). Single member LLC'S file a 1040 with a schedule C. Multi member LLC'S file a K-1 attached to their 1040 which is received from a partnership tax form 1065. Shareholders of an S-corp file a k-1 received from an s-corp tax form 1120s.
Romelia Polly
Romelia Polly 5 aylar önce
If you want to do it yourself, just look for Woodprix. There is everything you need to do it :)
Sheila Garrett
Sheila Garrett 5 aylar önce
Should you get a virtual office as an sole proprietor?
Rose Ermine Cajuste
Rose Ermine Cajuste 5 aylar önce
Thanks so much. I'm about to start selling on ebay. I was scared to sell without a license. Can i sell my own brand as a sole proprietor?
Lisa R Kippen
Lisa R Kippen 5 aylar önce
Should you use your own name for branding purposes when doing either of these types of business entities?
SOCAL DIAMOND PAINTING INC.
SOCAL DIAMOND PAINTING INC. 5 aylar önce
I have 2 year with my. Painting licensed. And. I Have s corporation . But. I dont. Make. That much money. Do you thing. If i switch to. Sole p. Or LLC. Is better for me if my company. Do t make. More the. 40k. Tank you.
Psalms easy to play and sing for church groups
Psalms easy to play and sing for church groups 5 aylar önce
Going into home repair. About 50k for me and 30k for my children who will help me out. Do I need comp on my kids? Should I buy crypto out of an LLC? Or just as myself?
601Picker
601Picker 5 aylar önce
This info is wrong... A single member LLC is taxed exactly like a sole prop unless you opt to be taxed as a s corp. That means you file smllc just like a sole prop, on your schedule c. That means you still get the benefits of LLC as a schedule c filer until you are ready to elect as s corp. Also, you can't change from a sole prop to a llc, you start all over as you are forming a new business... But, you can form LLC as a single member schedule c filer and switch to s corp later.
Mike Rothleutner
Mike Rothleutner 5 aylar önce
This is true. I am a a professional bookkeeper and tax prep provider. Single member LLC's push the net profit onto a schedule C attached to your 1040. Multi member LLC's push net profit to each member from a form 1065 partnership tax form to a K-1 form. The K-1 data is then entered on to each member's 1040. If you elect to take S-Corp filing status you file form 1120S at tax time which generates a K-1 for for each shareholder and as a partnership LLC that data flows to the shareholder's 1040. The break even point on whether to switch from an LLC to an S-corp depends on your net profit after expenses are paid. It also depends on how you are being charged for services to maintain the S-Corp because it does cost more. It can be as little as 15k net profit for my clients as I charge a flat rate for my services. I have an LLC client that is well over $60k net profit so far this year. It's time to switch him to S-Corp filing status to save some self-employment tax. There a people out here who actually help set small and micro businesses up for very reasonable fees. It is worth it to get everything set up properly and operating smoothly. It will save you stress at tax time! Good luck to all of you new small business owners and dreamers!
Shamyra Lewis
Shamyra Lewis 5 aylar önce
Sole Proprietor
Deborah Crawford
Deborah Crawford 5 aylar önce
So glad I found you‼️ ❤ 😘
Natasha Santiago
Natasha Santiago 5 aylar önce
Great info!! Question: I'm offering a micro-blading service (just me for now), Can I do sole proprietor now, and in the future when I have employees, can I switch to LLC or just do LLC now?
Cynthia Romero
Cynthia Romero 5 aylar önce
You could probably do it as an independent contractor. With an LLC you can have payroll for employees and LLC’s protect your assets if you get sued especially working in microblading sometimes certain people keloid or you never know it might be worth considering to protect yourself from being sued. You can be a sole proprietor and be selective of who you do business with until you feel better about it starting an LLC. LLC protect you more legally but both sole proprietor and LLC get taxed as disregarded entities unless you do s-Corp or you’re a multi partner LLC. Doing an S Corp only makes sense when you’re making closer to what he suggested. So you can still do an LLC and do the personal tax rate, being protected and who knows maybe it doesn’t cost a lot to start up in your state! Certain states like Florida are more expensive
Jose Batistine
Jose Batistine 5 aylar önce
Thank you ❤
Solar
Solar 5 aylar önce
I don't see how you're saving paying the 15% fico tax as a LLC vs sole propretor, if you still have to pay the 15% fico tax on your W-2?
Ado CFC
Ado CFC 5 aylar önce
You have to pay the 15% fico tax on both, but you save more $ as an LLC. If you are a sole proprietor and make $50k in net income off your business you will be taxed 15% fico + federal tax on the whole 50k. But, as an LLC you would list yourself as an 'employee' in the company where you can give yourself a salary like say 30k, you would only get taxed the 15% + federal tax on the 30k, not the entire 50k. Make sense?
beezneezmcgee
beezneezmcgee 5 aylar önce
I will start with a sole proprietorship.
Life Performance Podcast - Alex Martinsen
Life Performance Podcast - Alex Martinsen 6 aylar önce
Really great video man, thanks! I have had a Single Member LLC (S-Corp Election) for 10 years now. It is the pass through entity for all of my sales commissions, and consulting fees. I recently filed a DBA.. When you have a legal LLC name AND a DBA, can you use both interchangeably? For example my Business Bank Account and Chase only has my LLC name on it, not my DBA.. But I send invoices to customers with my DBA name on it.. I assume there is only one EIN number even though I have two names? Thanks
Mike Rothleutner
Mike Rothleutner 5 aylar önce
You have to be sure your bank account is registered to include both the llc name as well as your dba name. The same account will work for both. You may have to fill out additional paperwork if both names aren't registered, but your banker will help you out.
Dean Jones
Dean Jones 6 aylar önce
I needed this video. Thank you so much! I have been considering forming an LLC but so far I have only made $900 on my side hustle. I did set up an EIN for a DBA.
TheStrangeFruitEmpire
TheStrangeFruitEmpire 6 aylar önce
Thanks for info . After seeing your video and being a single person start up I think sole proprietorship is good for now however a couple questions. What if I want to have multiple DBA for my sole proprietorship can you do that. Also is there a way to protect your LLC name unto you are ready to form the LLC
Mike Rothleutner
Mike Rothleutner 5 aylar önce
In my state your name is reserved once you pay the fee. It is protected as long as I file my annual paperwork on time each year. There is a separate fee in my state for dba's. My dba was an unusual enough name I didn't register it, but my bank acknowledges it and is registered as a dba on my account. Each dba would have a schedule C attached to your 1040 tax form while you're a sole proprietor.
SweetSurrender0771
SweetSurrender0771 6 aylar önce
Two part question: 1. When I become a LLC should I keep my proprietor status? Two when it comes to taxes do you file for both the LLC (your business) & proprietor (you/ceo)? I ask because I know that youtubers for example: have to file as a LLC & proprietor. FYI: I am going into catering.
wendi rivera
wendi rivera 6 aylar önce
Thank you soooo so so sooo much for this video
eric green
eric green 6 aylar önce
Thank you for the info💪🦍
chriss4365
chriss4365 6 aylar önce
what should I get for self employment? so if you make under 50k then just do regular taxes? Can you put all of your income in one LLC or s corp or do you need separate ones for each category of income stream?
Charlie Mätur
Charlie Mätur 6 aylar önce
wow thanks so much, i am applying to become a GC and i wasn't sure about this part. great video !
Dora Jenkins
Dora Jenkins 6 aylar önce
Graham thanks for simplifying the facts.
Shaneikiya Steel
Shaneikiya Steel 6 aylar önce
I have photography business and at this moment in time I am currently a sole proprietor as I do not make nearly enough to even write off. However, I am looking to get into real estate and figured it would be smart to start off as a SP with an EIN, business checking, contract, and the like before thinking about a LLC (which a lot of people do off top, and after working at a bank I didn't think was smart to begin with...). None of the less, this really helped and broke down the differences in weighing my pros and cons, thank you!
jonezy6056
jonezy6056 6 aylar önce
Love that rule of thumb. Really can provide context for anyone's situation. And all the other info is excellent as well, thanks!
Eileen Lord
Eileen Lord 6 aylar önce
The internet says if I make under 12,000 I don't need to file. But I've made only 2,000 and have filed.
Sabino Emil Cocos
Sabino Emil Cocos 6 aylar önce
Hi! So, my wife is an independent contractor, and she works as a Home Health Physical Therapist, She is paid by a company per home visit where she has to drive from house to house and so we are thinking of forming an LLC as we think an LLC will benefit her independent contractor expenses such as gas/mileage, medical equipment she use (this is from what I understand), so my question is: 1. Is my understanding correct that if you start an LLC, you can use your business/ independent contractor expenses to be deducted on your taxes as compared to not having an LLC? (If I’m wrong, may I know the other benefits of having an LLC aside from your personal assets being protected) 2. If ever we start a single member LLC for her, can we use this LLC in the future let us say we will open our own PT clinic after 2 years. Can we modify this LLC from single member to multimember and change the address to the clinic’s address? Or do we have to start all over again and make a new multimember LLC for our future clinic. 3. Last question is what the major differences between single member LLC are and multi member LLC Thanks!! Clarifications with my question will really help us a lot and is greatly appreciated!
Purple Rain
Purple Rain 6 aylar önce
thank you
Diane Andrew
Diane Andrew 6 aylar önce
What would I need to open a business bank account? I already have an EIN
Dan DeW
Dan DeW 6 aylar önce
The best advice I've had on how I should form my business when I start it. Especially the rule on making at least $50k a year before starting an LLC.
Tyra Rice
Tyra Rice 6 aylar önce
This video has helped me immensely!!! I am a notary and I didn't understand about LLc's or what it meant to be a sole proprietor. I understand a whole lot better now. Thank you for this video.
T T
T T 6 aylar önce
The music in the background makes it really difficult to hear you. And it is very destructing.
John Cortesi
John Cortesi 6 aylar önce
I’m just starting a haircut business
Abelardo Ramos
Abelardo Ramos 6 aylar önce
I want to start a trucking company but only to lease my truck out, use someone else’s numbers. Is an LLC good for that?
John The Disciple
John The Disciple 6 aylar önce
Thanks Graham. This was a very well-explained , wonderful video. I needed this information.
Amanda Bowlby
Amanda Bowlby 7 aylar önce
Thank You , I am starting a small home base business and I as looking to form a LLC but after this video I am thankful I have not.
bianca kendricks
bianca kendricks 7 aylar önce
U help me thanks so much..omg
juan zamarripa
juan zamarripa 7 aylar önce
Great and well explained clear as water thank you so much
Sarys
Sarys 7 aylar önce
Hey man I noticed when I paused the video for a mintue @8:43. Concerned about the dental imprinting on your tongue. I know it's been over 2 years since this video, but if you still have that going on, you maybe want to look into it. here's a medical link as to what I'm talking about. www.newhealthadvisor.org/Teeth-Marks-on-Tongue.html
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