Hacker News Reader

Comment by torr | Hacker News Reader

Setting up and keeping up an LLC is a bit of a pain in the neck. Also working out how to pay yourself, keeping accounts separate, and so on takes extra time.

One benefit of an LLC might be a somewhat more professional image (for some customers anyway). Also, my guess is that corporate customers may not want to do business with you unless you're an LLC (though I wouldn't know for sure as I have no corporate customers).

Anyone here go from having your own LLC to dissolving it and going sole proprietership?

View on HN

"A pain in the neck"

You've got to be kidding.

1. Trivial law work is required. 2. Annual total business license fees range from ($20-$1,000) depending on location 3. Trivial bank account setup

All of this can be accomplished literally in the span of a few hours. I would argue the biggest maintenance costs are related to tax filings and accounting, but they're more than offset by all the available expense write-offs.

It's really a no-brainer decision with today's streamlined systems and litigious society. Additionally, having an LLC operating agreement (even a generic one) in place, usually makes converting to a C-corp (to be available for VC financing) much easier.

Not so in New York. You have your UBT (over $3,000 per year), your publication requirements (over $1,500 per registration), and more. Considering that generally your clients cannot sue you for more than the contract was worth in the first place (excepting rare cases of willful negligence etc.) it is far from a no-brainer.

Willful negligence indeed. That's why it's a good idea to carry E&O insurance in most states--despite the costs.

Nah, the tax write-offs alone make those costs more than manageable.

LLCs are simple. Maybe you're thinking of C-corps and the mountain of paperwork involved with that?

I have an LLC for my consulting business, mostly so I don't get qualified as an employee of my clients, have "limited liability", etc. It's simple in terms of paperwork because it's treated by the IRS just like a sole proprietorship as long as the LLC only has one employee. The biggest downside is that I have to pay an $800/year LLC tax to the state of California.

Oops, s/qualified/classified/...

Anyone here go from having your own LLC to dissolving it and going sole proprietership?

Yes. I still don't know what the advantages of a one person LLC are, even after doing it myself. On the other hand I didn't find it a pain in the neck. I still keep separate bank accounts, have a tax ID, etc. I dissolved the LLC because I moved to another state. I think the LLC makes more sense if you have more than one person. Maybe it helps you not seem like a temp employee if you're a consultant and only have one client. However, that seems like more of an advantage to the client, not the LLC owner...

I have one of each, a sole proprietorship and an LLC. LLC costs $150 a year in Florida. I should ditch the SP and do both as LLC, but habit is a powerful thing.

Reply on news.ycombinator.com