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Question: Which is the best business entity for my home based business?

(Posted by: Nicole*Is*Great!!! on 2010-02-27 10:00:22)

I am starting a home based residential cleaning company. I will work alone and take on small accounts for atleast the first two months. As my client base grows, I will begin to hire employees. I plan to start out with general liability insurance. I am the only owner and I have been developing bootstrapping and bartering methods to make up for my small budget (deep discounts in exchange for references, free office cleaning in exchange for a logo design, etc.) I rent an apartment (zoning is approved) and own a vehicle, not much in savings. I really like the advantages of being an LLC, but it seems complicated to start. Should I go for LLC or maybe start out as a Sole Proprietor and then later convert to LLC? Or strictly Sole Proprietorship?

Posted by: Emeriox on 2010-02-28, 14:34:42

The choice between the Sole Proprietor and the LLC comes down to your comfort for liability. Starting an LLC can be done for around $500 (the actual cost will depend on your state and who files the papers for you), and protects your personal assets in the event of a lawsuit that does not go your way. So I guess the question is what are your personal assets worth, and how much is $500 to you? Having been on the startup side of a few businesses, I know $500 goes a long way in the early days. If you do not have a lot of personal assets, and plan to deal primarily with people you know at first, you're probably OK starting out as an SP, then moving on to LLC as the business grows. On the other hand, forming and LLC is not that complicated; search "forming an LLC " and research the websites that will do it for you. Good luck! emeriox.com