Should I form a LLC?

[Janitor Bob]

For 12 years I have been a sole proprietor....no employees...just me preparing taxes. Every year, I see and hear of people forming LLCs. What would be the benefit to me?

I know it is simple enough to do....It cost some, but not a lot and there would be some added forms. but would it be worth it? In what scenerio would being a LLC protect me?

I do not own my home (I rent my home/office)or have a lot of assets to protect.

Any wisdom is appreciated.

[jainen]

>>there would be some added forms<<

I hear ya, bro. With all this e-file nonsense, we don't have enough paperwork anymore.

[Lion EA]

If you don't see a clear reason to form an LLC or make a change in your entity, then you're probably fine as you are. Now, you asked us and could include your friendly, local lawyer and insurance agent in the discussions. Even with an LLC, you are still liable for what you do professionally. With little in the way of owned assets, you can probably rest easy with reasonable insurance.

I went from a sole proprietor to a SMLLC but owned a house and have a home office, had a second marriage with a child from each of us, was hiring employees, and at that time CT charged about $60 to organize and $10/year to file annual reports. Now, those fees have doubled and CT added a business entity tax of $250 per year separate from any gain or loss on my schedule C. I might not have made the same decision with the new fees, but am continuing my SMLLC for now.

[BulldogTom]

As mentioned above, you are still liable for any misconduct you personally do in your business. So there would be no real liability protection if you screwed up a tax return so bad that you got sued. With no real assets to protect, there would not be anything for a lawyer to go after if someone tripped in your office and sued you. In your scenario, insurance is better liability protection than choice of entity.

The only reason I can see that you may want to consider another choice of entity is the new health care law. It may work out better for you (if you are providing your own health care) to be a corp in the future. But I would wait for all the details to work themselves out in congress and the courts before you think about that.

Just my 2 cents.

Tom

Lodi, CA