Sole proprietorship vs corporation

[FlySi]

What are the advantages and disadvantages of each? This is for a landscaping/excavating business with one owner.

[adamc]

there is so much available elsewhere, this is probably the worst place to ask.



http://www.smallbusinessbc.ca/


^ tons of info on the pros and cons of each structure.

[urbannomad]

I will say this...

If you get sued and have done work as a sole proprietorship, you will be held liable, and the person suing (plaintiff) can, and most likely will go at your assets (e.g. home). If you have a corporation and get sued only the companies assets will be at risk, not your own personal finances and livelihood.

[snowboard]

Incorporate, then pay through dividends.
whammy.

[acura_el]

http://www.businessnameusa.com/Compa...ssEntities.htm

The biggest advantage of a corporation is definitely the limited liability.

[BananaFob]

Originally posted by urbannomad
I will say this...

If you get sued and have done work as a sole proprietorship, you will be held liable, and the person suing (plaintiff) can, and most likely will go at your assets (e.g. home). If you have a corporation and get sued only the companies assets will be at risk, not your own personal finances and livelihood.

That's exactly what liability insurance is for. I would say go for the sole proprietorship as it doesn't seem like your business is that huge at the moment. I had a painting company with $2 million in liability insurance and I ended up paying about $600 over the year for it. You also get double taxed as a corporation, once at the corporate level and then again when you declare income on your personal taxes. There's no point in doing this if you're only paying a few hundred dollars a year on insurance to stop you from getting sued for big bucks.

[Maddog55]

Originally posted by BananaFob


That's exactly what liability insurance is for. I would say go for the sole proprietorship as it doesn't seem like your business is that huge at the moment. I had a painting company with $2 million in liability insurance and I ended up paying about $600 over the year for it. You also get double taxed as a corporation, once at the corporate level and then again when you declare income on your personal taxes. There's no point in doing this if you're only paying a few hundred dollars a year on insurance to stop you from getting sued for big bucks.

excellent advice. Corporate taxe return will cost you about $1500-$2000 to get done each year. Not to mention your monthly bookeeping fees for a corporation. Unless you're making more money than you can spend each year and have equity and assets coming out your ears, sole proprietorship is what you're looking for.

[dropdat]

I say be a proprietor for as long as you can, until you have to become a corporation.

[97'Scort]

My DJ company is sole proprietor. I have good liability coverage. For me, incorporating would mean tons more paperwork, more tax on the little money I do make through the company, and just more hassle for something I consider fun.

Also, since it's just me and no employees, there's no reason to incorporate. I don't need to protect anyone but myself and it'll stay that way until I'm ready to go bigger.