What Is the Best Business Entity Structure (IYHO)?
by petrosianii, Window Shopper
- Created: March 6, 2010, 5:45 pm
I think that my firm's business structure is the best. Of course, I understand 'best' is subjective, so I would like to hear the opinions of others on this.
I own a microbusiness. (The Business.Gov site has an excellent article on what a microbusiness is here)
It is a Single Member LLC. I have at any given time, anywhere from 2 -4 Independent Contractors. Each of these contractors only works part-time. I have checked the IRS' guidelines for determining whether a worker is an IC or an Employee, and we're good there.
My wife, while not a Partner, is an appointed officer (Chief Operating Officer) in our Operating Agreement.
We are a virtual company, which means we don't have a physical location or office. So overhead is very low, freeing up more funds for marketing and advertising, which I love.
I think this is a tremendously flexible, yet recession-resistant and resilient, form of business structure. It allows me additional income, and I can still work a FT job if I so choose (what former NYTimes blogger/writer, Marci Alboher, calls being a 'slasher' or the '/career movement,' which I've written about on this forum here.)
As a SMLLC, for tax purposes, we are a 'disregarded entity'. Means: the LLC doesn't have to file a separate tax return. I simply attach a Schedule C to my personal income tax return, and it's done. My accountant's fees are a little high, but it's quick and easy and painless and much less stress than filing a separate LLC return or filing as a corporation, IMHO.
And, since I don't hire 'employees' in the legal sense, I don't have to pay employment taxes and figure out all the regulations governing employees (there are a lot of them)
As far as Federal, State and County regulations, an SMLLC is pretty straightforward. All I need to do is
- file an Operating Agreement with the state
- file an Annual Report ($50 in NJ)
As an SMLLC isn't a sole proprietorship in terms of registration laws, I don't have to pay an extra fee to file a county d/b/a fictitious or trade name application to operate as 'Gnosis Arts Multimedia Communications LLC'. (At least, I don't think so; correct me if I'm wrong here but I did the research and that's what it seems to suggest).
I just think that theis form of business structure: a virtual SMLLC, microbusiness, which can hire contractors and appoint officers without having to make them employees; offers the best of all possible worlds - at least for the entrepreneur who wants to have the legitimacy of a business designation and operations, without all the complex governmental machinery that can be daunting, confusing and discouraging for many first-time, want-to-be, business owners.
But what do you think? What is the best business entity, in your opinion?
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