We get this question all the time. The first thing folks think they need to do is to set up an LLC or an S Corp. We think that isn’t the right first step. The right first step is to take a look at your facts and circumstances, current and future, and a whole bunch of other things to put the question in the right perspective.
There is no one size fits all. Not everyone needs an LLC. And an LLC may not even be legally available to you (if you are a licensed professional, for example) based on certain California business codes.
Incorporating or starting an LLC comes with a fixed set of costs. The most basic is the annual $800 fee you have to give to the state of California (if you are in different states, this may not be the same for you, but the majority of our clients conduct business in California.)
With that all said, there may be a bunch a really great reasons you should incorporate or form an LLC. Again, your particular facts and circumstances will drive the framework for decision making here.
Yes, this all leads to 2 important points: if this is something you are considering, you should talk with an attorney AND a CPA to get assistance in making the best decision. We work with our clients frequently as they face this question. Let us help you.
CJ Spady | CPA 